If vacation pay is accrued in July, should vacation pay be included in tax expenses in August? The answer was prepared by Elena Savina, expert of the Legal Consulting Service GARANT
The employee goes on vacation from 08/01/2020, and vacation pay is issued to him in July 2021. The employee's vacation occurs only in August. The organization does not create a reserve for future expenses to pay for vacations, and when calculating income tax, it uses the accrual method.
When is it necessary to transfer insurance premiums and personal income tax? When are holiday pay accrued in July or August? If vacation pay is accrued in July, should vacation pay be included in tax expenses in August?
Having considered the issue, we came to the following conclusion:
Vacation pay is accrued in accounting and paid in July 2021. Therefore, insurance premiums must be paid no later than August 17, 2021, and personal income tax no later than July 31, 2021. When calculating income tax, insurance premiums from vacation pay are taken into account in July, and vacation pay themselves are taken into account in August 2021.
Rationale for the conclusion:
According to Art. 114 of the Labor Code R, during the annual leave the employee retains his average earnings. The average earnings retained by the employee during vacation (hereinafter referred to as vacation pay) are calculated, accrued and paid to the employee no later than 3 days before the start of the vacation. This period is fixed in Part 9 of Art. 136 Labor Code of the Russian Federation.
In this case, the accrual day is the day of reflection (accrual) of payments in favor of the employee, including vacation pay, in accounting (letter of the Ministry of Finance of Russia dated June 20, 2017 N 03-15-06/38515).
In the situation under consideration, the employee’s vacation began on August 1, 2020. Therefore, vacation pay must be calculated, accrued and paid to him in July 2021.
Calculation of vacation pay from the 1st day of the month: what is the difficulty?
Vacation is paid according to average earnings.
It is counted for 12 calendar months preceding the month in which the employee goes on vacation. It would seem that there is nothing difficult in calculating vacation pay in this situation. But we remember that the vacationer needs to pay money no later than three days before the start of the vacation (the days are still calendar days). This means that at the time of calculation, the last month of the billing period has not yet ended and the final earnings for this month may be unknown. What to do? In practice, vacation pay is calculated from the 1st day of the month in one of three ways:
- according to expected salary;
- based on accruals at the time of payment of vacation pay;
- excluding earnings for the last month.
Let's look at each method with examples.
IMPORTANT! The day of payment of vacation pay is not included in these three days. For example, if vacation starts from July 1, when should vacation pay be paid? July 1 is Monday, three days before vacation are Friday, Saturday and Sunday. This means that the employee must be given the money no later than Thursday, June 27.
Deadline for payment of vacation pay in 2016-2017
In 2021 in Art. 136 of the Labor Code of the Russian Federation, amendments were made to clarify the period for payment of vacation pay. Now it is three calendar days before the start of the vacation. If the payment date coincides with a non-working day, it must be made the day before. It is not allowed to delay vacation pay until the dates for payment of wages and advances established by the organization. At the same time, the legislator does not set an upper limit for payment - the employer can pay vacation pay several weeks before the employee goes on vacation.
The reason for clarifying the timing of vacation pay was the increase in the number of holidays, which affect the average number of working days per month, which is a mandatory factor when calculating vacation pay. In 2021, this coefficient is 29.3. It is also used to calculate vacation pay for the employee’s next vacation, and with its help, compensation for unused vacation upon dismissal is calculated. Please note that due to the fact that next year there are no plans to change the number of holidays, in 2021 the coefficient of the average number of working days will remain the same.
Method 1: according to plan
When calculating vacation pay, the salary for the last month of the billing period is taken into account in the planned amount. If it changes at the end of the month, a recalculation is made. This method is suitable for salaried employees whose salary amount is stable and known in advance. If the employee works in full for the month before the vacation and this month he does not have payments for average earnings, sick leave, etc., then you will calculate the vacation pay accurately and no recalculations will be required.
For example, an employee goes on vacation from 08/01/2021. The accountant calculates and issues vacation pay on July 26, 2021. Billing period: August 2021 - July 2021. When calculating average earnings, the accountant takes the July salary in full. If the employee works as usual on July 29, 30 and 31, then there will be no need to recalculate vacation pay. But if he, for example, gets sick, a recalculation will be required.
If you doubt the correctness of your calculation for an employee whose vacation begins on the 1st, use the recommendations from ConsultantPlus. Here you will learn how to correctly calculate your average daily earnings and not make mistakes with the dates. Get trial access to the system and proceed to consultation for free.
Billing period
Typically the billing period is 12 months before the month in which the person goes on vacation. What if the employee has worked for less than a year? Then take into account the time from the start date of work until the end of the month before going on vacation.
Let's say an employee quits and then gets a job in the same organization again. In this case, the billing period is the time after re-employment. Do not take into account the months worked before dismissal.
At the same time, there are periods that must be excluded from the calculation - they are listed in paragraph 5 of Regulation No. 922. This is all the time when the employee did not work. For example, you were on a business trip or on any vacation, received social benefits, or were unable to work due to the fault of the organization or external circumstances (power outage, hurricane, etc.).
Weekends and holidays are included in the calculation period when calculating vacation pay in 2021. Even if a person was sick just before the holidays, and immediately after them he went on a business trip. These conclusions are in the letter of the Russian Ministry of Labor dated October 15. 2015 No. 14–1/B-847.
A special situation if the entire billing period consists of time that needs to be excluded. For example, a woman has been on maternity leave in the previous 12 months. And before that, on maternity leave. When calculating vacation pay, you must take into account the previous period equal to the calculation period (clause 6 of Regulation No. 922). Moreover, you need to take a period of 12 months, which was before all excluded periods. This is stated in the letter of the Ministry of Labor of Russia dated November 25, 2015 No. 14-1/B-972.
It also happens that before the payroll period, the employee did not actually have days worked, and all the time in it itself needs to be excluded. In this situation, as the calculation period, take the days worked in the month in which the employee goes on vacation until the start date. The rule is essentially the same if a person goes on vacation in advance in the month of hiring (clause 7 of Regulation No. 922).
Use the online calculator to calculate vacation pay
Method 2: in fact
For the last month, accruals are taken on the day the vacation pay is calculated, and at the end of the month they make an additional payment. It is clear that this method is suitable for employees whose salaries can be calculated for a specific day. For example, these could be piece workers or employees working on a specific schedule.
Let's change the conditions of the previous example. Let’s say an employee works on a 2-by-2 schedule, and his salary is set at 3,000 rubles. per shift. On the date of calculation of vacation pay (07/26/2021), he will work 14 shifts out of 16 in July. Then the accountant will take into account the amount of 42,000 rubles. (3,000 × 14). When the month ends, vacation pay will need to be paid, taking into account an additional 6,000 rubles. earnings.
When to grant leave
In general, the right to the first annual leave at a new place of work arises for an employee after six months of continuous work (Part 2 of Article 122 of the Labor Code of the Russian Federation). Some employees, at their request, must be given leave in advance. But an employee can take vacation for the second and subsequent years of work at any time of the working year in accordance with the schedule.
Leave in advance must be provided to employees under 18 years of age, women before maternity leave, adoptive parents of children under three months of age, husbands while their wives are on maternity leave, etc. These are the requirements of Articles 122, 123 and 267 of the Labor Code .
Also, the categories of those who are entitled to receive leave in advance may be listed in other legislation. For example, these are veterans (Article 14-19 of the Federal Law of January 12, 1995 No. 5-FZ).
Method 3: excluding the last month
Vacation pay is first calculated without taking into account the salary for the last month of the pay period. When the month ends, recalculation and additional payment are made. This method is optimal when the salary has a variable part, for example, it consists of a salary and a monthly bonus, the amount of which is unknown until the end of the month.
Let's assume that the employee's earnings are a small salary and a percentage of sales (the main part). On July 26, the accountant will calculate and pay him vacation pay based on average earnings for August 2021 - June 2021. When the income for July is known, he will make an additional payment.
How to calculate vacation pay if there is a day off during the vacation period, for example, May 1? Find out the answer to this question from a calculated example from ConsultantPlus experts by receiving a free trial access.
Now you know how to correctly calculate vacation pay from the 1st. It remains to figure out what to do with taxes in each of these cases.
Earnings for vacation pay
When calculating your earnings, include all payments that are provided for by the remuneration system in your organization. That is, salary, bonuses, fees, allowances, etc. Also take into account compensation payments related to working hours and working conditions - regional coefficients and percentage increases in wages, additional payments for work in hazardous and difficult working conditions, at night, in multi-shift work, on weekends and holidays and overtime. The full list of payments is given in paragraph 2 of Regulation No. 922.
When calculating vacation pay in 2021, they take into account the salary that was accrued in a separate division with a separate balance before being transferred to the head office of the organization. The same applies to the earnings of a part-time worker before transfer to the main place of work. The explanation is the same in both cases – the employer does not change.
There is also a list of payments that are not taken into account when calculating vacation pay. It is given in paragraph 5 of Regulation No. 922. These are payments from average earnings and of a social nature (for example, financial assistance).
note
If an employee is hired under a fixed-term employment contract for a period of less than a year, the vacation order indicates a reduced working year depending on the term of the employment contract with the employee.
Separately, let’s talk about additional payments to temporary disability benefits and average earnings during a business trip. Such periods themselves and the average earnings accrued during illness or business travel are not taken into account.
Additional payments between the average salary and benefits are social payments. This means that these amounts are not included in the calculation of average earnings. The same applies to additional payment for sick time before salary or actual earnings.
But take into account the additional payment between the salary (actual salary) and the average earnings during the business trip. After all, this is part of the salary, and it must be taken into account when calculating vacation pay. Such clarifications are given in the letter of the Russian Ministry of Labor dated March 16. 2021 No. 14-1/B-226.
As for payments under civil contracts, do not take them into account. After all, these amounts are not provided for by the wage system.
Recalculation of vacation pay and taxes
Personal income tax on vacation pay is withheld at the time of payment and transferred to the budget until the end of the month in which this payment occurred (subclause 1, clause 1, article 223, clause 6, article 226 of the Tax Code of the Russian Federation). The same procedure applies to additional payments arising during the recalculation of vacation. You will withhold tax from it when paying additional money and transfer it to the budget until the end of the month when it occurred. There is no need to adjust previously made calculations or reporting.
If, during recalculation, the amount of vacation pay is reduced, an excessively withheld personal income tax will arise. You will credit it when paying taxes for subsequent periods.
For more details, see “How to correctly fill out the clarification on form 6-NDFL.”
For insurance premiums, the principle is the same: if the amount of vacation pay has increased, accrue contributions for the difference in the month of the additional payment; if it has decreased, adjust the period of payment of vacation pay and offset the paid contributions for the next month.
For more details see:
- “What taxes are vacation pay subject to?”;
- “Insurance premiums for vacation pay (nuances).”
IMPORTANT! We recommend calculating and paying compensation for late payment of vacation pay for the amount of the additional payment (Article 236 of the Labor Code of the Russian Federation). Otherwise there may be liability.
Features of payment of vacation pay in certain cases
At the end of the year, the employer is required to draw up and approve the employee vacation schedule for the coming calendar year. In this case, the employee is required to submit an application for the next leave. This statement serves as the basis for calculating vacation pay and determining the payment period. As a general rule, the employee goes on vacation from the date specified in the application, but by agreement of the parties this date can be changed. In this case, the employer must take into account the possible consequences for the payment of vacation pay. If the vacation date occurs later than specified in the application, then the payment of vacation pay can be made taking into account the first date. If the employee’s vacation begins earlier than the planned date, then the employer must also review the timing of payment of vacation pay so that there are at least three days between the date of payment and the date of going on vacation.
The period of payment of vacation pay is not affected by the upcoming dismissal due to staff reduction, or if the employee decides to write a letter of resignation of his own free will. In such situations, vacation pay must also be paid no later than three days before the start of the vacation, and all other payments are made on the last working day.
When planning vacation pay payments, another difficult situation may arise. The current labor legislation does not regulate the period for an employee to submit an application for leave, which may put the employer in a situation of forced violation of the Labor Code regarding the timing of payment of vacation pay. For example, an employee submitted an application for leave one day before its start date. In such a situation, it is impossible to make payments on time. However, the law allows the employer, when approving the application, to postpone the start date of the vacation, thus avoiding the risk of liability for late payment of vacation pay.
Advice: in order to avoid unexpected vacations, it is necessary to promptly inform employees of the vacation schedule, and when drawing it up, rely on the wishes of the employees.
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Some workers try to go on vacation as soon as they receive an entry in their work record book, hoping to get good vacation pay. But here the law is entirely on the side of the employer - the minimum period of work in an organization for going on vacation is regulated by the Labor Code of the Russian Federation. In addition, to calculate vacation pay, average earnings are taken, which a beginner simply does not have.
Example of calculating vacation payments
Let's consider the situation: an employee received 450,000 rubles for a year of work at the enterprise. (including additional payments for advanced training - 40,000 rubles). He is going on vacation for 14 days. Calculation of the amount of vacation pay:
- the amount for training is deducted from the annual income (450,000 - 40,000);
- the average monthly salary is determined (410,000 / 12) - 34,166.67 rubles;
- then we determine the daily income (34166.67 / 29.3). It turns out 1166 rubles;
- We multiply the average daily income by 14 (the number of vacation days), we get vacation pay - 16,325.37 rubles.
An accountant must always remember that payment of vacation pay 3 days before the start of an employee’s vacation is a mandatory requirement of law.
How can you divide your vacation?
An employee can take the entire vacation or divide it into several parts. The breakdown of vacation occurs by agreement between the employee and the employer’s administration. No additional documents are required. Simply, the date of granting each part of the vacation is recorded in the vacation schedule.
There is only one limitation: at least one of the parts of the divided vacation must be at least 14 calendar days. The employee can use the remaining days as he pleases. That is, you can take a vacation even for one day. If, of course, the employer does not mind.
This procedure is established in Article 125 of the Labor Code of the Russian Federation.
What are vacation pay?
The rules for granting various types of leave are determined by Chapter. 19 Labor Code of the Russian Federation. But the very concept of “vacation pay” is not disclosed there. Such payments are defined according to the meaning of their implementation.
Vacation pay is compensation to an employee for the period of his absence from the workplace when he exercises his right to rest. In fact, this is his salary for the time he will rest. Typically, this amount of money is calculated from the employee’s earnings as specified in the employment contract. It allows him to rest without serious financial losses.
Procedure for compensation upon dismissal
Primary and additional leave are taken into account. The duration of standard vacation, provided once a year, is 28 calendar days. If, before dismissal, an employee took the required basic leave, and according to the law, he is still provided with additional rest - 8 days, then upon dismissal he will receive compensation for these days.
Compensation upon dismissal is accrued regardless of the reason for which the employee leaves. Even if the reason is absenteeism. Upon dismissal at will or for other reasons, compensation is not paid in the following cases:
- The employee took all his vacation days off.
- Work experience - less than a month.
- The employment contract is of a civil nature.
Before resigning voluntarily, it is appropriate to study unemployment statistics around the world. Data analysis will allow you to make informed decisions.
Employer's liability
Including clauses in the contract that change the timing of payment of vacation pay (3 days before the vacation) is illegal from the point of view of the labor code. A similar rule also applies to the employee’s statement about this.
Administrative penalties may be imposed on the employer: up to 5 thousand rubles. – for a manager or entrepreneur and up to 50,000 rubles. - for a legal entity.
For individual entrepreneurs, a ban on carrying out activities for up to three months can also serve as a punishment.
How are vacation pay determined?
Absenteeism and other reasons for absence from work are not taken into account when calculating vacation pay. Sick leave amounts will be deducted when calculating the average salary. The same rule applies to business trips, additional payments for food, and travel. Vacation payments are taxable and are included in the new reporting form.
Additional paid leave
In addition to the regular annual leave, some categories of employees also have the right to additional paid leave. These categories include (Article 117 of the Labor Code of the Russian Federation):
- workers engaged in work with harmful or dangerous working conditions;
- employees with a special nature of work;
- workers with irregular working hours;
- workers working in the Far North and equivalent areas;
- workers whose provision of additional leave is provided for by federal laws (for example, “Chernobyl victims”).
Organizations, taking into account their production and financial capabilities, can independently establish additional leaves for employees.
The procedure and conditions for granting these leaves are determined by collective agreements or local regulations.
