Insurance contributions for severance pay in case of layoff. What is redundancy severance pay and is it subject to insurance contributions? Is the reduction benefit subject to contributions?

Namely:

Severance pay, as specified in Art. 178 of the Labor Code of the Russian Federation, is assigned to the person being laid off in the amount of 1 average monthly salary:

1. Upon dismissal.
2. If during the month following the layoff the former employee was not officially employed, then he is entitled to the average earnings for the current month.
3. If during the next third month the employee has not found a job, then the entrepreneur also undertakes to pay him another average salary, but for this, the dismissed person must register with the employment center no later than two weeks after the calculation, because in order to receive the payment he will need present a document from this authority.

Because the benefits for the next 2 months are paid only if the person was not officially employed, then such payments are not made on the day of calculation, but are paid at the enterprise where the employee previously worked, on the days when wages were paid in this structure.

If the organization is liquidated, then the body by whose decision this structure was liquidated is obliged to ensure the payment of average earnings, or must designate a successor who will be obliged to pay the amount of severance pay in full.

Is income tax withheld?

In paragraph 3 of Art. 217 of the Tax Code of the Russian Federation it is noted that any compensation payments related to the reduction or dismissal of employees, within the limits established by the legislation of the Russian Federation, are not subject to personal income tax. This article includes severance pay for those dismissed due to layoffs, retained average earnings for the months after the date of calculation, as well as compensation for cancellation of an employment contract earlier than the established period, which are not subject to taxation.

Compensation for part of unused vacation, as well as wages for those actually worked in the month of calculation of output, are subject to mandatory taxation.

This payment must be transferred to the budget on the day the funds are credited to the taxpayer on his account, i.e. on the day of termination of his employment relationship (clause 2 of article 226 of the Tax Code of the Russian Federation).

Compensation payments assigned to employees in connection with dismissal are not subject to personal income tax if their amount does not exceed three monthly earnings, and for enterprises located in the Far North or in regions equivalent to them, the amount of this benefit should not exceed six times the average earnings.

There are several possible interpretations of clause 3 of Art. 217 Tax Code of the Russian Federation. According to the Ministry of Finance of Russia (Letter of the Ministry of Finance of the Russian Federation No. 03-04-05/26273 dated July 8, 2013), compensation payments upon dismissal should include compensation for early termination of employment agreements, since such payment is guaranteed. Thus, if an employee was laid off and his contract was terminated early, and after dismissal he was not officially employed for another three months, then he is credited with four average monthly earnings (for early termination, upon dismissal, and the next 2 months after the calculation date).

Is personal income tax taken from severance pay? The Ministry of Finance believes that the last payment (compensation for the last month after calculation) must be subject to personal income tax. However, there is another interpretation.

In the Komi Republic, the Supreme Court, in its Ruling No. 33-1663 of May 10, 2012, states that compensation for breaking an employment contract earlier is not specified in paragraph 3 of Art. 217 and this payment should not be combined with severance pay in case of layoff. And all accrued amounts, both for early termination and all severance payments, should not be subject to personal income tax.

However, it is worth considering that if you agree with this opinion, then this may lead to litigation.

There are also certain peculiarities in calculating severance pay for workers dismissed due to layoffs and employed in seasonal work.

For this type of work, upon dismissal due to the end of work, payment is not provided for the average monthly benefit, but the average earnings for only two weeks.

In addition, the law does not stipulate for seasonal work the payment of compensation for the subsequent months after layoffs, if the laid-off worker has not found an official job. In this case, the two-week allowance is also not subject to personal income tax, since this is also a compensation payment upon termination of the employment relationship.

There are a number of other nuances when calculating the amount of severance pay. certain categories of citizens. For example, if this reduction affected a civil servant, then by law he is required to pay three average monthly earnings at once when calculating. In this case, the main thing to take into account is that only three averages are not taxed, and personal income tax should be taken from amounts in excess of the specified norm.

Sometimes the collective agreement may stipulate a different amount of severance pay. For example, the collective agreement states that when calculating the employee should be paid not a monthly allowance, but two months.

It turns out that, if you refer to the letter from the Ministry of Finance, then if an employee was fired early due to redundancy and he has not found a job for another three months, then not only the third salary should be taxed, but also the second one, because upon dismissal he received two average and compensation for early termination of the contract.

What insurance premiums are charged and in what cases?

According to Chapter 34 of the Tax Code of the Russian Federation, all payments that are guaranteed to an employee in connection with a layoff are included in the subject of taxation by all insurance contributions. Although the contributions themselves should not be calculated in all cases. The calculation of mandatory contributions during a reduction is similar to the collection of personal income tax.

The salary accrued to a redundant employee in the month of his dismissal must be subject to insurance contributions to the Pension Fund, Federal Compulsory Medical Insurance Fund, Federal Social Insurance Fund of the Russian Federation and contributions in case of injury.

Also, compensation for the employee’s unused vacation days will also be withheld by these authorities. Naturally, we should not forget about the maximum size of the base for calculating insurance premiums, which is prescribed in paragraphs 3, 6 of Art. 421 Tax Code of the Russian Federation.

If these accruals exceed the figure for the current year, then for taxation it is necessary to take only the maximum base for taxation of contributions.

Its size from January 1, 2017 is 755,000.00 rubles. From January 1, 2018, the amount will be 815,000.00 rubles.

Until January 1, 2015 all compensation payments for layoffs and layoffs were not subject to insurance premiums at all.

After the Letter of the Ministry of Labor of the Russian Federation dated September 24, 2014 N 17-3/B-449 came into force, Such payments upon reduction began to be subject to income tax: Only those amounts that do not exceed three times the average earnings or six times the average earnings for enterprises in the Far North and its regions are exempt from mandatory payments.

Contributions will be subject to the same amounts that were subject to taxation.

There are some peculiarities when taxing severance pay at additional rates. Pay attention to the calculation of insurance pension contributions at such rates for an employee who is dismissed due to staff reduction, but he was employed in work that gives him the right to early retirement.

The object and basis for calculating contributions to the Pension Fund remained the same, wages for work worked in the month of reduction are subject to pension insurance contributions, and any compensation payments are not subject to the withholding of additional contribution amounts at all.

Conclusion

If an employer needs to dismiss an employee due to a reduction in staff or numbers, one should be extremely careful, since failure to comply with payment deadlines, incorrect calculation of the amount of benefits, the amount of personal income tax or insurance contributions entails the responsibility of the entrepreneur himself before the legislation of the Russian Federation.

The Labor Code of the Russian Federation provides for several cases when, upon dismissal, an employee must be paid not only wages and salaries, but also additional payments.

For example, upon liquidation of an organization, as well as upon reduction of the number or staff of a company (clause 1.2 of Article 81 of the Labor Code of the Russian Federation), the employee is paid severance pay in the amount of average monthly earnings, and for the period of employment - as a general rule, no more than 2 months from day of dismissal - his average monthly earnings are retained (Article 178 of the Labor Code of the Russian Federation).

In addition to legally established cases, the payment of severance pay may be provided for by an employment or collective agreement, a local regulatory act of the organization, as well as a separate agreement with the employee (Articles 178, 181 of the Labor Code of the Russian Federation).

As a consequence, the question arises: is severance pay subject to insurance contributions to the Pension Fund, Federal Compulsory Medical Insurance Fund and Social Insurance Fund, including “for injuries”?

The procedure for calculating insurance premiums from severance pay

Severance pay, as well as other compensation (except for ) paid to a dismissed employee, are subject to contributions when their amount exceeds a certain limit (subclause “d”, paragraph 2, part 1, article 9 of the Law of July 24, 2009 No. 212-FZ , paragraph 2 clause 1 article 20.2 of the Law of July 24, 1998 No. 125-FZ). Limits for different categories of employees are shown in the table below.

Note that similar rules apply regarding the taxation of severance pay upon dismissal with personal income tax: the tax is calculated on amounts exceeding the above limits (

When initiating a staff reduction procedure, managers undertake not only to make full payments for unpaid work time and unused vacations, but also to pay severance pay to dismissed employees. For some categories of employees, increased payments are provided, which everyone should know about.

Features of dismissal due to staff reduction

All important nuances of termination of employment contracts are indicated in the Labor Code of the Russian Federation:

How is dismissal due to staff reduction formalized?

In most cases, the decision to reduce the number of employees is made to optimize the enterprise budget. The procedure itself is carried out as follows:

1. A commission is convened to make a decision on the need for reduction, selects the employees who fall under it, and draws up a corresponding act.
2. The manager issues an order and written notices to each of his subordinates, introduces them to the documents against signature.
3. The employer notifies the Employment Center and the Trade Union of the upcoming layoff.
4. After 2 months, those who have refused vacant positions and cannot be left due to the lack of the right to advantage over other employees are dismissed.

How to create a notification?

The employer is required to notify all employees who are planned to be dismissed two months before the due date. This is done by serving a notice. It must contain the following information:

• Name of the company, date of compilation.
• Registration number.
• A heading followed by a description of the essence and a list of available vacancies.
• Signature of the manager and the employee to whom it was given.

“By examining judicial practice, we can come to the conclusion that most employers make a mistake when laying off employees - they do not offer their dismissed subordinates vacancies in writing. In the future, employees will be able to appeal the termination of employment agreements in court, so it is very important to include a list of unfilled vacancies in the notification,” says A.N. Moskal, expert in the field of labor and family law.

How is a layoff order issued?

There is no unified form of the order, but it must necessarily include the following:

• Name of the employing organization.
• Date of registration.
• The essence and reasons why the reduction is made.
• Information about positions and employees being reduced.
• Who is responsible for the ongoing personnel event.
• Director's signature.

Who can't be fired due to redundancy?

In addition to the persons specified in Art. 179 of the Labor Code of the Russian Federation, job security is guaranteed to the following categories of employees who cannot be dismissed in connection with organizational measures (Article 261 of the Labor Code of the Russian Federation):

• Pregnant women.
• Workers raising children under 3 years of age.
• Single mothers and fathers with dependent children under 14 years of age or disabled people under 18 years of age.
• Persons who are the only able-bodied persons in a family where there is a child under 3 years of age or three minor dependents.

What benefits are employees entitled to?

All payments to a subordinate during layoff are divided into two types: basic and additional. In the first case, it involves the transfer of wages and compensation for vacations not taken, and in the second - severance pay.

With payments to workers in the Far North, things are a little different:

Is the benefit subject to personal income tax and insurance premiums?

According to Art. 217 of the Tax Code of the Russian Federation, severance payments transferred as a result of staff reduction are not subject to taxation. Accordingly, tax cannot be withheld, but employees’ income will still have to be reflected in the declaration.

As for insurance premiums, they are also not paid if the amount of the benefit does not exceed three times the average salary, and for citizens located in the northern regions - the average salary for six months.

If the amount of payments exceeds the above limits, insurance premiums will have to be paid for each employee.

Income tax

Based on clause 9 of Art. 255 of the Tax Code of the Russian Federation, all benefits, regardless of the reason for the dismissal of employees, are subject to inclusion in the expense item.

Most common mistakes

Mistake #1. The benefit paid by agreement of the parties is subject to taxes and insurance contributions.

No, such payments are not subject to taxation.

Mistake #2. You can dismiss an employee early if he has verbal consent.

No, all decisions must be confirmed in writing. For example:

Abramov R.E. was laid off, the date of dismissal in the order and notification is 10/01/2017. He was warned 2 months in advance. A few days after receiving the notification, Abramov R.E. decided to quit early and brought a statement to the employer. He signed it and issued the order, and also made all payments.

FAQ

Question No. 1. How is the amount of severance pay for redundancy calculated?

The calculation formula is very simple: average daily earnings x number of days in the month following the date of termination of the employment contract.

Question No. 2. Is it possible to resign before the expiration of the two-month notice period at your own request?

Yes, you can, but in this case the employee will lose the right to receive severance pay. He will only be paid his salary and vacation pay if he has not used it before.

Conclusion

Having decided to reduce the number of employees at the enterprise, employers are obliged to pay not only wages for the time worked to each of them, but also payment of severance pay. If their size does not exceed the amount established by law, they will not be subject to taxes and insurance premiums, so employees will receive the maximum possible amount of money.

The formula by which you can calculate personal income tax during a reduction: from the full amount of your salary for the last month, you need to calculate non-taxable income and multiply by the tax rate. The resulting amount must be rounded. If the last digit is up to five, then to a lower value; if the number is larger, then to a higher value.

1. All wages before reduction.
2. Compensation for unused vacation. It applies only when the employee’s length of service at a particular enterprise exceeds six months.
3. Compensation is due if the employee is not notified of the layoff in due time.
4. Prizes for good work or other merits are possible.

What is severance pay for staff reduction and is it subject to insurance contributions?

There are some peculiarities when taxing severance pay at additional rates. Pay attention to the calculation of insurance pension contributions at such rates for an employee who is dismissed due to staff reduction, but he was employed in work that gives him the right to early retirement.

Compensation payments assigned to employees in connection with dismissal are not subject to personal income tax if their amount does not exceed three monthly earnings, and for enterprises located in the Far North or in regions equivalent to them, the amount of this benefit should not exceed six times the average earnings.

Is severance pay subject to insurance premiums in case of staff reduction? Is personal income tax withheld?

The fact is that the law establishes only the minimum amount of severance pay, and its maximum amount is determined by the above-mentioned collective agreement. This figure could be anything. Is income tax withheld from severance pay upon redundancy?

1. The company from which the person was fired is undergoing liquidation proceedings.
2. The employee was fired only due to special measures to reduce the number or staff of employees.
3. The dismissed person decided to refuse the planned transfer due to illness or due to the organization moving to a new location.
4. The employee was unexpectedly called up for military service in the Russian army.
5. A person who was subject to illegal dismissal was reinstated in the position he had lost.
6. A person who was working properly suddenly completely lost his ability to work.
7. For some reason, the employee refused to comply with the new terms of the employment contract if they appeared.
8. A person holding a leadership position was fired at the request of the owner who owns the organization.

Taxation of payments upon staff reduction with personal income tax and insurance premiums

• on the day of dismissal - severance pay in the amount of average earnings;
• if during the second month from the date of dismissal the employee does not find a job - the average earnings for that month;

In accordance with Art. 255 of the Tax Code of the Russian Federation, severance pay paid to dismissed employees in excess of the norms established by Art. 178 of the Labor Code of the Russian Federation, refers to accruals to employees released in connection with the reorganization or liquidation of the taxpayer, reduction in the number or staff of the taxpayer’s employees, and therefore reduces the tax base for corporate income tax.

Benefit for staff reduction taxation

How to calculate severance pay when staffing is reduced in 2019 This year, the Government of the Russian Federation, together with the State Duma, adopted a number of documents that significantly improved the fate of those dismissed due to staff reduction in terms of receiving compensation payments.

Accounting for the taxation of severance pay in the event of a reduction in insurance contributions Based on clause 9 of Article 225 of the Tax Code of the Russian Federation, all payments made by the employer upon termination of a contract with an employee at the initiative of the employer (in this case, due to staff reduction) are classified as labor costs.

Personal income tax on severance pay in case of staff reduction

After termination of employment due to staff reduction, the employee retains his average monthly salary until he gets a new job. However, this period does not exceed 2 months. In exceptional cases, when an employee has registered with the labor exchange after dismissal, then, at the request of this service, the former employer can pay the average monthly salary in the third month of forced unemployment.

In accordance with Article 210 of the Tax Code of the Russian Federation, when calculating the tax base, all income received by the taxpayer is taken into account. When forming the tax base, it is necessary to take into account that not all income of individuals is subject to inclusion in the calculation of income tax withholding.

What taxes are levied on compensation for staff reduction?

If within two weeks from the date of dismissal the employee applied to the employment service and was not employed by him within three months from the date of dismissal, then in exceptional cases, by decision of the employment agency, the employee is paid the average salary for this third month.

In practice, situations arise when the amount of severance pay payable in connection with a reduction in the number of workers exceeds the norms established by the Tax Code (Article 178). The reasons for this are provisions that improve the rights of the worker, either prescribed in his employment contract, or adopted by a local act of the organization in which he works.

Personal income tax and contributions from payments in case of staff reduction (Lenskaya N

The arbitrators motivated their conclusion by the fact that in paragraphs. “a” clause 7 art. 1 of Federal Law No. 330-FZ of November 21, 2011, which introduced restrictions into the text of clause 3 of Art. 217 Tax Code, not specified additional compensation for early dismissal. This is stated in the Decision of the Supreme Court of the Komi Republic dated May 10, 2012 N 33-1663AP/2012.

According to experts from the Ministry of Finance of Russia, the composition of compensation payments in connection with dismissal, for which a limit is set that is not subject to personal income tax (three times (six times) the average monthly earnings), includes the amount of additional compensation paid for early termination of employment relations (Letter from the Ministry of Finance of Russia dated 07/08/2013 N 03-04-05/26273).

In accordance with Art. 255 of the Tax Code of the Russian Federation, severance pay paid to dismissed employees in excess of the norms established by Art. 178 of the Labor Code of the Russian Federation, refers to accruals to employees released in connection with the reorganization or liquidation of the taxpayer, reduction in the number or staff of the taxpayer’s employees, and therefore reduces the tax base for corporate income tax.

According to paragraphs. 1 clause 1 art. 223 of the Tax Code of the Russian Federation, when receiving income in cash, the date of actual receipt of income is defined as the day of payment of income, including the transfer of income to the taxpayer’s bank accounts or, on his behalf, to the accounts of third parties. Let us remind you that according to clause 2 of Art. 226 of the Tax Code of the Russian Federation, the organization from which or as a result of relations with which the taxpayer received income is obliged to calculate, withhold from him and pay the amount of tax.

Is severance pay subject to insurance premiums in case of staff reduction? Is personal income tax withheld?

Severance pay for staff reduction is taxed like other monetary compensation. The only exception in this case is the payment for which the dismissed person did not take advantage of the leave. But contributions are accrued only if the amount of payments exceeds the established limit.

The fact is that the average amount of earnings per day is calculated for the day on which the employee worked, and not for the one indicated in the calendar. To correctly calculate the benefit amount, you need to take the wages received 12 months before the employee was fired.

Severance benefits are not subject to contributions

Guarantees and compensation to employees related to termination of an employment contract are established in Chapter 27 of the Labor Code of the Russian Federation. So, according to Art. 178 of the Labor Code of the Russian Federation, upon termination of an employment contract due to a reduction in the number or staff of employees (Clause 2, Part 1, Article 81 of the Labor Code of the Russian Federation), the dismissed employee is paid severance pay in the amount of average monthly earnings, and he is also retained the average monthly earnings for the period of employment , but not more than two months from the date of dismissal (including severance pay). In exceptional cases, the average monthly salary is retained by the dismissed employee for the third month from the date of dismissal by decision of the employment service body, provided that within two weeks after the dismissal the employee applied to this body and was not employed by it. In this case, an employment contract or collective agreement may establish increased amounts of severance pay.

In accordance with Art. 180 of the Labor Code of the Russian Federation about the upcoming dismissal due to a reduction in the number or staff of employees, employees are warned by the employer personally and against signature at least two months before the dismissal. However, the employer, with the written consent of the employee, has the right to terminate the employment contract with him before the expiration of the two-month period, paying him additional compensation in the amount of the employee’s average earnings, calculated in proportion to the time remaining before the expiration of the notice of dismissal.

When is severance pay subject to insurance contributions, and how will the situation change?

Let's look at what will change in the situation with severance pay from January 1, 2015. From this point in time, insurance premiums are not subject to certain types of severance pay. Moreover, regardless of the grounds for dismissal upon termination of the employment contract (subparagraph “a”, paragraph 3, article 2, subparagraph “a,” paragraph 1, article 5 of the Law of June 28, 2014 No. 188-FZ). This:

Let's consider the situation: the so-called severance pay upon dismissal by agreement of the parties. Insurance premiums are calculated from such compensation (letter of the Ministry of Labor of Russia dated December 4, 2013 No. 17-3/2038). A benefit that is paid to an employee upon dismissal by agreement of the parties, for example, in connection with retirement due to age or disability, is subject to insurance contributions as a payment made within the framework of the employment relationship. Reason: Part 1 of Article 7 of Federal Law No. 212-FZ. Some clarification is needed here.

Are severance pay subject to insurance premiums during layoffs in 2019: features and most common mistakes

At present, when the country's economy is going through far from the best of times, businesses are trying to optimize their expenses and ensure not only a decent standard of living, but also outline prospects for the future. Some enterprises are automating production processes, others are increasing demands on employees, and others are simply reducing labor costs, which in all cases leads to a reduction in personnel in the company. In all cases, the manager tries to save the business by optimizing costs. It is necessary to clearly understand that the reduction of employees is nothing more than the termination of an employment contract at the initiative of the employer (Article 81 of the Labor Code of the Russian Federation), therefore, mistakes cannot be made in this matter in order to avoid problems with the law. In this article we will look at whether severance pay is subject to insurance premiums during layoffs.

In general, the personnel reduction procedure is a very costly project for an enterprise, so many managers try to avoid this by asking employees to write a letter of resignation of their own free will, but not all employees succumb to this persuasion, and, in fact, this is wrong. There is another opportunity to avoid quite serious expenses - to offer the employee another, vacant position in the same organization, but here the employee has the right to refuse this offer. In this case, the reduction procedure is inevitable. This article will help the manager avoid serious mistakes when planning and implementing the costs of the staff reduction procedure.

Amounts not subject to insurance premiums

Insurance premiums and other compensation related to the employee’s performance of work duties are not subject to insurance premiums. For example, teaching staff of federal state educational institutions (including management), in order to facilitate their provision of book publishing products and periodicals, are paid monthly monetary compensation in the amount of:

In Art. 1 of Law N 4730-1 contains a definition of the border, according to which the state border of the Russian Federation is a line and a vertical surface passing along this line, defining the limits of the state territory (land, water, subsoil and airspace) of the Russian Federation, i.e. spatial limit of the state sovereignty of our country. Consequently, the state territory of Russia in this case ends not at the airport checkpoint, but when the aircraft crosses the vertical surface of the airspace passing above the state border line of the Russian Federation.

What is severance pay for staff reduction and is it subject to insurance contributions?

There are several possible interpretations of clause 3 of Art. 217 Tax Code of the Russian Federation. According to the Ministry of Finance of Russia (Letter of the Ministry of Finance of the Russian Federation No. 03-04-05/26273 dated July 8, 2013), compensation payments upon dismissal should include compensation for early termination of employment agreements, since such payment is guaranteed. Thus, if an employee was laid off and his contract was terminated early, and after dismissal he was not officially employed for another three months, then he is credited with four average monthly earnings (for early termination, upon dismissal, and the next 2 months after the calculation date).

There are some peculiarities when taxing severance pay at additional rates. Pay attention to the calculation of insurance pension contributions at such rates for an employee who is dismissed due to staff reduction, but he was employed in work that gives him the right to early retirement.

Is severance pay subject to insurance contributions?

All employee salaries are subject to insurance contributions: to the pension fund, medical and social insurance fund. This also applies to compensation for unused vacation. But what if there is a liquidation of an enterprise or a reduction in staff? Are severance pay subject to insurance contributions in this case?

• in connection with changes in the employment contract, for example, when there is a change in management;
• relocation of a company or transfer of an employee if the latter does not agree;
• for health reasons, if the employee can no longer perform his work duties;
• liquidation of an enterprise (institution or organization);
• reduction or mismatch of qualifications of employees;
• reinstatement of the worker who previously performed these duties, etc. The full list can be found in 178 Labor Code of the Russian Federation

Calculation of severance pay - we compensate for “moral damage” upon dismissal

On the question of whether severance pay paid by decision of management is subject to personal income tax, the opinions of the Ministry of Finance and the Federal Tax Service were divided. According to the instructions of the Ministry of Finance, severance pay for any reason (in accordance with the Labor Code, it was paid or by decision of the manager, under a collective agreement) is not subject to personal income tax within the limit (3 times or 6 times the average earnings). Basis - letter of the Ministry of Finance dated April 10, 2012 No. 03-04-06/6-105.

When an employee leaves the organization, he has the right to receive everything that the company “owes” him. Usually this is wages for the last month of work and, if there are unused vacation days, compensation for unused vacation. If an employee resigns of his own free will, then usually the amount of payments is limited to this.

How to calculate severance pay during layoffs

But in order to receive benefits for the period of employment (the second and third months after dismissal), you must provide the organization with a work record book indicating the lack of employment. Work under a contract performed by a dismissed person during this period is not grounds for deprivation of compensation payments.

In accordance with labor legislation, upon dismissal, an employee has the right to count on certain payments from his employer. As a rule, in case of voluntary dismissal, the amount of such payments consists of wages accrued for the last month worked and compensation for unused vacation (if there are unused vacation days). However, situations arise when the employee is due additional compensation payments. The most common situations of this kind include staff reduction or liquidation of an enterprise. In this article you will learn how to calculate severance pay when an employee is laid off.