What is financial assistance for vacation?
In order to answer the question of whether financial assistance is included in the calculation of vacation pay, you should decide what is meant by financial assistance in the context of vacation payments.
The Presidium of the Supreme Arbitration Court of the Russian Federation, in its resolution dated November 30, 2010 No. VAS-4350/10, states that financial assistance should include employer payments that are not related to the employee’s performance of a labor function and aimed at meeting the social needs of a citizen in a difficult situation. This could be, for example, damage to property and/or health due to an emergency, serious illness, death of a close relative, birth (adoption) of a child, etc.
According to the logic of this resolution, financial assistance—including vacation—should also include payments that:
- are not included in the wage system;
- are not paid on a regular basis;
- not related to labor productivity;
- are not stimulating.
And if this or that payment (it does not matter whether it is one-time or multiple) meets the specified 4 criteria, then it may well be classified as financial assistance.
In order to prove to the inspectors that such payments are precisely material assistance - for vacation or not, it does not matter - the employer company can provide a clear definition of material assistance, as well as the criteria for its provision, in the collective labor agreement or in the regulations on financial assistance. We can take the theses of the Supreme Arbitration Court of the Russian Federation that we have considered as a basis.
See the material “Regulations on the provision of financial assistance to employees” for more details.
Is financial assistance included in the calculation of vacation pay?
Article current as of: July 2021
Financial assistance is a measure of encouragement. It is awarded at the discretion of the employer. It can be received by the best employees who have demonstrated their success over a certain period, for example, a month.
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Financial assistance may be provided to an employee if any special situations arise.
In any case, this payment is a one-time payment and is not included in the employee remuneration system.
Will financial assistance be taken into account when calculating vacation pay, namely the employee’s average earnings? The legislator answers this question negatively and excludes financial assistance from the income that is taken into account when calculating the amount of vacation pay.
Terms of service
Vacation is provided to all employees who have worked for the company for a year (Article 114 of the Labor Code of the Russian Federation). In such a situation, an employee can qualify for paid days off for 28 days (Article 115 of the Labor Code of the Russian Federation).
In some cases, this period increases. For example, when an employee works irregular working hours, he receives an additional 3 days.
Leave can also be received by employees who perform a job function part-time. Part-time workers receive it. Vacation is provided according to the vacation schedule.
If an employee has just found a job, he can rest after 6 months of work. For some categories of employees this period is not taken into account, including minors.
Features of accrual
Vacation pay is payments that are made while an employee is on vacation. During this time, the employee does not receive wages.
The funds are provided to him at a time - 3 days before the vacation.
Vacation pay is calculated based on average earnings. To obtain this indicator, it is necessary to identify the billing period and summarize the income received during this period.
The legislator defines the concept of average earnings in the Labor Code of the Russian Federation. It is necessary to adhere to the rules established by law for its calculation.
What payments are taken into account?
When calculating average earnings, the employee's payments for the pay period are taken into account. You need to know that not all profits will be considered when making calculations.
Thus, the following incomes are not taken into account when calculating average earnings in 2021:
- temporary disability benefits;
- benefits that are not subject to personal income tax;
- business trips;
- payments that are compensatory in nature (for food, travel, etc.).
Certain types of bonuses are not taken into account in the calculations. Namely, those that are not provided for by the accepted employee remuneration system.
Average earnings
Average earnings are calculated using the formula: income received in the billing period/12/29.3, where:
- 12 – number of months of the billing period (may be less than 12);
- 29.3 – average number of days in a month.
When calculating average earnings, it is necessary to obtain data on the employee’s income for the billing period.
Such payments include the following:
- salary size;
- profit from piecework;
- non-monetary remuneration;
- royalties;
- additional payment for performing work functions overtime;
- bonuses and additional payments that are established by the remuneration system.
The billing period is determined in months that are fully worked out.
Days are excluded from this period if the employee did not work due to the following reasons:
- absence from work due to illness or injury, which is confirmed by a certificate of temporary incapacity for work;
- maternity leave;
- periods of downtime;
- leave without pay.
Financial assistance in calculating vacation pay
The enterprise may have a system of remuneration for employees who have worked best for a certain period, or who have carried out work without criticism for some time. Usually such a payment is called financial assistance.
Its main meaning is a stimulating effect. It is designed to improve the quality of work performed.
Is financial assistance taken into account when calculating vacation pay? Will it be included in “income” when calculating average earnings? These questions are very important, since the higher the income base, the larger the amount of vacation pay the employee receives.
How is the amount of vacation pay calculated? See here.
Does it turn on?
Material assistance, as well as one-time remunerations, are not included in the income base when calculating average earnings. It is excluded due to its absence in the remuneration system provided for the employee.
Above we determined which payments will be summed up to calculate the amount of average earnings. The resulting number must be divided first by the number of months that make up the billing period, and then by the average number of days in a month (29.3).
This way you can calculate your average daily income. By multiplying this number by the number of vacation days, you can get the amount of vacation pay that will be accrued to the employee.
FAQ
The process of calculating vacation pay quite often raises questions among employees. Indeed, the law says little about making calculations.
In fact, all actions are carried out by the accounting department and it can be very difficult to determine the correctness of the calculations.
In addition, in practice, different situations arise that should also be taken into account when making calculations. For example, how is the average salary for a part-time worker calculated, will income for an incompletely worked month be taken into account, and are all bonuses excluded from the income base?
Partial month worked
We have already mentioned that when calculating average earnings, only fully worked months are taken into account. What to do if an employee was sick or on maternity leave during the billing period? Or in his case there were other periods that should be excluded.
If such a situation arises, then it is necessary to take into account not the entire month, but only those days that the employee performed his labor function, then in order to calculate the days included in the total period, the following calculations must be performed:
29.3/number of days in a month*days that the employee performed his job function.
Let's demonstrate with an example. Ivanov A.P. goes on vacation. In September he took sick leave for 14 days. Accordingly, he actually worked for 16 days. Now let’s calculate the number of days that will be included in the billing period: 29.3/30*16=15.63
This is important to know: What taxes are withheld from vacation pay?
Do bonuses count?
Cash rewards are part of the remuneration system, so they are included in the income part. The timing of the accrual of the incentive does not matter.
Payments that are made per day, month or year are taken into account equally if they were issued during the billing period.
But these rules apply only to bonuses that are defined by internal documents and are not one-time in nature.
When should vacation pay be transferred according to the law? Read here.
Do I need to pay insurance premiums from vacation pay? Details in this article.
Part-time job
The part-time worker has the right to leave. Weekends at additional work are provided in parallel with the rest period at the main place.
Vacation pay is calculated according to the same rules.
The video shows what is taken into account when calculating
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How to correctly take into account financial assistance when calculating vacation pay for annual leave - an example
When paying for annual leave, the accountant sums up the employee's income for the year and divides it by days worked. The received daily earnings are multiplied by days of rest, resulting in the amount of vacation pay to be paid.
If the employee was paid financial assistance during the billing period, then it should be correctly taken into account when calculating average earnings.
The article describes typical situations. To solve your problem , write to our consultant or call for free:
Is it included by law?
The amounts included in total income for average daily earnings are specified in paragraph 2 of Regulation No. 922 of December 24, 2007.
Among the given payments are all those amounts that are included in the wage system. This is also confirmed by Article 139 of the Labor Code of the Russian Federation.
What is financial assistance and can it be classified as a payment related to wages?
Mat. assistance is financial support provided to an employee in connection with various life situations.
For example, an employer can help its employee with money in connection with the birth of a child, the death of a relative, a wedding, an illness, or a difficult life situation in which a person finds himself.
The decision to pay is made by the employer either on the basis of its local documentation or on its own initiative.
An organization may adopt local acts that stipulate for which an employee can be paid financial assistance, as well as its amount.
When the event occurs, the employee is paid a sum of money.
In addition, a person himself, having found himself in a difficult situation that requires significant cash injections, can turn to management with a request for financial support for a gratuitous plan.
In this situation, the employer independently decides to satisfy the applicant’s request.
Such material payments are in no way related to the employee’s work activity in the organization, his production function, or the completion of work tasks, and therefore such monetary assistance cannot be included in the wage system and is not included in the calculation of average earnings for vacation pay.
The same conclusion is confirmed by clause 3 of Regulation No. 922, which states that payments of a social nature and other plans not related to the work process are not included in the calculation.
It is immediately explained that such amounts can also include financial assistance.
You can calculate vacation pay online on the website using a calculator.
What is taken into account?
Regulation No. 922 clearly states that financial assistance provided to an employee in connection with various life situations is in no way related to wages and should not be included in the calculation of vacation pay.
However, in practice, many difficulties arise as to whether one or another payment to an employee should be taken into account in total income. This is due to the employer’s lack of a clear understanding of what the remuneration system is.
Many organizations do not bother themselves with the process of drawing up Regulations on remuneration, bonuses, and the Collective Agreement.
That is, in some companies there is no clear information which payment can be interpreted as a bonus and which as financial assistance.
The average earnings can only include those payments to employees that are related to:
- his work responsibilities;
- work merits;
- fulfillment of assigned work tasks;
- fulfillment of certain labor indicators.
Such payments are called bonuses and can be assigned based on the results of a month, quarter, year or other period, and can also be one-time in nature.
It is one-time bonuses that are most often confused with financial assistance.
One-time bonuses for achievements at work must be included in the calculation, but material assistance of a social and other nature not related to the employee’s work activity does not need to be taken into account.
What doesn't turn on?
A cash payment can be called financial assistance, which is not included in vacation pay, if the following conditions are met:
- it is not related to the performance of official duties;
- aimed at meeting social needs;
- is not specified in local acts and regulations as an integral part of remuneration;
- is not regular;
- does not stimulate the employee to perform better.
Examples of such financial assistance are the amounts:
- payments for holidays (birthdays, official holidays, company day);
- issued in connection with significant events in the life of an employee (wedding, birth, death);
- paid due to a difficult life situation (not enough money to pay a loan, treatment);
- prescribed in connection with natural disasters (fire, earthquake, flood);
- other payments of a social nature.
Example
Petrov will go on vacation from June 20, 2021.
Which payments should be included in the calculation:
- 5,000 is a one-time bonus paid in connection with the fulfillment of a certain labor indicator and is included in vacation pay.
Source: https://TrudGid.ru/otpusk/vhodit-li-v-raschet-otpusknyh-materialnaja-pomoshh.html
What is the significance of the fact that payments are classified as financial assistance?
The criteria for classifying certain payments as financial assistance for an employer may play a role:
1. When maintaining tax records.
The fact is that material assistance cannot be included in expenses when calculating the taxable base for income tax (clause 23 of Article 270 of the Tax Code of the Russian Federation). In turn, payments to employees that are not recognized as financial assistance are included in expenses.
Find out how financial assistance affects the amount of income tax in the Ready-made solution from ConsultantPlus by receiving a free trial access.
How financial assistance is subject to insurance premiums, read this article.
See also:
- “Is financial assistance to an employee subject to personal income tax?”;
- “We reflect financial assistance under the simplified tax system “income minus expenses”.
2. When calculating vacation pay.
Financial assistance can be either completely excluded from the formula for calculating vacation pay (clause 3 of the Regulations on the specifics of the procedure for calculating the average salary, approved by Decree of the Government of Russia dated December 24, 2007 No. 922), or in a number of cases and with certain restrictions included in it (clause 6 Rules for calculating the salary of federal civil servants, approved by Decree of the Government of the Russian Federation dated September 6, 2007 No. 562, hereinafter referred to as the Rules).
But when should financial assistance for vacation (or provided before it) be included in the calculation of vacation pay?
The answer to this question depends on the legal status of the employer's company. The fact is that the legislation of the Russian Federation establishes separate rules for calculating vacation for:
- federal civil servants;
- other employees (including employees of regional and municipal departments).
How to take into account financial assistance for vacation in accounting, as well as correctly calculate personal income tax and insurance premiums, ConsultantPlus experts explained. Get trial access to the system and study the issue in more detail.
Financial assistance in the amount of 50,000 rubles at the birth of a child
The issue seemed to be resolved. But legal disputes on this3 topic are not decreasing. Especially when we are talking about paying not 4,000 rubles, but a significantly larger amount. In particular, the payment of financial assistance at the birth of a child, which amounts to up to 50,000 rubles.
There is no need to pay personal income tax and insurance premiums on the amount of one-time financial assistance in connection with the birth of a child up to 50,000 rubles. This norm is established in subparagraph 3 of paragraph 1 of Article 9 of Law No. 212-FZ and subparagraph 3 of paragraph 1 of Article 422 of the Tax Code of the Russian Federation.
The uniform position of the tax department and the Social Insurance Fund is clearly defined: since financial assistance is not subject to insurance contributions, the company’s accounting department does not have the right to take it into account in the average earnings, which is used to calculate benefits for temporary disability, pregnancy and childbirth, and child care.
Financial assistance for the birth of a child in the permitted amount of up to 50,000 rubles, in fact, is no different from ordinary financial assistance in the amount of 4,000 rubles. No financial assistance can be included in average earnings.
Exactly the same position is supported by the courts, and you can easily find it in many court decisions.
Financial assistance (one-time payments) when calculating leave for federal employees: nuances
Federal civil servants include employees of departments who receive salaries from the federal budget without attracting other budgetary sources of funding (Clause 1, Article 10 of the Law “On the Public Service System” dated May 27, 2003 No. 58-FZ).
Financial assistance is a type of additional payments for a federal civil servant (clause 2 of the Rules). It is isolated from various allowances and incentives and therefore can be considered as unrelated to the remuneration system.
At the same time, in accordance with clause 6 of the Rules, financial assistance is included in the calculation of vacation pay for employees of federal departments. But not completely, but limitedly - like 1/12 of each accrued payment for the billing period before the vacation (12 months).
In this case, only actual payments are taken into account, and not regulatory ones, if any are provided for (letter of the Federal Tax Service of Russia dated November 23, 2007 No. BE-6-16/906). The formula for calculating vacation pay can take into account several payments of financial assistance - before or before the vacation (letter of the Ministry of Health and Social Development of the Russian Federation dated November 15, 2007 No. 3495-17).
The jurisdiction of the Rules introduced by Resolution 562 applies to all positions in federal departments, except for those for which the amount of remuneration is determined based on performance indicators (in the manner established by paragraph 14 of Article 50 of the Law “On the State Civil Service” dated July 27. 2004 No. 79-FZ).
Is financial assistance taken into account when calculating vacation in a private company?
In private firms and all those business entities that do not belong to the system of federal departments, material assistance is not taken into account when calculating the amount of vacation pay - like other social payments. This rule applies, in particular, to municipal employees (decision of the Kovylkinsky District Court of the Republic of Mordovia dated March 25, 2015 No. 2-116/2015).
It should be noted that the very fact of using the concept of “material assistance” in local and industry-wide departmental (at levels below federal) standards will mean nothing if the payments associated with this concept do not actually meet the criteria for material assistance. Payments called material assistance in the local act, but not corresponding to them in essence, will be considered labor payments (letter of the Ministry of Finance dated June 26, 2012 No. ED-4-3 / [email protected] ). They will need to be taken into account when calculating vacation.
If in the regulations governing the work of specifically federal departments, the concept of “material assistance” is directly associated with the wage system (and does not fall under clause 3 of the Regulations under Resolution 922), then, nevertheless, such assistance should be taken into account when calculating vacation pay for federal employees necessary according to the Rules approved by Resolution 562.
Thus, paragraph 32 of the Regulations, introduced by order of Rosobrnadzor dated July 17, 2015 No. 1247, establishes that employees of the Federal Service for Supervision in Education and Science are entitled to a one-time provision of financial assistance in the amount of one salary. The connection between financial assistance and labor function is obvious, but its amount is not included in the calculation of vacation pay in full, but only in 1/12 of the part - as prescribed by a higher departmental regulation.
See also “Financial assistance upon dismissal of one’s own free will.”
Is financial assistance income?
Let's consider whether material assistance is income from a tax point of view. In Art. 210 of the Tax Code of the Russian Federation states that when calculating personal income tax, all income received by an individual in a specific tax period is taken into account. But in clauses 8, 8.3 and 8.4 of Art. 217 of the Tax Code of the Russian Federation provides a list of payments that are completely or partially not subject to taxation, among which are some types of one-time financial assistance:
- in connection with the death of an employee or a member of his family;
- victims of a natural disaster or terrorist attack;
- at the birth (or adoption) of a child (within 50 thousand rubles).
For all other types of financial assistance, the non-taxable limit is 4,000 rubles. per year - an amount exceeding this limit is subject to taxation (clause 28 of article 217 of the Tax Code of the Russian Federation).
Is there a regional coefficient for financial assistance? When paying for labor, these coefficients are widely used in the Far North and some other areas. But the coefficients do not apply to financial assistance, since it is not included in wages (Article 129 of the Labor Code of the Russian Federation). This position is adhered to by the courts and some government departments (for example, letter of the Ministry of Labor of the Russian Federation dated July 22, 1999 N 716-7). The amount of financial assistance is determined by local acts and collective agreements.
Results
Financial assistance for vacation is included in the calculation of vacation pay by an employer in the status of a federal department, but not in full, but in the amount of 1/12 of the actual payments. For other employers - it is included only on the condition that the payments, which are called financial assistance by local standards, are actually labor payments (incentives, incentives). Payments in the form of financial assistance that are not related to the labor function in private firms and budgetary organizations that are not related to federal departments are not taken into account when calculating vacation pay.
As a rule, the frequency of payments is not a criterion for classifying them as financial assistance or labor incentives.
Sources:
- Tax Code of the Russian Federation
- Labor Code of the Russian Federation
- Law “On State Civil Service” dated July 27, 2004 No. 79-FZ
- Decree of the Government of Russia dated December 24, 2007 No. 922
You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.
Should financial assistance be taken into account when calculating vacation pay?
Let's consider whether financial assistance is included in the calculation of vacation pay. Clause 2 of Government Resolution No. 922 lists all payments taken into account when calculating the “average”, incl. for vacation pay:
- wages calculated at tariff rates and issued in cash;
- Commission remuneration;
- allowances, surcharges;
- compensation payments;
- bonuses and rewards;
- other payments.
Based on clause 3 of this Regulation, it follows that financial assistance is not taken into account when calculating vacation pay.
