Revised Average Pay Calculation Procedure.

30.11.2009

Legal Update No. 90.

Goltsblat BLP advises that Resolution No. 916 of the Government of the Russian Federation dated 11 November 2009 “On Amendments to Clause 16 of the Resolution on Average Pay Calculation Specifics” came into effect on 26 November 2009.

The Resolution modifies the rules for calculating the average pay rise in the event of a step-up in tariff or pay rates. The modifications cover all types of emolument based on the average pay (holiday pay, unused holiday compensation, etc.), apart from allowances and benefits.

Previously, an increase in tariff and pay rates entailed one in the average pay by a coefficient based on both the old and the new tariff/pay rates.
The new rules state that if, in the event of a step-up in tariff or pay (salary) rates or monetary rewards within an entity (branch, business unit), the list of monthly compensations paid over and above the tariff/pay (salary) rates or monetary rewards and (or) their amounts also change, the average pay shall be scaled up by the ratio of the newly-established tariff/pay (salary) rates and monetary rewards to those previously in effect.

Calculation of the average pay rise coefficient thus requires that the tariff/pay rate, as well as other monthly employee compensations, be taken into consideration. All the increased monthly emoluments, both newly-established and previous ones, should thus be taken into account.

This change will prevent employers from evading average pay rises when employees are allocated new monthly bonuses or other compensations in addition to their tariff or pay rates during the settlement period. The revised procedure might also effectively increase the average pay rise ratio and, consequently, the average pay itself when monthly bonuses or other compensations are accrued for an employee over and above the increased tariff or pay rate during the settlement period.

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