Discussion in the State Duma on proposed method for determining the national average wage
On June 7, Russian President Vladimir Putin signed a law aimed at protecting employees from unjustified reductions in bonuses in case of disciplinary action. The amendments, which will come into force on September 1, 2025, mark a significant shift in the Labor Code of Russia.
Starting next year, Russia changes the method for calculating average earnings to include not only base wages but also various bonuses and incentive payments. This expanded calculation method makes the average earnings figure more comprehensive, reflecting total employee compensation more accurately.
The impact of this change on employee bonuses and severance pay is substantial. Bonuses that were not previously considered as part of the average earnings calculation will now be included. This can increase the average earnings baseline used for calculating various payments. As a result, severance pay and other compensations tied to average earnings will likely increase since they are often based on average monthly earnings. Including bonuses raises the base figure, potentially leading to higher payouts on termination or other benefit calculations.
However, the rules for calculating average earnings will remain the same in most cases. For calculating paid leave and compensation for unused leave, the current method of dividing the total salary for the calculation period by 12 and by the average monthly number of calendar days (29.3) will continue to be used.
In case of disciplinary infractions, employers can only reduce an employee's bonus for that month. This new rule aims to provide employees with a degree of financial security, ensuring that the reduction in bonus does not result in a decrease of more than 20% of the employee's monthly salary.
The new rule for calculating severance pay will be calculated by multiplying the average daily earnings by the average number of working days in a month. A separate rule for calculating average earnings for severance pay will be introduced from September 1.
The decree introducing these changes was signed by Russian Prime Minister Mikhail Mishustin on April 24, 2025. The changes are in the form of changes to Article 135 of the TК. Employers will now be required to clearly outline their bonus systems in employment contracts, agreements, and local regulations.
These changes are part of Russia's ongoing efforts to protect employees and ensure fair compensation practices. The new version of the regulations on the peculiarities of calculating average earnings will be in effect until September 1, 2031.
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