“Bypassing” salary indexation: how to save time and money. Salary indexation

indexation, salary, consumer price index This is the official clarification provided in .

What did we ask the Ministry of Social Policy? “Is it possible to get rid of the need for salary indexation in the following cases:

1) if you increase the official salaries of employees once every 3 months, and the amount of the salary increase exceeds the amount of possible indexation;

2) if the increase in official salaries is carried out before the right to indexation occurs, and the amount of the increase in official salary will be, for example, 1 UAH?”

IN letter of the Ministry of Social Policy dated April 29, 2016 No. 234/10/136-16officials did not give direct answers to the questions posed, but merely duplicated the norms of the well-known clause 5 of Order No. 1078 *. At the same time, as alternative option instead of indexing offered use the mechanism increase in income workers in a proactive way taking into account forecast inflation level. In other words, indicated the possibility of replacement indexation for an “advanced” increase in income. What kind of mechanism is this? Should an employer use it? Let's figure it out ourselves.

“Advanced-predictive” path: is it necessary?

The main regulatory guide here is para. 8 - 10 p. 5 of Order No. 1078. An example of calculating indexation amounts for the “advanced” option is given in Appendix 5 to that Ok.

For clarity, below we have presented sparse regulatory requirements clause 5 Order No. 1078 for the “advanced” method:

In addition to the “indexing” option, Also in June 2016 an option with the following advance of income is possible, For example, on amount 70 UAH Then the total income for such a month will be 2070 UAH. (2000 + 70). Increase of 70 UAH. is accrued to the employee monthly until the next time the indexation threshold is exceeded simultaneously with the excess of the calculated indexation amount. Let’s say that in July 2016 we started calculating the CPI on an accrual basis. With a coefficient of 4.9% and PMTL of 1450 UAH. the indexation amount will already be equal to 71.05 UAH. (1450 UAH x 4.9%). In the month in which we apply such a coefficient (a month after the excess), we already need to return to indexation at 71.05 UAH. or raise wages again “ahead of the curve.” Let's sum it up result according to the “advanced-forecasting” method.

Conclusions:

- “Advanced” way to increase income - right(not the obligation) of the employer.

Have to control amounts monthly possible indexing.

In conditions of deflation or low inflation, the employer incurs more expenses, because the amount of the “advanced” increase must be paid from the 1st month and paid constantly.

Avoid by raising salaries

Norms para. 1 - 7 p. 5 of Order No. 1078 installed for indexing in the usual way. An example of calculating indexation amounts for general cases is given in Appendix 4 to this Order. To avoid indexation charges, there are two simple ways to increase official salaries:

1) we increase when the right to indexation arises;

2) we increase after 1 month by 1 hryvnia (before the right to indexation begins).

Let's analyze the attractiveness of each of them.

1st method - we increase the salary when the right to indexation occurs. As we already know, the right to indexation depends both on the monthly inflation indices published by the State Statistics Service and on the result of multiplying these indices on an accrual basis. Moreover, we begin to multiply from the month following the month of the last salary increase. It is the increase in salary, and not any other component of the salary, that matters. In the month of salary increase, the right to indexation is reviewed.

In which shortest term can this happen? When to increase salaries? We answer - at least 1 time every 3 months.

It all depends on which month the index will exceed 103% (new indexation threshold from 01/01/2016). Of course, if inflation is slight or even deflation, then you can raise salaries once every six months. This happened in the first half of 2016 for those workers whose salaries were last increased between November 2015 and March 2016. The right to current indexation after such an increase came only in June 2016.

Table 2. Right to indexing

As we see from table. 2 if latest salary increase was in March 2016, then already in June 2016(after 2 months on the 3rd) occurs right to indexation using the coefficient 3,5 % .

If you decide to increase your salaries in June 2016 to get rid of indexing,important to remember: when the right to indexation occurs the main rule here is ( para. 4 clause 5 of Order No. 1078) -promotion official salary must exceed amount possible indexing.

Example 2. The employee's salary in May 2016 was 2423.64 UAH, including the indexation amount - 423.64 UAH, determined in March 2016 (the last increase in salary by 100 UAH - from 1900 to 2000 UAH). In March 2016, indexation was calculated as the difference (from the previous base January 2015): 523.64 UAH. (1378 UAH x 38%) - 100 UAH. = 423.64 UAH. The employee has no allowances or additional payments, and no monthly bonuses are provided.

In June 2016, the employee has a total possible indexation amount of 474.39 UAH, consisting of:

Indexation amounts (current) from the base March 2016 in the amount of 50.75 UAH. (1450 UAH x 3.5%);

Indexation amounts (as a difference) in the amount of 423.64 UAH. (paid from March 2016).

To do not index salaries in June 2016, based on the conditions of our example salary in June 2016 should increase by no less than 475 UAH.(an amount exceeding the proper indexation for June 2016). The employee's salary for June 2016 will consist of a salary of 2,475 UAH. New basic month for the employee will be June 2016.

If the salary increase is less than the required indexation, then the total amount of possible indexation will decrease by the “missing” amount. For example, the owner decided to increase the employee’s salary in June 2016 by 200 UAH. Then the amount of indexation due for accrual in June 2016 will be reduced by the same amount. At the same time, June 2016 will also become the new base month. However, under such conditions, in June 2016 the employee’s salary was UAH 2,474.39. will consist of:

Salary - 2200 UAH. (2000 + 200);

Indexation (defined as the difference) - 274.39 UAH. (474.39 - 200).

If a decision is made in the next month (July 2016) to increase salaries by 200 UAH, then for a fully worked month the employee will receive the same salary in the amount of 2474.39 UAH, but consisting of:

Salary - 2400 UAH. (2200 + 200);

Indexation (defined as the difference) - 74.39 UAH. (274.39 - 200).

2nd method - we increase the salary before the right to indexation begins: 1 hryvnia will work. Increasing official salaries will also help get rid of salary indexation using this method, but this procedure must be done more often - before the right to indexation occurs.

If the employee has any no indexing(the right to the current one has not yet arrived and there is no saved fixed one (as a difference)), then the salary increase V like this month (before there was law) will eliminate the need for salary indexation. Please note: no restrictions according to the amount of salary increase in this case not installed.So the amount salary increase can be, for example, 1 UAH

As we can see, this method will allow the employer to significantly save money, because the salary should not be increased by an amount exceeding the possible indexation, but only by a “penny” - 1 UAH. and wherein avoid indexing completely.

Let's demonstrate this using the original conditions of our example 2.

Example 3. Let’s take the conditions of our example 2 as a basis and continue: the employer in June 2016 increased the employee’s salary from 2000 to 2475 UAH. and avoided indexation in such a month. June 2016 became the employee's base month.

To avoid further indexing in conditions of high inflation, enough after 1 month raise salaries by 1 UAH. and repeat it regularly every 1 month.

With the next salary increase by 1 UAH. (from 2475 to 2476 UAH) in August 2016 (will be basic), then by 1 UAH. (from 2476 to 2477 UAH) in October 2016 (the next basic one), etc. We are completely “moving away” from salary indexation by legal means.

As you can see, for this economical option, we will need to increase salaries (rates) in any of the two intermediate months in which indexation = 0. That is, without waiting for the month in which the right to indexation occurs, increase salaries by 1 UAH. This will bring economic benefits to the employer: there is no need to calculate and compare, and there is “no hassle” with calculating indexation.

For clarity, we have provided a convenient comparative analysis of the salary burden for the employer according to options for calculating indexation or “avoiding” it by legal means.

Example 4. The employee’s base month was September 2015 (the last time salaries were increased, a fixed indexation amount was not established for the employee). The salary consists only of salary (allowances, additional payments and bonuses are not paid). How much should the salary be increased so as not to index it?

Table 3. Salary burden during salary indexation and when “leaving” it

After analyzing the table, there is no doubt - by correctly increasing official salaries, you can not only avoid the headache of calculating indexation, but also reduce salary costs.

Based on Article 134 of the Labor Code of the Russian Federation, wage indexation must be carried out in all organizations without exception.

Its obligatory nature is beyond doubt. Although unscrupulous managers ignore this legislative norm and do not increase people’s wages for several years in a row.

Inconsistent indexing

Salary indexation is the responsibility of companies by law, but there is still no uniform regulation for its implementation.

The ambiguity of the issue gives rise to many disputes leading to conflict situations between employee and employer, employer and regulatory authorities.

Due to the lack of a unified regulation for its implementation, the indexing mechanism is unclear:

• What exactly should be indexed: the constant component of the salary or the variable part too?
• What should be the frequency of indexing?
• What indicators should be taken to calculate the indexation coefficient?
• How to legally formalize such an increase in earnings?

Only one thing is clear, that indexation must be carried out mandatory for all employees of the organization without exception.

Differences between salary increases and salary indexation

Many employers mistakenly believe that if they annually increase salaries at the enterprise, then there is no need to index wages.

The fact is that increasing salaries and indexing earnings are two different things. After all, the salary can be increased for one or all employees. Some will receive an increase of 10% of their salary, while others will receive a 50% increase. When the salary is increased, an order is issued, a new staffing table is approved, and additional agreements to employment contracts are signed. The purpose of increasing the salary is to interest a specific employee in further cooperation.

The purpose of wage indexation is to bring workers’ earnings into line with current consumer prices and thereby, at a minimum, maintain their quality of life at the same level.

Wage indexation, in contrast to salary increases, is carried out at the same time for all employees by the same factor.

Due to the lack of a unified procedure, we recommend that in order to comply with labor legislation, all organizations adopt an internal document regulating the procedure for indexing wages. This will protect companies from trouble in the event of an audit of compliance with labor law standards and will allow performers to have a clear understanding of its procedure.

Points that a local regulatory act on indexing should contain:

1. Frequency of salary indexation: monthly, quarterly, every six months, annually. It is not advisable to carry out indexation once a month or quarter, since this is a very labor-intensive process, especially in enterprises with a large staff. It is important that indexation is carried out at least once a year, for example, annually from January 1.

1. Indexation level. Due to the uncertainty of the issue, it is permissible to link this coefficient:

• to the consumer qualification index for a specific period in the region where the company is located or in Russia as a whole;
• to the officially recognized federal or regional inflation level;
• to increase the national or regional subsistence level for the working population;
• to an increase in the minimum wage in the whole country or region.

If none of these indicators are satisfactory, then there is no indication anywhere that it is impossible to establish a specific coefficient by which wages will be regularly indexed.

It is important that a document regulating the indexation of earnings be developed and approved and its requirements be fulfilled unquestioningly.

What components of earnings need to be indexed?

To carry out mandatory indexation of wages, it is enough to index its constant part - salary, tariff rate, piece rate. In most companies, all other parts of earnings - allowances, bonuses, as a rule, are tied as a percentage to the constant component. Therefore, their increase will naturally lead to an increase in everything else.

But you need to take into account that if at an enterprise, allowances and bonuses are fixed in labor, collective agreements or in the Regulations on remuneration in a specific figure, then their indexation in this case will not entail the indexation of allowances and bonuses. And then the indexation of earnings will be partial. Therefore, it cannot be assumed that due to rising consumer prices, workers did not lose wages.

Therefore, in organizations in which the payment of allowances and bonuses is made in fixed amounts, it is advisable to include them in the local regulatory document on earnings indexation in order to carry out full indexation.

Dependence of wages on the selected indexation coefficient

When choosing a coefficient on the basis of which the organization will periodically adjust employee wages, it is necessary to first calculate what workers will be able to receive for their work in the end.

Example #1. Options for calculating salary indexation

Let's consider how an employee's earnings will change in 2016 at Alpha LLC compared to 2015, provided he meets all planned targets and does not violate the work schedule. For clarity, we summarize the calculation results in the table below.

In 2015, Ivanov received a salary of 30,000 rubles. Every month he receives a bonus of 15% for fulfilling the plan and 5% for the absence of violations of labor regulations.

Let's calculate the salary for various salary indexation coefficients (options 1-3).

Salary recalculation takes place annually on January 1, his salary is indexed to the level: (click to expand)

• Option 1: Minimum wage set for the new year compared to last year.
• Option 2: at the officially planned inflation rate for the next year
• Option 3: by the earnings indexation coefficient established in the organization -1.05.

Ivanov’s earnings in 2015, taking into account allowances, will amount to 36,000 rubles.

Calculation according to Option No. 1

The minimum wage in the Russian Federation in 2015 was 5,965 rubles. For 2016 it is set at 6204 rubles.

Therefore, the coefficient of increase in earnings depending on the increase in the minimum wage will be:

6204 / 5965 = 1,04

Ivanov’s earnings in 2016 under option 1 will increase by 4%:

36000 x 1.04 = 37440 rubles

Calculation according to Option No. 2

For 2016, the authorities have set an inflation rate of 6.4%. Earnings will also increase by this percentage:

36000 x 1.064 = 38304 rubles

Calculation according to Option No. 3

In 2016, earnings according to the 3rd option will be:

36000 x 1.05 = 37800 rubles

The example clearly shows that the level of wage indexation directly depends on the chosen indexation indicator.

Dependence of the amount of wages on the chosen indexation coefficient and the adopted method of material incentives for workers

Employee incentives can be made either as a percentage of salary, tariff rate or piece rate, or be a constant value.

Example #2. Calculation of salary indexation with bonuses and allowances

Let's consider a situation where Ivanov is not given monthly bonuses as a percentage of his salary, but is paid a fixed bonus of 6,000 rubles for the same indicators. And we will accept that only salaries are indexed at the enterprise. We will leave all other data unchanged.

The result of the event is shown in the table below. (click to expand)

From this example it is obvious that with this method of bonuses and indexation of only salaries, workers seriously lose in earnings.

Choosing an indexation coefficient as a way to protect workers' rights

We looked at only 2 examples. In fact, there are many options. The conclusion suggests itself. The level of indexation depends on the specific parameters prescribed in the Regulations on remuneration and material incentives, and in the regulatory act on indexation of earnings.

The team of any enterprise has the opportunity to influence the level of indexation through the remuneration system and its indexation indicator.

The employer can direct its responsibility in the direction it needs to go, increasing the interest of employees and reducing staff turnover.

Even a high official salary can be significantly reduced due to inflation. To prevent this from happening, the state provides for a calculation. This mechanism should work due to the fact that goods included in the consumer basket (necessary for normal human existence) become more expensive. The law obliges the employer to carry out salary indexation on time - this mitigates the consequences of inflation for employees. Calculating salary indexation is not a mercy of the employer towards employees, it is his responsibility. In case of evasion, the head of the organization may be brought to court.

Types of indexing

There are two types of wage indexation:

• Retrospective. Salaries are indexed after increasing prices for goods.
• Warning. Salaries are indexed based on forecasts of future price increases.

Who has the right to recalculation

In some cases, management tries to mislead employees by assuring that all inflation indexations are due only to employees of budgetary organizations. This is not true. The law obliges all organizations and associations operating on the territory of the Russian Federation to recalculate salaries taking into account inflation. The only difference is that in commercial structures the procedure for indexing wages is prescribed in both the collective and employment contracts. This means that the heads of private organizations themselves choose the order and procedure for carrying out indexation; the law requires only the fact of implementation.

What are the dangers of non-indexing?

The head of an organization who ignores the legal requirement for indexing cash payments to employees will be...

The fine may vary:

• A person holding a leadership position will pay a fine of 1,000 to 5,000 rubles.
• A small entrepreneur (not a legal entity) will suffer losses in the amount of up to 5,000 rubles (Article 5.27 of the Administrative Code).
• A manager who has the status of a legal entity will be fined 30,000 - 50,000 rubles.

There is no criminal liability for violators, but the amount of fines is quite sensitive. A company found to have committed such violations will be subject to more frequent inspections and close attention from regulatory authorities. So it is easier for the employer to monitor how wage indexation is calculated for the company’s employees and whether this happens on time.

Let's summarize

• When calculating wage indexation, the amount of financial assistance to the employee is not taken into account.
• When indexing the salary of one employee, the salaries of absolutely all employees must be indexed.

Indexed wages will not completely cover the increased prices for essential goods. Indexation is intended to slightly soften the gap between the funds received and the ability of people to live on them.

I think it’s no secret to anyone that prices for goods and services in Ukraine and throughout the rest of the world are constantly changing. Such changes are caused by many different factors, so they occur continuously. Commodity prices may rise and may fall. When goods and services become cheaper, this is, of course, very good, because for the salary that a person receives monthly, he can buy more. When prices rise (in an unstable economy or crisis, such an increase can be very significant), this is very, very bad, because the purchasing power of an ordinary citizen decreases and he needs to reduce his expenses.

In order to maintain the purchasing power of citizens in the face of rising prices for goods and services, there is an indexation of cash income. The essence is to increase the nominal income of citizens depending on the increase in the consumer price index or inflation index. The Consumer Price Index is the main indicator on which the indexation mechanism is based. We, as accountants, are primarily interested in wage indexation, which we will talk about in this article.

The article will consist of two parts. The first part is theoretical, which will present the main regulations governing indexation issues and the main points of this issue, which are determined by the regulatory framework. The second part is practical, it will cover the methodology for wage indexation, and the calculation of indexation coefficients will be examined in great detail and broken down. A couple of useful links will also be provided, which will greatly facilitate salary indexation.

The main regulatory documents defining the concept of indexation of cash income and the mechanism for its implementation are:

Law of Ukraine “On Indexation of Cash Income of the Population” N 1282-XII, 07/03/1991 - defines the concept, objects, grounds, sources of financing of indexation. This law is very general, but it is the main (in its legal force) normative document on this topic.

“The procedure for indexing the monetary income of the population,” approved by Resolution of the Cabinet of Ministers of July 17, 2003 N 1078, determines the mechanism for carrying out indexation.

Of course, there are also numerous letters from the Ministry of Labor and Social Policy of Ukraine, in which it provides explanations regarding the application of certain provisions of Law No. 1282 and Order No. 1078, and we will talk about them later.

Who should carry out wage indexation?

Clause 1 of the Procedure determines the circle of business entities that must carry out indexation. These include enterprises, institutions and organizations, regardless of the form of ownership and management, as well as individuals using hired labor.
So, wage indexation should be carried out by all employers without exception, regardless of the form of ownership and business, be it an enterprise - a legal entity or a private entrepreneur - an individual.

When and in what cases should indexing be carried out?

P.1.1. The order shows that indexation must be carried out in the case when the value of the consumer price index has exceeded the indexation threshold, which is set at 101%.
Indexation is carried out from the first day of the month following the month in which the consumer price index is officially published. It is calculated by Goskomstat and published in periodicals no later than the 10th day of the month following the reporting month.

So, if in August it is exceeded, then wages for October are subject to indexation according to the index for August. Because the consumer price index for August is published before September 10th.

Which incomes are indexed and which are not, and from what sources?

According to clause 2 of the Procedure and article 2 of the Law subject to indexation:
— Pensions;

— Scholarships;

— Remuneration (monetary security);

— Monetary support for military personnel;

— Amounts of payments made in accordance with the legislation on compulsory state social insurance;

— Amounts of compensation for harm caused to an employee by injury or other damage to health, as well as amounts paid to persons entitled to compensation for harm in the event of the loss of a breadwinner.

Not subject to indexing:

— Income from leasing property, from shares and other securities, from running a peasant (farm) and personal subsidiary plot, entrepreneurial activity, which is a source of cash income from property for citizens;

— Payment for the first five days of temporary disability at the expense of the employer, temporary disability benefits as those that are taken into account when calculating average earnings;

— One-time payment of unemployment assistance for organizing business activities for the unemployed, one-time assistance in the event of permanent loss of professional ability to work or death of a victim due to an industrial accident or occupational disease;

These tables are very easy to use. You just need to decide on the base month. We look at the cell with the base month and see that the indexation coefficient is ready there.

Using the indexing calculator is even easier than using tables. All you have to do is enter the base month and salary. After clicking the magic button, the calculator will calculate all the necessary coefficients for you.

Conclusions . Of course, you don’t have to bother and don’t even understand the methodology for calculating indexation coefficients that were given in the previous sections of the article. You can simply use ready-made tables and calculators. That's usually what everyone does. However, in my opinion, it is necessary to know how odds are calculated.