On 10 January 2016 amendments to the Labour Code of the Russian Federation (the "Labour Code") came into force entitling employees who stop working due to salary unpaid for a period of more than 15 days to receive average earnings for the period in which they did not work. The relevant changes to the Labour Code were brought about by Federal Law No. 434-FZ "On Amendments to Article 142 of the Labour Code of the Russian Federation" dated 30 December 2015.
These amendments provide a clear answer to the issue of whether employees who stop working due to unpaid salary must be paid after stopping and what amount is due.
Until the adoption of the amendments, the Labour Code provided for the right of employees, whose salary remains unpaid for more than 15 days, to stop working and be absent from work until they are paid. That being said, the Labour Code did not regulate the issue of whether employees should be paid for the period after stopping work.
This gap had been filled by the courts who confirmed the need for employers to pay employees average earnings for the period in which they are not working. However, the lack of clarity in the Labour Code had led to disputes which could only be resolved in court.
As the employer’s obligation to pay employees average earnings for the period in which they are not working is now expressly provided for in the Labour Code, employees have been given the opportunity to protect their right without resorting to court action – for example, by making a complaint to the State Labour Inspectorate or the Prosecutor's Office.
Employers are reminded that all types of payments made to an employee which are provided for in the employer’s remuneration system (including bonuses, allowances and some other types of additional payments) are to be taken into account when calculating average earnings. Thus, employers should bear in mind that if, during the 12 months preceding the date when an employee stopped working due to unpaid salary, additional payments were made to that employee, then the average earnings payable to the employee for the period in which they were not working may be higher than their base salary.
Employers should note that since they are now statutorily obliged to pay employees while they are not working, failure to do so may result in the employer and its officers being held administratively liable. The maximum fine for this type of breach is currently RUB 70,000 (approximately EUR 830) for legal entities. Moreover, the authorities may calculate the aggregate fine to be paid by the employer for such a breach based on the number of employees affected.
Finally, employers should note that fines for this type of breach may be increased in the future. A relevant bill has already been prepared by the Russian Ministry of Labour and Social Protection and is currently being reviewed by the authorities.