Reduction is a necessary measure, which different companies resort to in difficult situations. Most often, it is required to reduce employees when changing the direction of work, a crisis in the company or in other similar situations. The employer is obliged to notify all employees selected for reduction of the planned dismissal two months before the appointed date. All dismissed employees have the right to receive various payments, which include severance pay. It can be paid not only for a month of work, but even for three months if the specialist can not find a new job. Calculation of severance pay during reduction is carried out by the accountant of the company. For this, the average employee earnings in the company for the year of work are taken into account.
How are staff cuts?
The reduction procedure must be carried out by the employer in the correct sequence of actions, otherwise all employees dismissed from the company may challenge such dismissal. The steps of the procedure include the following:
- management decides on the need to reduce staff;
- employees are selected with whom the employment contract will be terminated, and it is taken into account which of the employees has the preemptive right to remain in the company;
- two months before the dismissal, all specialists are notified of the planned dismissal;
- the notification is sent to the employment service of the region if a massive reduction is planned;
- on the appointed day, orders are issued, on the basis of which specialists are reduced;
- on the last day of work, the required payments are presented to citizens, represented by salary, vacation compensation and severance pay;
- documents submitted to specialists by a work book and a certificate of average salary are issued.
Particular attention should be paid to the correct calculation of severance pay while reducing. It can be paid only for a month or even for three months. Not all employees can rely on such a benefit, for example, pensioners do not receive such a payment, since they already receive an old-age pension and do not need to find a new place of employment.
What funds are paid to retired employees?
Every person being laid off at work has the right to demand certain payments from the employer. These include the following listings:
- salary for the entire worked period;
- if a person has unused days of rest, then compensation is calculated for him, for which the average earnings of the citizen in the company are taken into account;
- severance pay;
- in some situations, employees may rely on other compensations provided for in the employment contract.
It is thanks to the severance pay that all citizens who are shortened at work will be able to provide themselves with an optimal standard of living for the next few months until they find a new place for employment. When calculating the severance pay, the reduction takes into account that this amount cannot be less than the minimum wage.
The concept of benefits
The severance pay is represented by a cash payment assigned to employees who are fired upon reduction of staff or position in the company. She acts as a reimbursement of income that was lost by a person in connection with a forced dismissal.
When calculating the severance pay, the reduction takes into account the average person’s earnings in the company during one year of work. This payment is fixed for the period during which the specialist is looking for a new job. Funds are paid within two months after the termination of the employment contract. In some cases, a third payment is allowed.
The rules for calculating severance pay for staff reductions are given in Art. 178 TC. Such a payment is mandatory, therefore, the desire or financial position of the company is not taken into account.
Who gets it?
Count on getting severance pay can be reduced employees of the company, listed in Art. 27 shopping mall. This includes all people who are forced to stop working due to the reduction carried out by the company's management.
Additionally, severance pay is paid in the following situations:
- the employee refuses to transfer to another locality if the registration address and location of the company change;
- significant changes are made unilaterally by the employer to the clauses of the employee’s labor contract, therefore the specialist decides to terminate the cooperation;
- it is found that the specialist does not correspond to the position held on the basis of the certification results;
- a citizen cannot cope with his basic duties in connection with the deterioration of his health;
- gross violations of the labor code are revealed by the head of the company;
- the employee is called up for military or alternative service.
In the above situations, severance pay is paid for two weeks.
The full severance pay can be calculated by people who are dismissed due to a layoff, as well as upon liquidation or bankruptcy of a company.
What is the formula used?
Calculation of severance pay while downsizing is not considered a very complicated process. It is performed by the staff accountant of the enterprise. To do this, use the following formula:
Benefit amount = average employee earnings per day × number of days in the month following dismissal.
The most difficult is the definition of average earnings. For this, it takes into account how much money was received by a citizen for a year of work in the company. Not only the direct salary is taken into account, but also other cash receipts represented by various benefits, bonuses, rewards or bonuses. This indicator is required for severance pay during reduction. The calculation of average earnings can be made directly by the employee to make sure that the accountant’s calculations are correct.
Billing process
Calculation of severance pay during reduction is carried out by an accountant in a certain sequence of actions. For this, the stages are implemented:
- initially calculated how much money was received by a person in the company for one year of work;
- for this, all cash payments, represented by salaries, bonuses and other allowances, are added up;
- periods when a person was on a business trip, on sick leave or on vacation are excluded from the calculation;
- the amount received is divided by the number of working days in the year;
- as a result, the average person’s earnings for one day of work will be obtained;
- determines how many days in the month for which the benefit is paid;
- final settlement is carried out according to a special formula;
- information about the correctly calculated payment is entered into the accounting of the company;
- full funds are paid to the reduced employee on the last day of his work in the company.
For each employee of the company, the calculation is made individually. It also requires calculating the days of severance pay with a reduction, which depends on when the specialist will be dismissed. If the accountant makes a mistake, the employee can dispute the dismissal altogether or demand that the company transfer compensation.
Calculation Example
The severance pay should be calculated by an experienced accountant. The procedure is performed for each hired specialist with whom the employment relationship is terminated. The procedure for calculating the severance pay during reduction is the same for all employees. Payment determination example:
- the man came under contraction;
- during the last year he worked 235 days;
- for this period of time he received an income of 460 thousand rubles;
- the average earnings per day is: 460,000 / 235 = 1957 rubles .;
- next month the number of working days is 22;
- the severance pay for one month is - 1957 × 22 = 43054 rubles.
This amount is transferred to the employee on the last day of his work in the company together with other mandatory payments. If a citizen does not find work within a month, he can count on another payment in connection with the dismissal of the reduction. The calculation of severance pay in this case is the same. For example, in the next month only 20 working days, so the second allowance is equal - 1957 × 20 = 39140 rubles.
The nuances of paying benefits for the third month
Typically, benefits are paid to abbreviated citizens within two months of being fired. This is only possible if they could not find a new place to work. These funds act as material support for the necessary standard of living of a person who has lost his permanent job.
You can even get paid for the third month, but only on condition that the job was not found for valid reasons. For this, the nuances are taken into account:
- within two weeks after the reduction, the person must register at the employment center;
- he should actually be looking for work, so you need to go to interviews appointed by employees of the employment service;
- refusal of work can be caused only by the mismatch of the proposed specialty or the lack of the necessary skills for the employee;
- in the process of calculating subsequent benefits, the average employee salary is still taken into account, but the payment cannot be less than the minimum wage.
Some employers may independently provide material support to downsized workers. They can offer various additional payments that allow you to easily find a new place of employment.
Nuances for women on maternity leave
If the employee is officially on maternity leave, then she is protected from reduction. The exception is if the company is liquidated or declares bankrupt.
Instead of reduction, pregnant women may be offered another vacancy in the company, for which an official transfer is executed.
If an employee is forced to contract, then she can count on all payments and compensation. The procedure is permitted only with the consent of the employee. A woman can rely on the same payments as other specialists with a reduction in workers. The calculation of severance pay is carried out in a standard way, which takes into account the average income of a woman during the period of work in the company.
Benefit Taxation
The severance pay assigned to staff reductions is represented by a guaranteed payment, which does not pay personal income tax or insurance premiums. But this takes into account some restrictions:
- the payment should not exceed three times the average salary of a specialist if he worked in standard climatic conditions;
- if a citizen worked in difficult conditions or in areas of the Far North, then the payment should not exceed six times the average earnings, since personal income tax is paid on excess.
Each employee can leave the company ahead of schedule upon receipt of a notice of reduction. Calculation of severance pay in case of early reduction is carried out in a standard way. Under such conditions, the employer has no right to deprive the employee of the due payments.
What to do in the absence of payment?
If the employer, for various reasons, does not transfer severance pay to lay-off workers, then specialists can file a complaint with the labor inspectorate or prosecutor's office. If necessary, file a lawsuit.
With significant delays, citizens may even demand compensation, the amount of which depends on the amount of debt.
Conclusion
The severance pay is paid to all employees being reduced in the company. Its calculation is carried out by the organization’s staff accountant. For this, the average earnings of a specialist and other indicators are taken into account. Funds are paid on the last day of work of citizens in the company.
If, for various reasons, the employer does not transfer the required funds to employees who are reduced in the company, then this is the basis for holding him liable. Specialists can collect additional compensation from the head of the enterprise.