Increasing the minimum wage in 2024: what changes employers will need to take into account

CrimeaPRESS reports:

On November 16, 2023, the State Duma in the third reading adopted a law on increasing the minimum wage (minimum wage) to 19,242 rubles per month from January 1, 2024. Alexander Yuzhalin, head of the legal practice at SuperJob, told us what changes employers will need to take into account.

The adopted law determines that the minimum wage for the next year is established by federal law, taking into account the value of the median wage for the previous year. It is expected that the adopted law will soon be signed by the President of the Russian Federation.

The minimum wage is the criterion that underlies guarantees for workers. The wages of employees who have worked full working hours in a month should not be lower than the minimum wage. Based on the minimum wage, the minimum amount of social insurance payments is calculated (for benefits for temporary disability, pregnancy and childbirth, etc.), as well as the minimum amount of vacation pay.

Changes in the minimum wage will also need to be taken into account by employers. In particular, they will have to make sure that the wages of their employees, taking into account possible incentives and compensation payments, will be no less than the new minimum wage. If an organization only sets a salary for employees and does not pay additional incentive payments, the salary must be no less than the new minimum wage. If this is not the case, salaries will need to be increased by making changes to the staffing table and to the employees’ employment contracts. In other words, such employers will need to conclude additional agreements to the employment contract with employees, under the terms of which the salary will be increased to the minimum wage.

The same applies to hourly tariff rates. Companies will need to determine the hourly wage rate in such a way that, after working the full working time, their employees receive no less than the minimum wage.

It is important to note that in the northern regions of the country, where a regional coefficient and a percentage increase in wages are applied, such increases must be applied above the minimum wage. That is, in fact, in such areas the minimum wage increases by the size of the northern allowances.

The signed law will come into force on January 1, 2024 and, accordingly, will also apply from January 1. This means that employees’ wages for work from January 1 must be calculated and paid taking into account the new minimum wage. Wages for December 2023 can still be paid taking into account the current minimum wage. Wages are paid on the days established by the employer in the internal labor regulations and employment contracts. Typically, the final payment for the month is made by the employer in the first half of the following month. But, given that from January 1 to 8 are non-working holidays, employers must make payments earlier — at the end of December (if the date of payment of wages falls on the period from the 1st to the 8th of the month).

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