Labor legislation defines a list of points in which the employer is simply obligated to pay severance pay if the employment contract is terminated. For example, it can be a benefit in case of reduction of staff or number of employees, in case of liquidation of a company and other similar cases. At the same time, the Labor Code also provides for other types of payments upon dismissal in a collective or labor contract.
Sometimes a company agrees to pay an employee additional lump-sum compensation upon dismissal, and its size is set in the agreement on termination of the employment contract. This type of payment is not provided for either in the list of obligatory labor laws or in the collective agreement or in the labor contract. The courts are of the opinion that an agreement to terminate a contract cannot be part of it. It does not regulate relations regarding the employee's performance of his direct functions. In this case, you cannot reduce the income tax base by the amount of compensation to the employee upon dismissal. But the company has the opportunity to conclude an additional agreement with the employee, which will provide for the payment of vacation pay upon dismissal upon termination of the contract by mutual agreement of the parties.
The tax authorities and the Ministry of Finance, in their letters, clarified that the costs in the form of severance pay can be taken into account as expenses that reduce the income tax base. Such payments upon dismissal must be provided for by the labor or collective agreement itself, or by an additional agreement to the agreement. The text of this agreement should include an indication that it is an integral part of the main contract, otherwise the tax authorities may challenge the accounting of costs associated with the payment of this compensation.
Calculation of payments upon dismissal is not particularly difficult, since it only requires a couple of indicators: the average salary per day with the number of unused days on vacation. You can calculate the average wage per day if you use the data on the actual wage for the three months worked, you need to divide it by the number of days that were actually worked.
Now it’s worth figuring out how many days you need to count? It is worth remembering that compensation must be paid in any case, that is, it does not depend on who initiated the dismissal. For those who have worked for less than 15 days, you do not need to count it, for everyone else - it is mandatory. A full 28 days of vacation will be paid to those who have worked for at least 11 months, that is, a calendar year, if you count along with the vacation. If we are talking about less time worked, then vacation pay should be calculated in proportion to the time that was worked out.
Payments upon dismissal
In the event of termination of the employment contract, each employee has the right to choose: receive compensation for the vacation or walk it off. If the employee chooses to walk him off, then he will be paid only wages, and if he chooses compensation, then in addition to the paid wages, the payment for unused vacation will also be added. There is a certain set of situations that are already regulated by judicial practice and regulations, that is, there should not be a dispute on these issues.
For employees who do not use additional leave for the working year, a cash reimbursement is expected. If there are holidays for several years, all of them must be compensated. In the event of the dismissal of an employee during the passage of the probationary period or in the case when he worked for less than six months, he should be given compensation, the amount of which is proportional to the number of days of vacation.
Now you know what the payoffs can be when you quit.