To calculate the severance pay upon dismissal, most often, is not difficult for experienced and not very accountants. However, there are several points that you should pay attention to both the employer and the retiring employee, depending on the situation and the institution from which the employee leaves.
Usually, upon dismissal at his own request, the employee is entitled to an unpaid salary for a certain period (most often, for the last month), and in addition , compensation for leave that was not used (if the leave did not follow immediately after the leave). However, there are several reasons for dismissal, which rely on additional compensation, for example, when reducing the staff of the enterprise or its liquidation. The main parameter on which the severance pay depends on the salary received during the last year of work, the amount is calculated from it.
In case of reduction, the employee must receive a payment equal to the average monthly earnings. Moreover, if he applies to the employment service no later than two weeks, but does not get a new job, then such a benefit is retained for him for three months. After that, during the same time he will receive half his salary. However, a prerequisite for this payment is an account with an institution engaged in employment, and periodic notes in it about why it cannot be arranged.
If the employee was on seasonal earnings, then he is paid a two-week average salary upon reduction or liquidation of the institution. In a more favorable relationship are managers who, upon dismissal for reasons beyond their control (change of ownership, decision of shareholders, etc.), receive three monthly salaries. There are also benefits for workers in the Far North and in equivalent places, they can receive benefits for up to 6 months.
So, the calculation of severance pay upon dismissal is done as follows. First, the average daily earnings are calculated by dividing the salary accrued for the calculated period (including various payments and bonuses for the past year) by the number of actually worked days. The resulting number is multiplied by the number of working days for the period that the company must pay the employee. At the same time, weekends and holidays (in contrast to the accrual of vacation or sick leave) are not paid.
After the severance pay upon dismissal is accrued, it is necessary to determine other contributions and taxes. In the event that the benefit is fully consistent with what is specified in the Labor Code, insurance premiums are not required to accrue on them. If the organization decided to pay an amount that is higher than indicated in the legislative document, or in a situation not specified in it, it is necessary to calculate the insurance premiums accrued for compensation.
It should be noted that some categories of citizens have additional benefits, for example, the severance pay is increased for dismissal of servicemen upon reaching their retirement age or for health reasons, which can receive up to 20 salaries at a time, depending on the length of service. Also, certain categories of civil servants (judges, etc.) possess preferential conditions for dismissal for reasons beyond their control. For them, payments are also increased.
Whether the severance pay is subject to personal income tax dismissal is a moot point. In the event that payment is made within the limit (three or six months, according to the Labor Code), this tax is not levied on it. If the company decided to pay the employee in excess of the norm prescribed by law, then the amount exceeding the limit will be taxed in full by personal income tax.