Author: Yuzhalin Alexander, consultant to Valentina Mitrofanova’s group of companies, leading specialist in the field of labor legislation and personnel records management.
Financial liability is one of the consequences of an employer’s violation of an employee’s rights. It involves the need for the employer to pay certain monetary compensation. However, the difference between financial liability, for example, and administrative liability is that such payment (compensation) must be made in favor of the employee.
We have already decided that the recipient of monetary compensation paid by the employer within the limits of his financial responsibility is the employee. Now it is necessary to decide in what cases the employer may be liable.
Responsibility of the employer for refusal to execute a court decision on reinstatement at work
The employer is obliged to pay wages to the employee if they are not received due to refusal to comply with a court decision to reinstate the employee to work.
If the employer delays the execution of such a decision, the body that made the decision makes a determination to pay the employee the average salary or difference in earnings for the entire time of delay in execution of the decision (Article 396 of the Labor Code of the Russian Federation).
The employer makes these payments taking into account interest (monetary compensation) in accordance with the requirements of Art. 236 Labor Code of the Russian Federation. the employee also has the right to demand payment of amounts in connection with their depreciation due to inflationary processes.
ATTENTION! Methods of collecting compensation from an employer for delayed payment of wages.
Article 5.27 of the Code of Administrative Offenses of the Russian Federation
The changes didn't stop there.
On July 3, 2021, Federal Law No. 272-FZ “On amendments to certain legislative acts of the Russian Federation on increasing the liability of employers for violations of legislation regarding wages” was adopted. The law will come into force on October 3. It amends Article 5.27 of the Code of Administrative Offenses of the Russian Federation, supplementing it with paragraphs 6 and 7 as follows:
6. Failure to pay or incomplete payment on time of wages, other payments, ..., or setting wages in an amount less than the amount provided for by labor legislation - entails a warning or the imposition of ... a fine on officials of 10,000 to 20,000 rubles;
7. The commission of an administrative offense provided for in Part 6 ... by a person who was previously subjected to administrative punishment for a similar offense ... entails the imposition of an administrative fine
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Thus, administrative liability for violation of deadlines for payment of wages and other amounts in favor of employees is allocated separately.
Responsibility of the employer for the delay in issuing a work book
The employer's financial liability to the employee arises in the event of a delay in issuing a work book, as well as the entry into the work book of an incorrect or non-compliant wording of the reason for the employee's dismissal.
On the day of dismissal of an employee, the employer is obliged to issue the employee a work book , as well as pay all wages and other payments due to the employee.
The employer is released from liability when he sent the employee a notice that the employee should appear for a work book.
Such notice must be sent within 3 days from the date of dismissal of the employee.
Other important points on this issue
Collection of this amount is usually made in the form of deduction from the wages of the person who caused this harm.
Damage is also recovered in that situation, if it is very large, more than the average monthly salary of the employee.
But the employer, if he himself considers it necessary, and if the subordinate has agreed to pay compensation voluntarily, has the right not to go to court.
In other cases, the manager can file a claim in court. And no later than within a year after discovery of the fact of causing harm.
Employer's liability for damage caused to employee's property
In the process of labor relations, situations are possible when the employer causes damage to the employee’s property.
In such cases, the employer must fully compensate for the damage caused.
Damage can be compensated in kind, but only with the consent of the employee. Damage can also be compensated in cash.
The amount of damage is calculated at market prices in force in the area on the day of compensation.
The employer's financial liability to the employee arises for damage caused to the employee's property that was used in the course of the employee's labor activity or in connection with the performance of his labor function.
The employer is liable only if guilt is proven. The employer will have to prove the absence of his fault.
The employee, in turn, will be required to prove the amount of damage caused to him as a result of the actions (inaction) of the employer.
The legislation does not indicate for which employee property the employer is liable.
As a rule, this is the property that is in the organization with the knowledge and consent of the employer.
For example, an employee uses his car to transport goods for the organization.
The employer is responsible for the safety of the vehicle while the vehicle is in the organization's fleet.
In what cases is compensation for moral damage to an employee required?
There are no restrictions in the Labor Code regarding compensation for moral damage caused. That is, in this case, we are not talking about the recovery of monetary damages from the employee, but, on the contrary, about the need to compensate a certain amount of material resources from the employer.
For this reason, the court has the right to satisfy the employee’s request to compensate him for moral damage. If, of course, he proves unlawful actions or criminal inaction of the employer. Unlawful actions may include, for example:
- constant involvement of the employee in overtime work;
- constant salary delay;
- non-payment of bonuses, if the moment of these, so to speak, incentive payments is prescribed in the company’s work schedule;
- and other similar cases.
The most important condition for recovery is the proven fact of the employer’s guilt. The exact amount collected is calculated by the court. Many factors are taken into account. For example, the employee’s health status, his individual characteristics, etc. It is important to remember that moral damage to an employee can only be non-material. Otherwise he ceases to be moral. This rule applies despite the fact that it is collected in monetary terms. If we talk about material damage, which any employee of the organization who caused it is obliged to compensate the employer, different rules apply here.
Delay of salaries and other payments
The employer's liability for delays in wages and other payments due to the employee is provided for in Art. 236 TK. Financial liability in this case is of a compensatory nature, that is, the employer must compensate the employee in cash for each overdue day when paying wages.
Liability also arises in relation to the employer’s overdue obligations in terms of payment of vacation pay, sick leave, maternity benefits, child benefits, compensation for unused leave upon dismissal, and other incentive and compensatory payments that are provided for in the employment contract or local regulations.
The employer's financial liability implies that he is not only obliged to repay the debt to employees, but also to pay them compensation. Its size is calculated as 1/300 of the refinancing rate for each day of delay. This percentage is applied to the amount of debt the employer owes to employees.
The payment day itself is not included in the calculations: compensation begins to be calculated from the day that follows the established salary payment day. The settlement day itself is not taken into account when determining the amount of compensation.
The timing of payment of salaries to employees must be specified in the employment or collective agreement or internal regulations. The absence of this information is equivalent to a violation of labor laws. Salaries must be paid strictly twice a month. For missing an advance payment, the employer must also pay compensation to the employee. The time interval between the advance payment and the final payment should not exceed 15 days. In this case, the final payment must occur on any date in the first half of the month, but no later than the 15th day of the month following the settlement month.
The employer must strictly adhere to the established deadlines for paying wages so that he does not have to pay penalties. He does not have the right to indicate a time frame in local documentation, for example, the advance payment is transferred before the 25th or in the period from the 21st to the 25th.
Payment of wages and compensation for unused vacation upon dismissal is made on the employee’s last working day.
Coverage of losses incurred by employees may be provided for in the provisions of a collective agreement, local regulation or employment contract. At the same time, the employer has the right to establish compensation exclusively in an increased amount in relation to the value contained in the Labor Code. That is, it should be more than 1/300 of the refinancing rate.
The employer's liability for late payment of wages occurs regardless of the presence or absence of his fault in this. Thus, he must compensate employees for expenses, even if they received their salaries late due to software failures.
Where can an employee apply for compensation?
Initially, an employee to whom the employer must pay compensation for damage caused must submit this claim to the employer. The procedure for contacting may be contained in internal documentation. In particular, the procedure for compensation of losses, the amount and timing of payments may be prescribed here.
If the employer refuses to voluntarily pay compensation, the employee may seek protection of his interests:
- to the labor inspectorate;
- to the prosecutor's office;
- to court.
Damage from the inability to perform labor functions
If an employer dismisses an employee without proper grounds, the employee may receive compensation for the earnings that were not paid to him due to his inability to work.
The circumstances for an employee’s forced failure to perform labor functions and deprivation of his due earnings are given in Art. 234 TK. Restrictions on the implementation of labor functions by an employee according to the specified legal norm may be due to:
- Removal of a person from work , his dismissal or transfer to another job.
- Issuance of a work book to an employee with a delay.
- Registration of the dismissal of an employee with errors (for example, the grounds for dismissal or the date of termination of the employment contract were incorrectly indicated). As a result of committing such offenses, the employee loses the opportunity to find employment and receive income.
- Failure to comply with the decision of the competent authorities to reinstate the employee at work or delay in this procedure.
It is worth considering that these methods of depriving an employee of an objective opportunity to work are not exhaustive. An employee may apply for compensation from an employer in other situations.
The fact that the employer’s actions are illegal must be established by the competent authorities. In particular, the court must recognize the existence of damage to the employee associated with the inability to work when considering a claim from the employee.
