What is the minimum wage - explanation and calculation criteria, the minimum wage for 2020

What does the minimum wage regulate?

Before considering what the minimum wage is and what it includes in 2020, it is necessary to understand what this indicator is used for.
And also how a fixed minimum wage as a regulatory tool helps the state in ensuring the right of citizens to a specific level of income. The concept of minimum wage implies that the state provides a guarantee of wages to the employee to maintain an acceptable standard of living. The lower limit of the “minimum wage” established by the state is an administrative and economic tool for regulating not only the actual amount of citizens’ incomes, but also socio-economic issues in society.

By establishing a minimum wage, the state guarantees the employee protection from excessively low wages, which are often set by employers. It is also worth considering that federal social payments depend on the minimum wage.

The value of the minimum rate in the Russian Federation according to the Labor Code of the Russian Federation cannot be lower than the subsistence level (LM) (Article 133 of the Labor Code of the Russian Federation). However, this statement has not been followed to date. The “minimum wage” did not keep up with the growth of the monthly salary. Only since January 2020, the minimum wage and minimum wage values ​​have been brought to a single level.

Compliance with the value of the “minimum wage” is mandatory, regardless of the method of adoption. The legislation provides for the establishment of:

• the federal minimum wage, which is adopted by the State Duma;
• subjects of the federation. The minimum wage is established by concluding an agreement between local authorities, representatives of trade union organizations and the association of employers in regions, territories, regions and municipalities. The minimum wage of a constituent entity of the federation should not be set below the national level.

Minimum wage: is it the same for all regions of the country?

Since the minimum wage is associated with such a concept as the subsistence minimum, it is worth considering that the latter indicator differs greatly in different regions of the Russian Federation. Consequently, when determining the minimum wage, it is impossible not to take into account the difference in living conditions and costs in all regions of the country.

Therefore, the legislation currently separates such concepts as federal and regional minimum wages.

Throughout the country, government regulations establish a federal minimum wage. At the same time, all regions have been given the authority to revise this indicator.

It should be noted here that the regional minimum wage can only be changed upward, since it should not be lower than the federal one.

The minimum amount in this case is set by regional authorities, employers and trade unions. After signing the agreement, it becomes mandatory even for those employers who did not participate in the approval of the minimum wage and did not sign the agreement.

As for those who disagree, they have 3 days to file a refusal with justification of the reasons.

What is the minimum wage made up of?

The minimum wage for an employee in 2020 is calculated in the amount of 12,130 rubles. What is included in the minimum wage in 2020, and are compensation and incentive payments included in the minimum wage?

Let's find out what payments are included in the minimum wage:

• the main part of the “minimum wage” is the salary, which is assigned to the employee according to his position and qualifications;
• allowances and additional payments that compensate for unfavorable and harmful to health and life-threatening working conditions, as well as other types of compensation that are included in the employment agreement;
• monetary rewards that stimulate employee motivation. These include incentive bonuses, additional allowances and additional payments. Bonuses are paid for achievements and production results in an employee’s work. Bonuses are given to holders of academic degrees, for length of service, etc.

If the salary is calculated only from the salary amount without accruing additional payments, then the salary cannot be set less than the minimum wage. If the salary is still below the “minimum wage,” what is included in the minimum wage when calculating wages in 2020? In this situation, the employer will have to use additional payments to bring the salary rate to the mandatory minimum wage level.

In situations where compensation and incentive payments are established for the employee in addition to the base salary, it is possible that the salary is less than the minimum wage. But the final salary, taking into account all payments, has no right to be set below the minimum payment (Article 133 of the Labor Code of the Russian Federation).

In both cases, from an accrued salary of at least 12,130 rubles, a personal income tax of 13% is withheld from the mercenary. Therefore, in fact, the employee will receive: 12,130 x 13% = 10,553 rubles, which, in fact, contradicts the principle of social protection for workers. In most countries, the minimum wage indicator is removed from the tax field.

It is worth noting that the interpretation of the minimum wage, according to the Labor Code of the Russian Federation, allows employers to manipulate when setting salaries for employees. For employees, even with specific qualifications, a rate is set below the minimum, and then, with the help of additional payments and compensations, they are brought into compliance with the minimum wage. This practice not only distorts the real state of affairs in determining the actual level of the minimum wage, but also the principle of protecting the social and labor rights of workers.

Comments: 15

Your comment (question) If you have questions about this article, you can tell us. Our team consists of only experienced experts and specialists with specialized education. We will try to help you in this topic:

Author of the article: Klavdiya Treskova

Consultant, author Popovich Anna

Financial author Olga Pikhotskaya

1. Alexander
   01/20/2020 at 21:01 If for some reason the employee’s salary is less than the minimum wage, the employer must pay the missing amount through bonuses, allowances, or increase the salary by an additional agreement.©Don’t you think this is wrong. A bonus is an incentive BONUS, and “raising” the salary to the minimum wage due to bonuses means depriving the employee of INCREASED wages for high-quality and conscientious work. Instead of “reinventing the wheel” and deceiving the people by raising wages to the minimum wage with incentive bonuses, it is necessary to return to the Labor Code an article about equating the rate of the first grade to the minimum wage, which was in the previous Labor Code and which was removed from the new one, which is where the movement into poverty began...
   Reply ↓ Anna Popovich
   01/20/2020 at 23:19

   Dear author, in the commentary material we are only talking about legal literacy and the employer’s obligation to pay employees in accordance with the minimum wage. As for bonuses, they are also part of the salary in accordance with Article 129 of the Labor Code of the Russian Federation, which means that at their expense the legally established minimum wage level can be achieved and this is legal.

   Reply ↓

Incentive accruals

Why is incentives included in the minimum wage? The conditions for accrual of incentive payments are set out in local regulations of enterprises and organizations or collective agreements between the employer and employees. If bonuses are paid monthly, then the accrued amounts are constantly added to the minimum payment. However, the payment of incentives is not an obligation assigned to the employer, it is his right.

Are annual, quarterly, or one-time bonuses included in the minimum payment? In practice, this issue caused certain difficulties, since it did not receive an accurate interpretation in the Labor Code of the Russian Federation. Based on the ruling of the Supreme Court of Karelia No. 33-2448/2018 dated 06/05/2018, it was established that such payments are also subject to inclusion in the minimum wage component.

Let's see what other charges are included in the minimum wage. Compensatory additional payments for work on night shifts, weekends and holidays are calculated at increased rates and, accordingly, are accrued above the minimum wage. However, if this work is carried out within the framework of established duties and fixed standards of labor and working hours, then compensation is accrued within the “minimum wage”.

Additional payment for harmfulness refers to a compensation payment, which is determined by the work regime and special working conditions of employees (Article 129 of the Labor Code of the Russian Federation). Since this payment is a component of wages, it is calculated within the limits of the minimum wage.

What accruals are not included in the “minimum wage”

When calculating the minimum wage, those payments that are not related to the payment of the main job, in accordance with established labor standards and working hours, are not taken into account.

Part-time work refers to work performed during free time from primary job responsibilities. The payment will be added beyond the minimum wage if the number of labor hours established by the standard is exceeded (Letter of the Ministry of Labor No. 14-1/OOG-7353). The same principle applies to overtime premiums.

Regional coefficient. This indicator is established for areas with unfavorable and severe climatic conditions (Article 148 of the Labor Code of the Russian Federation) and implies an increased salary. Resolution of the Constitutional Court No. 38 of December 7, 2017 established that regional coefficients and additional payment for each year of work in the Far North and areas equivalent to it are not included in the “minimum wage” component.

This rule applies not only to the minimum wage indicator, but also to the minimum wage. If the minimum wage is already set above the federal minimum wage, northern additional payments are made based on the minimum wage, if it does not include them.

Minimum wage and minimum wage - what is the difference

Sometimes the concept of minimum wage (MW) is identified with the minimum wage, but these concepts are not the same thing. The employer must adhere to these values ​​when determining the employee’s earnings.

The minimum wage is accepted by the constituent entities of the Russian Federation not less than the lower limit of the employee’s remuneration, which the employer does not have the right to violate (Article 133.1 of the Labor Code of the Russian Federation). The minimum wage is introduced taking into account the characteristics of the regions and corresponds to:

• socio-economic needs of the constituent entity of the Russian Federation, taking into account the size of the PM;
• mandatory for all categories of employees in a particular region with the exception of employees of federal structures;
• the minimum wage indicator cannot be used below the federal minimum wage.

The adoption of the minimum wage is not mandatory for the constituent entities of the Russian Federation; in calculating wages, they have the right to adhere to the federal minimum wage.

Who sets the minimum wage and how?

The main task of introducing a system for determining the minimum wage is to create conditions under which it is possible to adjust the salaries of employees depending on their experience, qualifications and quality. Thus, the minimum wage is a specific amount in monetary terms, less than which the employer simply does not have the right to pay its employees.

In order to provide its citizens with maximum protection of rights and interests, the state carefully monitors the issue regarding the minimum amount of labor. This occurs through a combination of labor law provisions and federal regulatory instruments.

All norms that in one way or another affect the procedure for determining and paying the minimum wage at enterprises are considered and regulated at the highest legislative level. Our labor code states that the method of calculating the minimum wage can be very diverse, but the following rules are established in relation to this indicator:

• the total minimum wage should not be less than the subsistence level for a particular region;
• the determination of the minimum wage is entirely entrusted to federal legislation;
• The minimum wage is guaranteed to be provided to all employees who fulfill their duties under employment agreements for a certain period of time;
• the minimum wage is set for each subject of the Russian Federation separately, and it will be closely related to data on the cost of living for a specific region.

It is worth noting that despite the standard according to which the salary cannot be less than the minimum wage, restrictions are established that are related to the working time limit. If a person is at work less than 40 hours a week, then the amount of his earnings in terms of the minimum wage will be determined as a percentage.

All issues related to the minimum wage and the establishment of specific indicators of the amount of payment are under the control of the Ministry of Labor of the Russian Federation. It is this department that annually calculates the cost of living, and based on it determines what the level of the minimum wage will be for a particular subject of the federation (or for the country as a whole), and issues appropriate orders and resolutions.

Procedure for accepting minimum wage

The minimum wage indicator is introduced based on the signing of an agreement by a tripartite commission between representatives:

• local authorities;
• employer communities;
• representatives of the interests of trade union workers.

As a result of negotiations, a decision is made to accept the agreement, which is published in an official source. After reading the agreement, employers either accept the terms of the document or have the right to refuse it within thirty days from the date of publication. In case of refusal, a written reasoned refusal is drawn up with documentary evidence of each argument.

The commission considers the refusal of the employer who is invited to the meeting. The employer has no right not to attend a meeting of the collegial body.