"Downtime" Clarified By Ministry Of Labor
An employer must provide staff with work stipulated by the employment contract (Art. 22 of the Labor Code). Article 157 of the Labor Code requires that the employer give the employee downtime in the absence of work. The temporary suspension of work for economic, technical, or organizational reasons is understood as downtime in labor legislation (Art. 72.2 of the Labor Code). Downtime can be issued by the employer, by staff, or by conditions outside either’s control.
Compensation for downtime will depend on why the suspension occurred. If it was issued by the employer, then payment is no less than 2/3 the average weekly salary of the employee. But if it is not due to the employer or the employee, then the rate will be no less than 2/3 the employee’s official hourly rate, calculated in proportion to lost time.
In Resolution #40 “Concerning Unpaid Leave at the Initiative of the Employer” from June 27, 1996 the Ministry of Labor explains that if an employer does not repay the lost time, then staff can appeal to the grievance committee or the court.
Leave Must Be Consensual
Article 128 of the Labor Code covers unpaid leave. It can be granted to an employee for family circumstances or other valid reasons. An employee must submit an application for leave. Employers are not allowed to force employees on unpaid vacations because there is no work for the employee as defined in the labor contract. Forced administrative leave is a violation of labor law. Article 5.27 of the Code concerning infractions provides an administrative fine at the rate of:
- 1,000 to 5,000 rubles for company officials;
- 30,000 to 50,000 rubles (or forced closure of the business for up to 90 days) for legal entities.
For repeated violations company officials can lose their professional qualification (be blacklisted from their positions) for one to three years.
Compensation to employees for downtime are valid expenses for tax purposes.
Personal Income Tax And Insurance Contributions
Employee pay for downtime is considered income and subject to Personal Income Tax (Point 1, Article 209 and Point 1, Article 210 of the Tax Code).
Regarding contributions to non-budgetary funds, the repayment of downtime is liable to insurance contributions.
Translated by Alinga Consulting Group.
About Alinga Consulting Group
Audit and Taxation Legal Accounting and Payroll
Questions? Ask Alinga's Experts!
It appears that 2/3 of the employee’s average weekly earnings and 2/3 of the basic hourly rate of the salary is identical, if the employee’s salary does not change during the course of the year. However, if an employee’s salary increases, then the average salary will be smaller than the actual salary. The level of discrepancy depends on how much the employee’s salary changed during the past 12 months.