Wage indexation: sample calculations for commercial organizations. What is wage indexation How does wage indexation work?

An employee's work must always be paid. A monetary payment that is formed taking into account the employee’s qualifications, complexity and working conditions, and other incentive and incentive payments are called wages.
In the generally accepted mode, it is paid in accordance with Article 139 of the Labor Code of the Russian Federation.

In addition, the salary should be subject to indexation, in other words, to increase its size.

What it is?

The obligation to carry out indexation is fixed in Article 134 of the Labor Code of the Russian Federation. According to it, government agencies and other employers must increase wages due to rising consumer prices.

So indexing is increase in wages due to price increases for services and goods.

Despite the fact that Article 134 of the Labor Code does not stipulate either the procedure for carrying out this procedure or its timing, it must nevertheless take place. This is confirmed by Rostrud letter No. 1073-6-1 dated April 19, 2010. It directly states that the employer must fix the procedure for indexing in local regulations or individual provisions of his organization.

Reasons for indexing and how often it is carried out

The level of real wages should increase in connection with inflation, that is, with an increase in the price level. However, this does not mean at all that he should be equal to her. Although employers often index wages based on this indicator.

As already mentioned, Article 134 of the Labor Code does not disclose the frequency and order of the procedure. Therefore, each employer decides these issues himself and prescribes it in the relevant documentation.

However, he is not obliged to index wages in accordance with Rosstat publications. However, as judicial practice shows, these indicators should be regarded as the minimum calculation figure for increasing the level of payments. In addition, according to the fourth part of Article 57 of the Labor Code of the Russian Federation, the organization establishes working conditions that do not worsen the employee’s position in comparison with those established by law.

The employer can be guided, in addition to increasing prices throughout Russia, by the following indicators:

regional price increases;
an increase in the cost of living of the population capable of working both in Russia and in the region;
inflation, according to federal law;
inflation, according to regional law.

This procedure is discussed in detail in the following video:

What documents is it regulated by?

When wages must be indexed for the first time, the employer adopts the appropriate local regulation or collective agreement about this. All employees should be familiarized with this document against signature.
Indexation is carried out by order of the manager.

If the company operates in accordance with an industry agreement, then, according to Article 48 of the Labor Code of the Russian Federation, it must also be taken into account when establishing the size and procedure for salary increases.

Thus, the sequence of the procedure is as follows:

Adoption of a local act (or collective agreement) with the terms of the procedure (or certain provisions are included in an already existing local normative act).
Familiarization of all employees with the document for signature.
Issuance of the manager’s order to carry out the next indexation.
Familiarize workers with this order.
Approval with new changes.
Conclusion of an additional agreement to the existing one on changes in wages.

Nuances of documentation

A regulation, collective agreement or local act on indexation must contain not only a recording of the fact, but also its order. This can be implemented using an order from the manager. All employees must also familiarize themselves with the changes made against signature.

When hiring a future employee, it is necessary to familiarize him with the Regulations even before concluding an employment contract. Here it must be borne in mind that the employee’s familiarization with this document does not at all mean his consent to change the terms of the contract regarding the amount of wages.

Therefore, in order to avoid disagreements, the employer must include the indexation procedure in the employment contract itself.
It seems that in connection with this procedure, an increase in salary entails a change in the employment contract, and for any changes to it additional agreements must be concluded.

Since the procedure is fixed in the employment contract, the employer does not have the right to make changes unilaterally.

If management sets new rules, and it can do this, then in terms of remuneration they will apply to the employee only with his consent.

In addition, it must be borne in mind that such changes are not subject to Article 74 of the Labor Code of the Russian Federation, according to which the employer has the right to change the terms of the contract, since this issue does not relate to technological and organizational issues.

Formula and calculation with examples

So, at a minimum, indexation should be calculated based on base inflation, that is, in accordance with the increase in prices according to Rosstat. This information can be found on the Internet. The procedure can be carried out either once every quarter or every six months.

The price inflation index in 2015 was:

March - 101.9%;
June - 101.4%;
September - 101.6%.

The calculation is made both according to the salary data and the daily rate. Based on the fact that the employee’s salary was 31,000 rubles, as a result of indexation the daily rate changed as follows:

from the first of April - 31,000 rubles * 101.9% = 31,589 rubles;
from the first of July - 31,000 rubles * 101.4% = 31,434 rubles;
from the first of October - 31,000 rubles * 101.6% = 31,496 rubles.

If the calculation is carried out taking into account the daily rate, which was 1550 rubles, then the salary was recalculated as follows:

from the first of April - 1550 rubles * 101.9% = 1579 rubles;
from the first of July - 1550 rubles * 101.4% = 1572 rubles;
from the first of October - 1550 rubles * 101.6% = 1575 rubles.

This is how the calculation is done. It must be remembered that indexation is the employer's duty.

In addition to wages, the direct and strict responsibility of the accounting department is the indexation of vacation pay. To calculate earnings at this time, as well as the amount of compensation for unused vacations during the year, the method of dividing the amount of the accrued salary by twelve is used. The result is divided by the average number of calendar days. By law, the generally accepted number is 29.3.

When calculating vacation in working days and other cases, a method is used where the amount is divided by the number of such days, according to six working days per week.

It is important to remember that indexation does not take into account any financial assistance, travel, food and utilities.

Tax consequences for employer and employee

In the appropriate form of the indexation document, it can be recorded that the salary is made according to one of the following options:

due to the company's current expenses;
at the expense of retained earnings from previous years.

Tax consequences occur depending on the option selected. Let's look at how insurance premiums are paid.

Income tax

In the first case, for current expenses, accrued amounts are taxed in the month in which they are accrued. In the second case, these expenses will not be taken into account when taxing profits.

Insurance premiums

Regardless of the source from which wages were indexed, insurance premiums paid to the Social Insurance Fund, the Federal Compulsory Medical Insurance Fund for accidents, occupational diseases and the Pension Fund must be accrued. The basis for this is Federal Law No. 212 of July 24, 2009.

Moreover, these amounts can be taken into account when taxing profits in the period in which they were accrued (the first subparagraph of the first paragraph of Article 264 and the first subparagraph of the first paragraph of Article 272 of the Tax Code of the Russian Federation).

Personal income tax

According to the sixth subparagraph of the first paragraph of Article 208 and the first paragraph of Article 209 of the Tax Code of the Russian Federation, the indexation additional payment is considered a component of the salary and is subject to personal income tax taxation.

In accordance with the first paragraph of Article 224 and the first, second, third and fourth paragraphs of Article 226 of the Tax Code, the company, being a tax agent for employees, withholds 13% of the amounts due to them.

Responsibility for refusal to carry out a procedure

If the employer does not want to carry out indexation, then the employee, guided by Articles 353 and 355 of the Labor Code of the Russian Federation, as well as the Regulations on the Federal Service for Labor and Employment of June 30, 2004 No. 324, has the right to apply for protection to the State Labor Inspectorate. In addition, the manager’s inaction can be appealed in court.

In the first case, inspectors check whether indexation was carried out by the employer.

First, documents reflecting this responsibility are reviewed. In the absence of such, administrative liability will be imposed on both the manager and the organization, in accordance with the first part of Article 5.25 of the Code of Administrative Offences. In this case, the manager may be punished with a fine of one to five thousand rubles, and in case of repeated violation - with disqualification from one to three years. The company will pay a larger fine - from thirty to fifty thousand rubles, or its activities will be suspended for up to three months.

If indexation is reflected in the local act, but was not actually considered, then the inspector issues an appropriate order that the missing amount be paid to the employee. In addition, the employer is obliged to pay interest in an amount not less than 1/300 of the Central Bank refinancing rate for each day of delay.

If the employer does not agree with this decision of the inspector, he, in turn, can appeal his actions in court.

If the procedure is prescribed in the collective agreement and its failure to comply, the manager, in accordance with the first part of Article 5.31 of the Administrative Code, may be fined an additional amount of three to five thousand rubles. The same fate awaits managers who set indexation below that established in the industry agreement.

In the case where an employee has been working for several years, through the court, in accordance with Articles 236 and 237 of the Labor Code, the employer may be ordered to pay indexed amounts for several years with interest and compensation for moral damage.
An appeal to the court, according to the first part of Article 392 of the Labor Code, is possible within three months from the time the employee learned or was obliged to learn about the violation of his rights. However, even after the specified period, according to the third part of Article 392 of the Labor Code, for good reasons he can go to court.

Anyone who decides to go to court can be almost sure that the case will be successful, since the court in most cases sides with the employee as the vulnerable party.

One of the most pressing issues for many employers, accountants and ordinary workers is wage indexation in 2019. It should be remembered that wage indexation in state and budgetary institutions, as well as wage indexation in non-profit and commercial organizations, is carried out using various methods and means. All this should be taken into account by employers, because the law provides for liability for failure to index wages in 2019, and entrepreneurs cannot refuse to carry it out.

Wage indexation in 2019 - laws and legal regulations

In the field of labor relations, Russian legislation provides practical protection and implementation of workers' rights in various ways. Among other things, the fundamental rights of every employee include the right to wage indexation in accordance with the increase in real prices and inflation to ensure that the negative consequences of these impacts are overcome. The legal regulation of these issues in the general context rests primarily with the provisions of the Labor Code of the Russian Federation and is disclosed in the following articles of this regulatory document:

Art.22. This article establishes the main responsibilities of the employer. Among them, there is no direct indication of the need to increase the employee’s real wages, however, the direct responsibility of the employer and the obligation to comply with the provisions of labor legislation are established.
Art.46. The provisions of this article regulate the structure of the collective agreement between employees and employers, in particular, they require mandatory indication in the current collective agreement of information on measures and methods for ensuring a real increase in workers’ salaries.
Article 130. The standards set out in it touch upon the issues of providing workers with certain social guarantees in connection with their work activities, and also establish direct types of guarantees in matters of wages, which include salary increases.
Art. 134. It is this article that clearly regulates the obligation of employers to ensure wage indexation in 2019 and other time periods, also entrusting the possibility of legal regulation of the work of public sector employees and civil servants to individual legislative acts.

The Labor Code of the Russian Federation does not directly provide for a direct indication of the obligation of indexation for non-budgetary organizations. However, clarifications from various government bodies and court decisions, including the Constitutional Court of the Russian Federation, establish that employers, regardless of their form of ownership and organizational and legal structure, are obliged to index wages. The only exception in this matter applies to public sector employees, for whom this procedure may be influenced by certain federal laws and other regulations.

It should be remembered that wage indexation can be carried out in various ways and based on various indicators. However, in any case, employers must implement salary increases by one means or another.

Direct indexation of wages is in no way connected with the minimum wage, however, legislative standards allow employers to use this particular indicator when calculating indexation. But it is also necessary to remember that, regardless of the indexation indicator, the salary of workers in 2019 should be no less than the minimum wage established for this year. Accordingly, when the minimum wage increases, all workers who previously received a salary less than its level should increase the amount of funds they receive.

Wage indexation in 2019 for government agencies and budget organizations

Public sector workers and civil servants often rely on the provisions of individual departmental documents in matters of wages. At the same time, due to the consequences of the economic crisis, in accordance with the provisions of Federal Law No. 68 of 04/06/2015, indexation of civil servants’ wages has not been carried out in recent years. However, as of January 1, 2019, the moratorium on increasing salaries of public sector employees ended. Therefore, the indexation of civil servants’ wages in 2019 was carried out from January 1, 2019. At the same time, the size of the salary increase for public sector employees and civil servants was tied to the inflation index and amounted to 4%.

It should be remembered that from January 1, 2019, a new minimum wage has been in effect in Russia. At the same time, regardless of the organization or institution where a citizen of the Russian Federation or a foreigner works, his salary cannot be lower than the minimum wage, which means the size of the real increase in wages may ultimately significantly exceed the indexation indicators of 4% for many employees of budgetary institutions.

In total, more than 2 million state employees and civil servants are subject to salary indexation in 2019, so the lifting of the moratorium was very good news for many. Especially for those categories that were not included in the previous, selective indexation of salaries, which affected only certain categories of civil servants and budget workers. The 2019 indexation, in contrast, affected all workers without exception.

Wage indexation in 2019 for commercial and non-profit organizations

The biggest questions for employers and ordinary employees are the indexation of wages in 2019 for non-budgetary business entities. First of all, this is ensured by the rather extensive requirements of Article 134 of the Labor Code of the Russian Federation, which assumes that the procedure for indexing and increasing salaries of employees in non-budgetary organizations is established by labor contracts, a collective agreement, or local regulations of the enterprise. Based on this, some employers, HR specialists and accountants believe that indexation is a right and not an obligation of the employer, but this is not the case.

The following documents may provide clarification on this issue:

Determination of the Constitutional Court No. 2618-O dated November 19, 2015.
Letter of Rostrud No. 1073-6-1 dated 04/19/2010.
Letter of Rostrud No. 14-3/B-1135 dated December 26, 2017.

All of them, as well as a number of other explanatory and informative acts, indicate that workers have an inalienable right to an increase in the real level of wages.

However, it should also be noted that the employer also has certain freedoms in matters of salary indexation. In particular, he independently sets the period for indexation, the methodology by which its volume will be calculated and the method of calculation. For the lack of indexation, employers face liability, and if it is discovered that wages remain at the same level, employees have the right to file complaints with the labor inspectorate.

It should be noted that government bodies also consider it mandatory for employers to have local regulations that would regulate the procedure for indexing employee salaries. Only micro-enterprises are exempt from such obligations - they can replace any local regulations by indicating the necessary information directly in employment contracts with employees.

How to calculate salary indexation for a non-budgetary organization in 2019

As mentioned earlier, the employer himself has the right to determine the procedure for indexing employee salaries. At the same time, he can indicate information about indexation both in local regulations and in a collective agreement or contract, or directly in the text of employment contracts with employees. In addition, he has the right to establish various periods for indexation, which may be:

One year. This period is the maximum during which wage indexation may not be carried out in commercial organizations. That is, this procedure should be carried out at least once a year. Considering the procedural nature of indexation, the most logical action on the part of the employer would be to initiate this procedure in the last month of the year.
Six months. The employer has the right to index salaries every six months. This allows you to diversify the dynamics of the enterprise’s expenses and increase the motivation of employees, as well as ensure a stable increase in the well-being of employees.
Quarter. Indexation of wages in commercial organizations in 2019 every quarter is also a common practice among Russian employers.
Month. This is the minimum period in relation to which indexation of workers’ salaries can be carried out, since it is the monthly indicators of consumer price growth that are published by official institutions. In addition, frequent indexation of wages will require excessive personnel costs and increase the procedural burden both on the enterprise itself and on its employees.

The mechanisms by which indexing is carried out may also differ. In particular, employers have the right to establish indexation of employee salaries based on the following indicators:

Minimum wage. Linking indexation to changes in the minimum wage or subsistence level, which become identical from January 1, 2019, is allowed for Russian employers. In this case, indexation is carried out in accordance with the proportional change in the minimum wage each time this indicator changes or in a otherwise determined period, but at least once a year, and provided that the total amount of indexation is not lower than the consumer price growth index.
Inflation rate. The employer has the right to base the indexation of employee salaries on the inflation rates forecast for the next reporting period. However, the key requirement in this matter is the fact that, regardless of inflation, the indexation amount cannot be lower than the consumer price growth index.
Consumer price growth index. In 2017, this figure was 4%; accordingly, in 2019, salaries should be indexed by at least this percentage. It should be remembered that this indicator is key in determining whether an employer complies or fails to comply with legal requirements.

Since employee salaries, which include a large number of different incomes, are subject to indexation, the employer has the right to choose which components of the salary will be indexed. The main requirement in this case is only the correspondence of the general increase in workers' earnings to the consumer price index. In addition, the employer has the right to index salaries according to other indicators, as well as with other percentages and amounts of increases, provided that they are not lower than the established requirements of the legislator.

The employer has the right to use incentive payments for indexation - if at the end of the year the actual salary and tariff rate were not increased, but the required increase in the salary of each employee was ensured in accordance with the standards through bonuses and other incentive payments, then the employer cannot be held liable.

The procedure for indexing wages at an enterprise in 2019

Indexing employee salaries in 2019 requires the employer to follow a fairly strict procedure. In this case, it is necessary to take into account the mandatory nature of a number of procedural procedures and the presence of certain internal documents. So, the procedure for indexing wages at an enterprise in 2019 may look like this:

The employer establishes regulations according to which wage indexation can be carried out in 2019 or on an ongoing basis. Most often, such a normative act is the provision on wage indexation.
Since wages are mandatory information recorded in the employment contract, an additional agreement must be concluded with each employee that changes the content of the employment contract.
Upon an increase in wages, the employer issues a corresponding order. The text of the order may indicate either a general list of employees whose salaries will be increased, or it may be possible to draw up an order for each employee separately.
The staffing table in force at the enterprise is subject to appropriate changes related to changes in employee salaries.
If the enterprise previously had other regulations in force regulating indexation or simply the size of workers' wages, appropriate changes must also be made to them.

Responsibility for non-indexation of wages in 2019

If the employer does not timely index wages, he may be held administratively liable for these actions. This responsibility is considered by the provisions of Article 5.27 of the Code of Administrative Offenses of the Russian Federation. Thus, this article implies the imposition of a fine in the amount of 1 to 5 thousand rubles for the managers of an enterprise or individual entrepreneurs or others responsible for establishing the procedure for calculating salaries of persons, and from 30 to 50 thousand rubles for direct business entities with the status of a legal entity .

If the employer has actually provided wage indexation through bonuses, salary increases and tariff rates, but does not have local regulations regulating the procedure for its provision, the only measure taken against him may be an order from the labor inspectorate on the mandatory implementation of these local documents.

It should be noted that in situations where wages were not indexed and the employee went to court, a decision may also be made to recover in favor of the employee the lost income and additional compensation. However, judicial practice on this issue is ambiguous and has examples of exempting the employer from such payments.

In addition, in judicial practice on issues of failure to index wages, employers are also held accountable for tax evasion, since failure to carry out indexation reduces the salary of employees in comparison with the required one and, accordingly, reduces the volume of mandatory tax deductions.

An employee's salary is subject to indexation, that is, an increase in accordance with the rising cost of living. What will be the specifics of the procedure in public and private enterprises, the general procedure, as well as which payments are subject to it and which are not. How salary indexation is carried out: calculation of coefficients and payments.

As Article 134 of the Labor Code states, employers should increase wages along with the rise in consumer prices. This is called indexing. Letter of Rostrud No. 1073-6-1 indicates that the regulations of the employing organization must establish the procedure for its implementation, which each such organization is free to establish independently.

And although the legislation clearly indicates that indexation is mandatory, it does not provide specific instructions on how often the procedure should be carried out, or how to calculate the amount of indexation. Thus, this is left to employers, which allows unscrupulous management not to take this norm into account and not carry out indexation for 2-3 years in a row.

The absence of a unified regulation gives rise to many ambiguities and conflicts between employers and employees or regulatory authorities. In particular, the following questions often arise:

What should be indexed – only , or also the variable?
How often should indexing be carried out?
How should it be legally formalized?
What indicators should be taken as a basis when calculating its size?

As for the latter, if you rely on , it is worth considering price increases as the best guideline. In addition to it, indicators such as inflation and the cost of living for the working population can be used as a criterion for indexation. Both federal and regional indicators can be taken.

Indexing Features

In budgetary organizations

In them, salaries are indexed according to the orders of government bodies. Thus, in 2017, indexation is simply not carried out, however, starting from January 1, 2018, it will be carried out at a rate of 4%. In general, the Federal Law “On the State Civil Service of the Russian Federation” states that it should be carried out annually, and the inflation rate is taken as a basis.

In commercial organizations

Wage indexation, as already noted, is not regulated very clearly; in particular, the Labor Code does this only in general terms. Therefore, in a commercial organization, the employer himself determines how often it should be performed (but if this is done less than once a year, then he may have problems), and what indicators to tie it to. The main nuances of indexation should be determined by the internal regulations of the enterprise.

If there are no mechanisms for indexing at the enterprise, and as a result it is not carried out, this is a violation of the law and should entail fines.

Employees have the right, within three months from the moment the violation was discovered, to file a lawsuit and demand indexation and payment of the amounts that the organization underpaid them.

Sometimes the management of commercial organizations assures their employees that indexation is carried out only for those who work at state-owned enterprises. This is incorrect, and if a company does not have a clearly regulated indexation procedure, then this is considered a violation of labor laws. According to Article 5.27 of the Code of Administrative Offenses, the following fines are imposed: for an official or private entrepreneur - 1,000-5,000 rubles, for a legal entity - 30,000-50,000 rubles. In addition, if a violation of the law has already been recorded in a company, it will be checked more often in the future.

Implementation procedure

It must be set out in a document that guides the enterprise when carrying out indexation. When it is carried out for the first time, a corresponding normative act is adopted. Employees must review the document and sign to confirm this.

If an employee is just being hired, then he must be familiarized with the indexation document immediately so that he has an idea of the procedure for its implementation. The Employment Agreement also records information about it, and when wages change, the corresponding changes in it are recorded in an additional agreement.

That is, the order of indexing will be as follows:

A local act is adopted indicating the conditions for its implementation, or amendments are made to an existing one.
Employees are familiarized with this document.
The manager issues an order to carry out indexation.
Staff are also familiarized with it.
The staffing table, to which changes have been made, is approved.
An additional agreement is added with instructions on changes in wages.

There are two main methods of indexation; it can be either retrospective, that is, taking into account the rise in prices or inflation over the past period, or expected, that is, carried out in advance, taking into account the expected rise in prices.

Which payments are indexed and which are not?

It is necessary to index only the constant part of the salary - that is, the salary or tariff rate. But the obligation to index additional payments, such as food and financial assistance, is not imposed on the employer.

Various ones are often tied to wages and are paid as a percentage of it, that is, they change along with it, which does not require separate calculations.

However, those that are indicated in regulatory documents in the format of exact numbers will not be indexed. Therefore, it is advisable to carry out indexation separately for such payments, also including them in the document according to which it is carried out.

It is worth noting an important point: employers sometimes believe that if they increase employee wages, then indexation is not necessary. But this is not true, since salary increases and indexation are carried out in different ways and have different goals: the salary can be increased for one employee or part of it, for some it can be increased by 10%, for others by 30%, and so on. Here, everything depends solely on the will of the employer and his considerations regarding the need for this or that employee for the company. That is, the salary increase is intended to interest the employee in continuing to work for the company and benefit it. Indexation is needed to bring the wages of all employees in accordance with changes in consumer prices over the period and maintain their quality of life at the same level. Therefore, it provides for a simultaneous increase in wages by the same percentage for all employees of the enterprise.

How to calculate the indexation coefficient?

The calculation will depend on the parameter to which it is linked. Minimum indexation usually corresponds to the level of core inflation and is carried out either quarterly or semi-annually.

Let us give an example of wage indexation carried out at the end of the quarter for the second quarter of 2017. Inflation in April was 0.33%, in May 0.37%, and in June 0.61%. If the employee’s salary was 35,000 rubles, then for April it should be 100.33% of this amount, that is, 35,000 x 1.0033 = 35,115.5 rubles. For May 35,115.5 x 1.0037 = 35,245.43 rubles. For June 35,245.43 x 1.0061 = 35,460.42 rubles.

As a result, wages should rise by a little more than 460 rubles. It is worth noting that inflation in 2017 is low, and at the end of the year it will probably be in the range of 2–2.5%, but if calculated for some previous years, when it was 4–5 times higher, the figures would be significantly more impressive .

This is retrospective indexation, now we will give an example of what is expected: for example, the consumer price index from the Federal Statistics Service is used for calculation. Thus, the forecast for 2017 was 3.2%, which means that the expected indexation should have been carried out as follows: at the end of 2016, perform a recalculation and, if the employee’s salary was the same 35,000 rubles, raise it by 3.2%: 35 000 x 1.032 = 36,120 would be wages from the beginning of 2017.

An important nuance is taking into account indexing in . If it was carried out during the billing period, then all payments should be increased in accordance with the conversion factor. So, if wages are raised by 3.2% from the previous example, then the conversion factor will be the same (1.032). All payments made during the billing period must be adjusted to the indexed one. This means that if the calculation period included 6 months of 2016 and six months of 2017, then the coefficient should be applied to those relating to 2016.

The concept of indexation of remuneration for labor activities

The one hundred and thirty-fourth article of the Labor Code contains information on the rules for indexing. According to this document, state-owned enterprises, private entrepreneurs and legal entities are required to increase wage rates due to rising consumer prices. Based on this, we can say that wage indexation is a planned increase in wages due to an increase in the value of consumer services and goods.

It is important to note that the article in question does not contain information regarding the procedure for carrying out the indexation procedure and the regulations governing the timing of such operations. According to the resolution of the Ministry of Labor, each employer is obliged to independently establish the procedure for carrying out this procedure. The introduced procedure must be recorded in the company’s internal documents.

Why is indexing needed?

Inflation has a negative impact on the consumer market, which leads to an increase in prices for various products and services. That is why workers' wages should increase along with rising inflation. It is important to note that indexation does not always coincide with the inflation rate, however, most employers focus on this value during the procedure.

Since the one hundred thirty-fourth article of the Labor Code of the Russian Federation does not contain information about the procedure and frequency of the procedure, each employer is given the opportunity to independently set indexation periods. At the same time, the employer does not need to index wages based on publications of statistical bodies. The main requirement of the law is the establishment of working conditions that do not violate the position of the employee in comparison with the conditions established by law. This means that the procedure in question should be carried out with a nationwide increase in prices.

The basis for the indexation procedure may be federal or regional inflation, as well as an increase in the cost of living. In addition, in some cases there is a need to carry out the procedure when there is a regional increase in the cost of consumer goods and services.

Wage indexation for public sector employees is carried out according to the rules of labor legislation

Documents regulating the procedure

In the case when the procedure in question is carried out for the first time, the employer should prepare a collective agreement or an internal act. After this, all employees must familiarize themselves with the contents of the document. A mandatory requirement for internal regulations and collective agreements is the signature of each employee.

Indexation is carried out after the preparation of the corresponding order from the company management.

In the case where the enterprise operates on the basis of an industry agreement, the employer will need to take indexation into account when setting the wage rate.

The procedure for indexing wages has a clear sequence:

Creation of an internal document (normative act or collective agreement) regulating the conditions of the procedure.
If there is an existing document, additional edits are made.
Next, each employee must read the contents of the document and sign.
After this, a decree is issued by the company’s management to carry out indexation.
Next, each employee must read the order.
Then, the new staffing table with the amendments made is approved.
At the end of the procedure, amendments are made to the employment contract regarding changes in the rules of remuneration for labor activities.

Subtleties and nuances of the process

Internal documents of the company containing information about indexation must disclose information about the procedure. For this purpose, the manager should prepare an appropriate order containing all the necessary data. Each employee carrying out his labor activity on the territory of the organization must be familiar with the contents of the above documents without fail.

In the case when a new employee is hired, it is recommended to familiarize yourself with the Regulations before signing the employment agreement. It is important to note that familiarization with this document does not always mean the employee’s consent to change the terms of the employment agreement regarding the amount of salary. In order to avoid possible conflicts between the company's management and employees, the employer should indicate the indexing procedure on the pages of the employment contract. Since the procedure under consideration implies a change in employment agreements, an additional agreement must be concluded between the employer and the employee.

Indexation - increasing wages taking into account rising prices for products and services

Since the procedure for this operation is fixed on the pages of the employment agreement, the company’s management does not have the right to change this document unilaterally. If new rules are established, each employee must give his written consent to the change in salary.

How to calculate salary indexation

Wage indexation should be based on core inflation, information about which is provided by Rosstat. This information is freely available. Since there are no clear regulations governing the frequency of such operations, the procedure can be carried out once every six months or every quarter.

in March – 101.8%;
in June – 101.6%;
in September – 102%.

Calculations can be made based on both salary and daily rate. Let’s say an employee’s salary is 28 thousand rubles. As a result of indexation, the salary looks like this:

From 1.04.2017— 28,000*101.8%=28,504 rubles.
From 1.06.2017– 28,000*101.6%=28,448 rubles.
From 1.09.2017 – 28,000*102%= 28,560 rubles.

From 1.04.2017— 2,000*101.8%=2,036 rubles.
From 1.06.2017– 2,000*101.6%=2,032 rubles.
From 1.09.2017– 2,000*102%= 2,040 rubles.

It is important to note that carrying out the procedure in question is one of the main responsibilities of every employer. It should also be said that employees of the accounting department must index vacation pay. In order to calculate the required amount or amount of compensation for unused vacation, the method of dividing the total salary by 12 is used. The result obtained must be divided by the average number of calendar days, which is 29.3.

It should be mentioned that during such operations, additional payments in the form of food or travel are not taken into account.

Wage indexation is an increase in the nominal amount of wages taking into account the inflationary growth in the cost of consumer goods and services over a period of time

Tax payments

According to the established procedure, it is necessary to fix the rules for calculating employee wages in the internal acts of the organization. It can be carried out both at the expense of the current costs of the enterprise, and at the expense of retained income in recent years. The tax consequences of indexation depend on the payroll method.

In the case where employee salaries are included in current costs, income tax increases in accordance with indexation. In the second situation, these production costs are not taken into account. It should also be said that the methodology for indexing labor remuneration does not affect the amount of insurance premiums. This rule is enshrined in article number two hundred and twelve of the Federal Law of the Russian Federation.

It is important to pay attention to the fact that according to article two hundred and eight of the Tax Code of the Russian Federation, indexation additional payments are included in wages and are subject to personal income tax. This means that thirteen percent is withheld from employees' salaries and transferred to the tax office.

Consequences of refusing surgery

In the event that the employer refuses to index wages, the employee has the right to appeal to the state labor inspectorate, guided by the three hundred and fifty-third article of the Labor Code. In addition, you can protect your interests by going to court. If you contact the labor inspectorate, the employer will face an inspection from the regulatory authorities.

The need for indexation is determined by the loss of purchasing power of workers

So, what is the essence of the law on wage indexation? At the first stage, regulatory authorities will check the company’s internal documents, which should contain information about the procedure for indexing. In the event that this information is missing, then, on the basis of the fifth article of the Code of Administrative Offences, sanctions will be imposed on the enterprise. The fine for individual entrepreneurs varies from 1,000 to 5,000 rubles. For legal entities, the fine ranges from 30,000 to 50,000 rubles. In addition, regulatory authorities can suspend the activities of the enterprise for ninety days.

In the case where information about the transaction is reflected in the company’s internal documents, but no increase in wages has been made, the inspection authorities fill out an order to pay the missing amount to the employee. In this situation, the employer will need to pay interest taking into account each day of delay.

When the company's management does not agree with the decision of the regulatory authorities, they are given the right to appeal the actions of the inspector through the court.

In contact with

One of the most pressing questions for employers, accounting staff and employees is what wage indexation is and how to carry it out in public and commercial companies. Everyone also needs to remember that these actions can be carried out in various ways and methods. In addition, it is important not to forget about the sanctions measures applied to organizations that do not carry out indexing.

What is wage indexation?

It is the responsibility of each employer to carry out indexation in accordance with the requirements of Article 134 of the Russian Labor Code. This norm states that in commercial and budgetary organizations it is mandatory to increase the level of labor income due to increased prices for various goods and services for citizens.

According to letter No. 1073-6-1, issued by Rostrud on April 19, 2010, despite the absence of instructions in the Labor Code on the mechanism for carrying out the indexation procedure and the timing, it must be implemented in every company. In addition, it must be enshrined in the company’s local regulations or regulations on wage indexation.

Legal basis for indexing

After considering the question of what wage indexation is, you should study the regulatory framework governing this issue. In the field of labor relations, the legislation of the Russian Federation ensures the protection of workers' rights in practice through various means.

One of the options for implementing this principle is the indexation of workers' wages. The absence of this mechanism in the organization contributes to the deterioration of the standard of living of employees due to the discrepancy between the level of earnings and the prices for various services and goods for citizens.

The topic is mostly covered in the Russian Labor Code.

The standards governing the issue include the following:

Article 22, which lists the basic requirements for the employer in relation to employees. Despite the absence of a direct instruction to increase real wages, this provision contains reference to the employer's responsibility for non-compliance with the provisions of labor legislation.
Article 46, which regulates the structure of various collective agreements and agreements between employers and employees. One of the features of this norm is an indication of the mandatory inclusion in established acts of information on methods and measures to ensure a real increase in the level of labor income of employees.
Article 130 reveals the standards affecting the implementation of social guarantees established by law in relation to employees that are related to the performance of their labor duties. This norm also establishes specific types and types of guarantees in the field of remuneration, including indexation.
Article 134 establishes the direct obligation of the employer to carry out indexation this year and for previous periods of time, assigning the right to issue relevant acts in relation to employees of the budgetary and public sector to certain entities.

Features of indexing for various companies

The Labor Code does not indicate the direct obligation of the employer to index wages to employees in the non-budgetary sphere. At the same time, there are clarifications from some government bodies and court decisions (for example, clarifications from the Russian Constitutional Court).

According to these explanations, the employer, regardless of the form of ownership and organizational and legal structure of his organization, must increase the level of labor income of employees depending on the increase in prices for various services and goods for citizens. An exception in this matter is the presence of various federal laws or other legal acts affecting the sphere of labor of specialists in the public sector.

It is important to remember that salary indexation in an organization can be carried out using different methods based on certain indicators. Regardless of the options used, the procedure for increasing income must be carried out without fail.

The increase in the maximum level of labor income is not directly related to the minimum wage. At the same time, labor legislation gives employers the right to use this indicator when calculating wage indexation.

It is necessary to remember the following: regardless of which indicator is used by the employer, the wages of employees should not be lower than the minimum wage level in the corresponding region in the specified year. If the minimum wage increases, the minimum wage must increase proportionately.

Indexation of labor income in 2018 for budgetary and government organizations and institutions

Issues of indexation of wages for public sector employees are mainly regulated by the provisions of individual departmental documents. Due to the consequences of the economic crisis, on April 6, 2015, Federal Law No. 68 was issued, according to which the labor income of civil servants was not indexed until 2018.

This moratorium has been lifted since this year. The wage indexation coefficient this year for civil service employees was four percent. Since a new minimum wage has been in force in the Russian Federation since May 2018, and before that the minimum indicator was increased less than six months ago, for specialists in the public sector the four percent indicator may be increased.

The indexation of labor income this year affects more than two million specialists in the public sector and public service. According to the latest news about wage indexation, the lifting of the moratorium has had a positive impact on a huge number of employees in these areas. This especially affected the financial situation of those who were not included in the previous increase in labor income.

Wage indexation in commercial organizations in 2018

The largest number of questions arises from those employers and employees who work in the non-budgetary economic sphere. Based on the fact that Article 134 of the Russian Labor Code determines that the procedure for indexing and increasing the amount of labor income must be fixed in the company’s local regulations or relevant provisions, employers consider increasing the amount of labor income not an obligation, but a right.

Explanations on the need to carry out the wage indexation procedure and calculate its amounts are contained in the following regulations:

Determination No. 26188-O, issued by the Constitutional Court on November 19, 2015.
Letter No. 1073-6-1, issued by Rostrud on April 19, 2010.
Letter No. 14-3/B-1135, issued by Rostrud on December 26, 2017.

Separate instructions are also contained in other informative and explanatory acts, which confirms the inalienable right to indexation of employee salaries.

Employer's rights in the field of indexation

The employer is endowed with not only responsibilities, but also rights in the field of indexing the labor income of employees. First of all, this lies in the ability to independently determine which points will be contained in the wage indexation regulations, which should be developed in each organization.

In addition, the employer himself determines the frequency of increasing payments to employees, as well as methods and methods for calculating the amount of required expenses from the company’s budget. If the head of the company does not index the wages of employees, he faces prosecution.

Despite the responsibilities of various organizations to develop indexing regulations, the legislation contains an exception to this rule. For example, microenterprises have the right not to issue established acts, but to include clauses on increasing the amount of labor income in labor agreements with employees.

Due to the fact that employees’ income includes many elements, the employer has the right to independently determine for which element of income to index wages. In commercial organizations and public sector institutions, the main requirement is a general increase in employee income, regardless of which component of the salary was increased.

The legislation also gives employers the right to index incentive payments. That is, the salary and tariff rate at the end of the calendar year remained unchanged, but the level of wages increased due to bonuses and other incentive payments.

Rules for calculating the indexation of salaries of employees in the extra-budgetary sector in 2018

Since the employer himself establishes the procedure for indexing the labor income of employees, he also has the right to choose the forms of securing this obligation in various regulatory acts (regulations, local regulations, collective agreement or employment contract).

Also in the Russian Federation, wage indexation is carried out according to periods established by the employer. There are four options for choosing the period during which an increase in employee labor income occurs.

Annually. According to legal norms, this is the maximum period that can be used in an organization for not carrying out the indexation procedure in commercial companies. Most often, employers initiate indexation of employee labor income in December of the current year.
Semiannually. This period allows the employer to make the growth of the organization’s expenses smoother, increase the level of motivation among employees and ensure a stable and uniform increase in the well-being of employees.
Quarterly. This method is the most common option among managers of Russian companies.
Monthly. This period is the minimum period for carrying out the indexation procedure. This is due to the fact that it is the monthly indicators of consumer price growth that are published by official institutions. Frequent indexing increases the procedural burden on the organization and its employees.

Indexing Mechanisms

Mechanisms for indexing differ according to the following indicators:

The amount of the minimum wage for labor (MROT). The legislation of the Russian Federation gives employers the right to “link” the indexation of employees’ labor income to changes in the size of the subsistence minimum or minimum wage. This is due to the fact that since May of this year these indicators have been identical. If this indicator is used, indexation is carried out in direct proportion to the change in the minimum wage. Changes to the salary amount can be made simultaneously with an increase in the established indicator or in a different order. In this case, the maximum period for making changes is no more than one year, and the total amount of indexation carried out should not be lower than the index of increase in prices for consumer goods and services.
Inflation rate. Employers are also given the right to base their indexation of workers' labor income on the price growth forecast for the coming year. Despite the possibility of using this indicator, the employer must ensure that the level of indexation is not lower than the coefficient of increase in prices for consumer goods and services.
Consumer price increase index. The latest wage indexation should have been carried out by at least four percent due to the fact that this corresponds to the index of increase in prices for goods and services for citizens. Even if another indicator is used to calculate the size of the increase in workers' labor income, the price index is considered key to determining whether an employer is complying with or violating labor laws.

The procedure for indexing in organizations

Carrying out wage indexation measures in a commercial or budget organization requires the head of the company to strictly adhere to a certain procedure. The employer also needs to take into account the mandatory nature of certain procedural procedures and the availability of important documents (internal).

This year, actions to index the labor income of employees in the company are carried out as follows:

The employer is developing local regulations in accordance with which the procedure for indexing the labor income of employees will be carried out in a specific year or on an ongoing basis. The most common form of local acts is a provision in which all actions within the framework of indexing are described in detail.
Concluding an additional agreement on changes in the employee’s salary. This point is due to the fact that the labor income of employees is mandatory information, which is recorded in the employment contract of each employee. Therefore, any changes regarding wages must also be documented by both parties.
Issuance of an order to increase the amount of labor income of employees. Based on the fact of a salary increase, it is necessary to draw up a document that will reflect the subjects of the increase and its size. It is allowed to issue a general order for all employees, as well as separate papers for each of them.
Making appropriate changes to the staffing table that is in effect in the organization. Changes are made only to items relating to the amount of labor income of employees.
Making appropriate changes to the local regulatory acts previously in force in the organization, which regulate the amount of labor income or the rules for its indexation.

Responsibility for violating indexing rules

If the head of an organization does not index wages (sample below), he may be held administratively liable for such actions. Sanctions for relevant violations are provided for in Article 5.27 of the Russian Code of Administrative Offences.

The article says that for violation of labor legislation, the employer may be subject to penalties in the range of five thousand rubles (directly to the manager or to the employee responsible for establishing the rules and the procedure for calculating and issuing wages) or in the amount of thirty to fifty thousand rubles (for an organization that has the status of a legal entity).

If the employer actually ensured the procedure for indexing the labor income of employees in the absence of local regulatory acts that regulate the procedure for its implementation, a more lenient sanction will be applied to him. In this case, the labor inspectorate has the right to issue an order for the mandatory preparation of the specified local document.

In addition to administrative liability, the employer may be held civilly liable if the indexation of labor income was not carried out and the employee went to court. In this case, a decision may be made to recover in favor of the employee the lost portion of the income, as well as an additional compensation payment. The second part of the penalty is voluntary and, according to judicial practice, is used quite rarely.

Also in matters of indexation, the employer is held liable for evading the transfer of taxes to the treasury due to the failure to carry out the indexation procedure. This is due to the fact that as the employee’s labor income increases, tax deductions from his salary also increase. Accordingly, refusal to increase wages entails an illegal reduction of the tax base.

It is important for employers and their employees to clearly understand what wage indexation is, how often it should be carried out and in what amount. Knowledge and compliance with the relevant regulations will help the employer avoid liability, and the employee will receive the proper salary.