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Specialists from Russia’s Ministry of Public Health and Social Development and Social Insurance Fund have jointly reviewed issues concerning adopting new regulations for calculating mandatory social insurance benefits.

Compensation for unused vacation time

One of the issues had to do with determining the average wage when calculating temporary disability compensation for unused vacation time when it is not related to an employee’s dismissal.

What kinds of payments count towards assessment of benefits?

Temporary disability benefits and benefits for maternity and childcare leave are assessed based on the average wage of the insured, calculated by the last 12 calendar months of employment preceding the insurable event. The average wage includes all types of pay and other compensation to the employee which is included in the base for calculating insurance premiums. This is stipulated in Parts 1 and 2 of Article 14 of Federal Law #255-FZ “On Social Insurance in Case of Temporary Disability or Pregnancy,” dated December 29, 2006.

The tax unit, tax base, and list of payments that are not subject to having insurance premiums withdrawn from them is established in Federal Law #212-FZ “On Insurance Premiums to the Pension Fund, Social Insurance Fund, Mandatory Federal and Regional Medical Insurance Funds” dated July 24, 2009 (heretofore referred to as Law #212-FZ).

Compensation for unused vacation time is not exempt from insurance premiums…

Payments that are exempt from insurance premiums are listed in Article 9 of Law #212-FZ. Among them are compensatory unemployment benefits. An exception is made for unused vacation time (Article 9, Part 1, Point 2, Sub-Point D in Law #212-FZ). Compensation for unused vacation is paid when an employee is dismissed and insurance premiums are deducted from it.

Compensation for unused vacation that is not related to employee dismissal is not listed in Article 9 of Law #212-FZ. Since this type of payment is produced within the framework of labor relations, insurance premiums are withheld from it on the basis of Article 7, Part 1 of Law #212-FZ.

The portion of an employee’s annual paid vacation time that exceeds 28 consecutive days may be substituted with monetary compensation if the employee completes a written statement requesting this. Article 126, Part 1 of the Labor Code stipulates this. Does this need to be taken into account when determining benefits?

…And is taken into account when determining benefits

There are a number of disagreements about this issue. Compensation for unused vacation time does not need to be taken into account when calculating average wage, despite the fact that it has insurance premiums deducted from it, because it is calculated based on the employee’s average wage and similar payments are not taken into account when calculating these benefits.

Now this matter has been regulated.  Specialists from Russia’s Ministry of Public Health and Social Development and the Social Insurance Fund have come to the conclusion that since the payment has insurance premiums deducted from it and in connection with the fact that it does not fall under the jurisdiction of Point 8 of the Provision on calculating benefits for temporary disability, maternity and childcare, monthly benefits for those who qualify for mandatory social insurance care (for temporary disability, maternity leave, etc.) as stipulated by Act #375 from June 15, 2007, it is necessary to take the payment into account when determining average wage for social insurance benefit purposes.

This issue has brought up various interpretations and was worked out conclusively with specialists from Russia’s Ministry of Public Health and Social Services.

Payments that are not subject to the Uniform Social Tax in the accounting period

If an employee was sick in 2010, the entire accounting period or a part of it is added to 2009, the year in which the employer paid the Unified Social Tax (UST) instead of insurance premiums.

When calculating social insurance benefits, are payments from the accounting period (from January 1, 2010) that were not subject to UST taken into account? For example, bonuses for holidays or finances from paid vacation.

When calculating benefits for temporary disability, maternity and childcare leave, monthly subsequent childcare benefits for insurable events occurring or being transferred over into 2010, the rules from Federal Law #255-FZ “On Mandatory Social Insurance for Temporary Disability or Pregnancy” (dated December 29, 2006) need to be applied in current version effective in the coming year. Therefore, when calculating average wage, it is necessary to take into account those payments which are subject to insurance premiums in the Social Insurance Fund in 2010, despite the fact that before January 1, 2010, UST was not taken from these payments in the Social Insurance Fund.

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