Is annual salary indexation required? Salary indexation. Example of calculating salary indexation Employer against indexation: what to do about it
Hello! In this article we will talk about wage indexation.
Today you will learn:
- What is indexing;
- How is it different from a salary increase?
- Who carries out indexing and how.
Indexation is the responsibility of all organizations. It does not matter what form of ownership the organization has. The only thing is that if the enterprise is commercial, then there is no strict indexing algorithm. We’ll talk today about whether indexation will be carried out in 2019 and whether it is needed at all.
Why are salaries indexed?
We all know that the economic situation in any state can change. And both for the better and for the worse. And the process of inflation is generally an inevitable phenomenon. In addition, this is a factor that has a negative impact on the salary of any employee.
Inflation depreciates wages, which is why a tool such as indexation was introduced so as not to reduce the level of wages.
Differences between indexing and promotion
Let's start understanding this by defining the terms.
Indexing – This is a procedure for increasing employee salaries, which is carried out due to a general increase in prices.
If an organization is financed from the budget, then indexation for public sector employees is usually planned and is regulated by various legal acts. If the organization is commercial, then salaries are indexed based on a collective agreement or other local acts.
As for the increase, the employer may or may not give it. This depends on how well the employees perform their duties and whether they violate labor discipline. A salary increase is...
So, let us finally formulate the main difference between these two concepts: after indexation, the employee’s welfare will not be increased, it will be maintained at the same level in relation to inflation in the state.
What is indexing?
Indexing is most often divided into 2 types:
- Expected type - its implementation is based on the level of price increases that is expected in the near future;
- Retrospective type – the price level that developed over the previous period is taken into account.
Regulatory regulation
The main regulatory legal act, which stipulates the obligation of each employer to index employees’ salaries, is the Labor Code of the Russian Federation.
If you plan to index your salary for the first time, the employer must adopt a local regulation that will reflect this procedure. Such a document could be the Indexation Regulations, a collective agreement with employees, and so on.
All employees must be familiarized with this document upon signature. The manager also issues an indexation order.
Who conducts
- Budgetary organizations and institutions;
- Commercial companies;
- Any entities where employees work.
Who can apply for indexing
All persons who work with the conclusion. Moreover, this is confirmed by the Constitutional Court of the Russian Federation.
When indexing can be omitted
The employer is not obliged to index the salaries of those employees with whom the contract is concluded.
Frequency of the procedure
The period within which wage indexation should be carried out is not regulated by legislative acts. Employers decide this issue themselves and write down the information in the relevant documents.
Indexing order
To avoid possible disagreements, the procedure for indexing can be specified in employee employment contracts. But in this case, the employer will not be able to make changes to this procedure on his own. In practice, this information is not always recorded in employment contracts.
So, how does the procedure go:
- Some local act or collective agreement is adopted, in which all indexation conditions are included.
- All employees are introduced to the document upon signature.
- The manager issues an order or instruction on the implementation of indexation.
- Employees are familiarized with the order.
- They confirm that changes have already been made in terms of employee salaries.
- They sign additional contracts with each employee. agreement on salary changes.
This whole system has one significant drawback: it takes two months to fully implement indexing.
Nuances of indexing in the Russian Federation
The funds that are allocated for salary indexation are taken from the budget (if the organization is state or municipal), from the funds of the company itself (if it is private) or from sponsorship proceeds (if we are talking about an NPO). Therefore, the question arises: what is the coefficient that both private and budget organizations should adhere to when indexing?
Experts answer this question as follows: if the organization is budgetary, then the calculation of indexation is carried out taking into account Rosstat figures, which reflect the percentage of inflation.
In turn, private companies calculate this coefficient themselves. They may focus on the percentage of inflation, or they may not take it into account. The law is not violated in this case.
How to index correctly
Now let's talk about the procedure for calculating indexation.
To carry out everything without errors, you need to take into account several factors:
- The salary of each employee;
- Daily earnings of each employee.
Now we will consider the procedure for indexing an employee’s salary, using all the necessary coefficients.
Formula for calculating indexation.
For example, in2018-2019 levelprice inflationlooksSo:
- February 2018 – 0.52%; February 2019 – 1.45%
- Overall for 2018 – 4.27%;
- Last 12 months – 5.24%;
- Last 5 years – 41.86%.
The basis for indexing is the employee’s salary.
It turns out that the indexing formula is expressed as follows:
Employee rate per month (or day) * inflation index = salary amount taking into account indexation.
How to index monthly salary
Now let's give an example of calculating salary indexation.
As of January 1 of this year, a storekeeper at the Ivanova furniture factory has a salary of 15,600 rubles, according to the staffing table.
The employer has the right to independently set the wage indexation coefficient, but it would be better if it is equal to the inflation rate - and this is 4.27% for 2018. As a rule, indexation is carried out from February 1, when inflation targets are already published.
Based on the law, the employee’s salary was indexed:
15,600 * 1.0427 = 16,266 rubles
How to index your salary per day
To do this, the employee’s salary per day is determined, taking into account the indexation coefficient.
Eg: for the current year, the daily rate of the cleaning lady Petrova was 1,060 rubles. Let's recalculate:
1,060 * 1.0427 = 1,105 rubles
This is how employee salaries are indexed. Also, when a person goes on vacation, he receives his vacation pay taking into account the indexation carried out. To recalculate them, the current coefficient is taken and applied to the amount of vacation pay that has already been accrued.
Indexation of wages taking into account inflation is one of the ways to mandatory increase them. The employer can also develop a bonus system for its employees or conduct periodic salary increases. This step will not be considered a violation of the collective agreement, for example, which provides for mandatory indexation of wages taking into account inflation, which has already been confirmed by judicial practice.
How to index average wages
If an employee’s tariff rate or salary is increased, the new salary amount is divided by the previous one. If the employee was paid bonuses during the indexation period, then all these amounts are indexed and divided by the previous ones.
Each accountant must take an individual approach to each situation, while not forgetting that not only the rate is indexed, but also the income that the employee receives additionally.
Once the calculation of the coefficient is completed, no further adjustments are made. This is how the coefficient for the current year is calculated.
Employer is against indexation: what to do about it
If an employer’s refusal to index wages is illegal, employees have the right to file a complaint against it. In addition, a claim can be formed, with which employees apply to the judicial authorities.
Misleading employees
It is not uncommon for managers, not wanting to bear the costs, to tell employees that salaries are indexed only for those who work in the public sector.
This is an obvious deception. All companies operating in the Russian Federation are required to recalculate salaries taking into account inflation. The only difference is that in commercial companies the order and procedure are regulated by the managers themselves; the law requires them only to carry out the recalculation itself.
Responsibility for refusal to index
If the manager ignores the requirements of the law on indexing wages to his employees , he must be prepared to pay the fine.
The fines are as follows:
- For managers: 1000 - 5000 rubles;
- For small entrepreneurs (without status): 5000 rubles;
- For managers with legal entity status: 30 - 50 thousand rubles.
There is no criminal liability for this category of offenses. But the fine is also an unpleasant fact. In addition, if a company is found to be violating the law, it will definitely be checked much more often. Regulatory authorities will pay close attention.
The company’s inspection report may also indicate that it will be required to recalculate employee wages taking into account inflation, as well as pay additional tax - personal income tax to the budget.
So just make sure that indexing is done on time.
News for state employees for 2019
Almost everyone knows that public sector employees are those who work in state-owned enterprises. Their salaries are paid either from the federal or local budget.
Over the past year, their average salary was 36,000 rubles, although in small settlements this figure is completely different, it is much lower: approximately 10 - 16 thousand.
As for the latest news, according to the most disappointing forecasts, the salary increase for public sector employees in 2019 will be 6-10% of the salary, and not in one stage; accordingly, the final income will increase in proportion to the increase in salary. All allowances: for length of service, difficulty of work, qualification level and others will be recalculated in accordance with this increase.
It is planned that the salary increase for public sector employees will occur in 2019 in several stages. When the first one is held, it will be followed by a summer and autumn phase.
One of the reasons for the salary increase is the increase in the retirement age for certain categories of civil servants, for example, judges, for whom the length of service required for retirement increases from 20 to 25 years.
Conclusion
Let's summarize our conversation. We found out that salaries are indexed to all employees who work in the company, except for those with whom civil contracts have been concluded.
Indexed wages will not fully cover the increased prices of goods. It will only soften the difference between the money a person earns and the ability to live on it.
I need to index the wages of employees, what was the inflation index in 2017? By what percentage should wages be raised?
Answer
Answer to the question:
First of all, it should be noted that today the indexation procedure for organizations that do not receive budget funding for salary payments has not been established by law. Issues of salary indexation for such organizations fall exclusively within their competence. This means that these employers resolve issues regarding salary indexation at the local level taking into account specific circumstances, the specifics of the organization’s activities and the level of its solvency. Specific indexing order must be fixed in local documents (for example, in a collective agreement, Regulations on remuneration). Moreover, if the indexation procedure is not established in the current local regulatory documents, they need to be amended accordingly (additions).
Article 134 of the Labor Code of the Russian Federation, which establishes indexation in connection with an increase in consumer prices for goods and services, only says that an increase in consumer prices for goods and services is the basis (reason) for wage indexation, but does not oblige the employer to use it as mandatory the amount of such indexation.
Consequently, labor legislation gives employers the right on one's own , taking into account the opinion of the representative body of employees (if there is one), establish the procedure for indexation in a collective agreement, agreement or local regulation.
The size of indexation depends on the choice of indicator for its implementation.
You can choose a fixed percentage by which you will regularly index your employees' wages, for example 5 or 10 percent. Also, to determine the amount of indexation, in addition to the increase in consumer prices in Russia, you can take into account the value:
growth of consumer prices in your region;
growth of the living wage of the working population in Russia;
growth in the cost of living of the working population in their region;
inflation reflected in the law on the federal budget;
inflation fixed in the law on the regional budget.
other indicators reflecting the dynamics of rising prices for goods and services.
The indexing condition may be as follows : “Wage indexation is carried out by increasing tariff rates (official salaries) of employees by an indexation coefficient, which is set equal to the consumer price index as of 01.01. of the current year compared to the same period last year.”
Inflation in the Russian Federation is calculated based on the indicator "Consumer Price Index", published monthly on the website of the Federal State Statistics Service (Rosstat).
*Compared to the same period last year.
Table of monthly and annual inflation, %
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | But I | Dec | Year | |
| 2018 | 0,31 | 0,31 | |||||||||||
| 2017 | 0,62 | 0,22 | 0,13 | 0,33 | 0,37 | 0,61 | 0,07 | -0,54 | -0,15 | 0,20 | 0,22 | 0,42 | 2,51 |
Details in the materials of the Personnel System:
1.Answer:Is the organization obliged to index employee salaries?
Employee salaries must be indexed in connection with rising consumer prices for goods and services ( ). Increasing the level of real wages is one of the main government guarantees. Therefore, indexing the level of employee salaries is a responsibility, not a right of the organization. This follows from the Labor Code of the Russian Federation.
The indexation procedure for organizations that do not receive budget funding for salary payments is not established by law. Issues of salary indexation for such organizations fall exclusively within their competence. This means that these employers resolve issues of salary indexation at the local level, taking into account specific circumstances, the specifics of the organization’s activities and the level of its solvency. The specific indexing procedure should be fixed in local documents, for example, in, or with an employee. At the same time, if the indexation procedure is not established in the current local regulatory documents, appropriate changes or additions must be made to them. This conclusion follows from the provisions of articles of the Labor Code of the Russian Federation. In addition, it is confirmed by the explanations of experts in
From May 1, 2018, the minimum wage will be 11,163 rubles (+17.6%), i.e. will be equal to the federal cost of living for workers. Vladimir Putin announced this at a meeting with workers of the Tver Carriage Plant.
Russian President Vladimir Putin signed a law on increasing the minimum wage (minimum wage). According to it, the minimum wage will be increased by 4% from July 1, 2017, from 7,500 rubles. up to 7800 rub. per month.
Table of regional minimum wages for 2017 by constituent entities of Russia. More precisely, it is called the Minimum Wage in the Regions (MW). Not all regions have raised the minimum wage bar above the federal one.
In fact, the employee’s salary paid in person may be lower than the regional minimum wage, since the minimum wage is calculated from the accrued salary, i.e. before personal income tax is withheld. Accordingly, with an accrued salary of 1 minimum wage (7,800 rubles), the amount of payment to the employee in person is reduced by the amount of personal income tax. Also, the calculation of sick leave may not be lower than the calculation based on the local minimum wage.
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 Rice. Dynamics of Inflation in Russia 2000-2016 |
You can find out about the minimum wage and its changes in 2016 in the article
Labor legislation provides for an increase in wages, including through indexation in connection with rising consumer prices for goods and services. We will tell you which organizations are employers and how they should index wages, as well as what changes in this direction are expected in the near future.
Article 130 of the Labor Code of the Russian Federation contains a norm that gives employees the right to increase the real content of wages, including through indexation in connection with rising consumer prices for goods and services.
Wage indexation: who is obliged to carry it out?
Today, state and municipal budget organizations must carry out wage indexation in accordance with labor legislation. Other organizations - at their own discretion, in the manner established by the collective agreement, agreement, local regulations (Article 134 of the Labor Code of the Russian Federation).
As a rule, employers, in order to avoid questions about wage indexation, do not mention it in internal labor documents. Although, when checking, inspectors, of course, pay attention to this and, as a rule, issue an order: to make changes, for example, to the regulations on wages, or to adopt a separate act establishing the indexation procedure.
The Code of Administrative Offenses of the Russian Federation provides for a fine for violation of labor legislation (Part 1 of Article 5.27 of the Code of Administrative Offenses of the Russian Federation), in particular, if the employer has not included a provision on salary indexation in the internal regulatory act. You can try to challenge the fine in court. Today, in judicial practice there are decisions both in favor of organizations and in favor of the labor inspectorate. And if the organization’s internal document establishes the procedure for indexing wages, but the employer does not comply with it, they can also be fined for this.
It is necessary to review employee salaries in accordance not only with the growth of the consumer price index, but also with the approved minimum wage (federal or regional) and the level of the subsistence minimum.
Wage indexation in 2017 in commercial organizations is not yet mandatory. But the State Duma is currently considering a bill (No. 1119655-6) with amendments to Articles 134-134.1 of the Labor Code of the Russian Federation, obliging absolutely all employers to index their salaries at least once a year. You can view the project using the link below.
Organizations and individual entrepreneurs with hired employees may be required to annually increase employee salaries due to rising consumer prices for goods and services. The indexation amount must not be lower than the inflation rate in a particular region. It is planned to exempt only those who pay their employees salaries from salary increases above 10 regional minimum wages . The indexation condition must be enshrined in an internal document.
The procedure for indexing wages, documents
To prescribe the procedure for increasing wages in an organization, it is necessary to make changes to the wage regulations.
According to the Labor Code, wage indexation is a guarantee for the remuneration of workers provided by the state, along with the establishment of a minimum wage, strict supervision of compliance with labor legislation, and the establishment of deadlines and frequency of salary payments. Article 134 of the Labor Code of the Russian Federation reveals the essence of the concept of “indexation”: since prices for goods and services are constantly rising, employers must index wages in the manner established by labor legislation or local regulations.
In budgetary organizations, wages are indexed much more strictly than in commercial ones. Legislation requires them to carry out wage indexation. Other employers (not related to budgetary institutions - commercial organizations) carry out indexation in the manner established by the collective agreement, agreements, and local regulations.
However, the law for “merchants” only establishes the employer’s obligation to carry out indexation. The current legislation does not establish the procedure for salary indexation in 2017. How often should indexing be carried out, and in what order? What documents should be used to document such an increase in employee salaries?
As practice shows, many employees do not even know about the existence of such an opportunity to increase their salary. Employers mistakenly believe that periodic salary increases allow them to avoid indexing wages throughout the company. However, indexation and periodic salary increases are not the same thing. Salary indexation is carried out for all employees of the company, the indexation coefficient is the same for all employees. Salary increases are periodic and not systemic. Salaries may not be increased for all employees, but in different amounts - the head of a department may receive a salary increase by 30%, and his employees by 10%.
In addition, some employers prescribe the indexation procedure in local regulations as a right and not an obligation of the employer, thereby protecting themselves from possible problems during inspections.
Wage indexation in 2017
If the company decides to carry out indexation, then it is necessary to act as follows. An increase in employee salaries due to rising consumer prices must be provided for in an employment or collective agreement, or other local act of the employer. Accordingly, if there are no such documents, it is necessary to correct this. You can draw up an additional agreement with the employee to the employment contract, where you can specify the details of indexation: conditions, frequency, etc. The agreement should make a reference to the internal document that regulates indexing. This could be, for example, an order to index wages in a company.
It is worth noting that despite the instruction in the labor code to act in accordance with the law, the employer must establish the conditions and procedure for indexation independently. When establishing conditions and procedures, the employer must remember that indexation should not become an unbearable burden for him.
The conditions for indexation can be specified in the collective agreement:
“In order to increase the level of actual wages (in connection with the increase in consumer prices for goods and services), it is necessary to index them in the following order:
- Wage indexation is carried out every six months, provided that the consumer price growth index in the region exceeds 5 percent in the billing period. To comply with the conditions, it is necessary to use officially published data from Rosstat and its territorial bodies.
- The size and procedure of indexation is determined by order of the general director of the company. The order must be issued no later than two months after the end of the billing period.”
What should be included in the document regulating the procedure for indexing?
- frequency of this procedure. Indexation can be carried out once a month, once a quarter, six months, or a year. It is advisable to choose periods of six months or a year - indexing too often is quite labor-intensive;
- payments that are indexed. This question also remains at the discretion of the employer.
- how to calculate the coefficient for indexing. The amount of indexation can be calculated based on the consumer price index established for a certain period for the country as a whole or in a particular region. The indexation coefficient can be calculated based on the amount of inflation that was recorded or based on changes in the minimum wage.
- the procedure and conditions for the indexation itself. It is logical to formalize each procedure with an order in which the head of the company will fix the coefficient applied to the calculation this year, the date from which employee salaries should be indexed.
