From November 1, 2018, salaries in Moscow will be increased for almost all employees (except for workers on maternity leave and parental leave until the child reaches the age of three)[1].
How to correctly formalize an increase in salaries for employees by agreement of the parties, what documents must be completed, in what order and within what time frame? What comes first: additional agreements to employment contracts or an order to amend the staffing table? Is it necessary to familiarize employees with the general order to increase salaries?
Legal basis for salary increases
The amount of money that must be paid to the employee based on the results of work is fixed in the employment contract. This is the salary that an employee is entitled to for all the time worked or the amount of work performed.
Salaries are paid monthly, and their amounts are regulated by Article 135 of the Russian Labor Code. Article 134 of the Labor Code states that it is necessary to increase wages. This is due to inflation in the country and rising prices.
At the same time, the HR and accounting departments need to carry out very painstaking work so that the salary increase is justified and formalized properly.
According to Article 129 of the Labor Code, wages can be increased in the following ways:
- raise the tariff rate;
- raise the base salary, which is specified in the employment contract.
In addition, management can set increased percentages on compensation and rates, and decide on bonuses and additional payments. Such additional funds are listed in Article 129 of the Labor Code, which states that the manager can personally decide to increase the salaries of his employees, on his own initiative.
Where can I complain if my salary is not indexed?
If an employer does not index wages for more than a year in accordance with a collective labor agreement, local regulations or agreements, his actions are regarded as a violation of labor legislation. Fine for violation of labor legislation in accordance with Part 1 of Art. 5.27 of the Code of Administrative Offenses ranges from 1,000 to 5,000 rubles for officials, and from 30,000 to 50,000 rubles for organizations. You can complain about a violation to the state labor inspectorate, the prosecutor's office, or go to court.
By filing a claim, an employee can bring the employer to administrative liability. But it is worth keeping in mind: if an employer periodically increases the salaries of employees or pays them bonuses, then he fulfills the requirements of the Labor Code and may not index wages if the local act states that increasing salaries and/or paying bonuses is equivalent to indexation.
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Increasing the salaries of all company employees
An increase in wages may affect all employees of the enterprise at the same time. In this case we are talking about indexing. As Article 134 of the Labor Code states, indexation must be carried out annually, because prices change in the state and there is an inflation index. The possibility of increasing wages should be reflected in the clauses of the employment agreement. You can also use special administrative acts.
Sometimes employers, who have the right to independently raise wages, establish that indexation is carried out once a quarter or once every six months. In this case, the head of the enterprise himself can set the date of such an event.
Most often, wage increases are planned for the end of the year, when the government, the Central Bank and statistical authorities announce information on the level of inflation in the country. A special coefficient or percentage is used by which the salaries of all personnel are raised.
The coefficient may vary; its calculation depends on the level of consumer prices, inflation, minimum wage and other factors.
Important
If an organization is subject to an industry agreement and has not provided a waiver of participation in the association of employers in advance, it is obliged to take into account the conditions prescribed in Article 48 of the Labor Code.
Should wages be indexed from February 1?
The salary indexation date is indicated in the collective agreement or in a regulatory act. Such a document specifies information about the timing and indexation rate, as well as what part of the salary is indexed. Often, employers index wages on February 1, since by this time Rosstat announces the official inflation for the previous year. But this date is not mandatory; it is different for all organizations and is set by internal
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documents.
According to Rosstat, inflation in the Russian Federation in 2021 amounted to 4.91% compared to 3.04% a year earlier.
Increasing the salary of an individual employee
If we are talking about increasing the salary of an individual employee, then the procedure must be justified. There is Article 132 of the Labor Code, which prohibits discrimination against employees. One should also take into account Article 3 of the Labor Code, which states that an employee cannot receive additional benefits because of his religion, social status, language, financial status, gender and race.
That is, you can apply for a salary increase solely on the basis of your own labor achievements and qualifications. The employee himself may demand an increase in wages if management does not show such initiative. In this case, the employee needs to write a statement justifying why he deserves a salary increase and what benefits the company received thanks to his work. The application must contain a request for a salary increase.
For example, you can write : “I ask you to raise my salary, since under my leadership the department has increased sales volumes.” If management meets the employee halfway, an appropriate order is issued to increase the salary or tariff.
What else can you do to get a salary increase?
Be creative and assertive. Modesty is a surefire way to go unnoticed. So roll up your sleeves and our tips will help you:
- Observe the work of your department. If you have any ideas about how to use your working time more efficiently, then go to your boss, having prepared in advance all the economic calculations that confirm the high efficiency of innovations that you are ready to install in your department. When the boss becomes ecstatic about your idea, say that a salary increase would be very helpful, because there is a lot of work to be done. If you manage to justify everything, he will not resist.
- If you have a decent amount of work experience, your ideas contribute to the growth of the company’s income, if you are ready to take on additional responsibilities for additional pay, then it makes sense to come to the boss with your ideas. It is important to conduct this conversation in such a way that his refusal does not put an end to your cooperation at all. That is, one should speak not assertively, but delicately and streamlinedly. In general, diplomacy is a very useful skill in resolving many issues and in the issue of salary increases in particular.
What you should never do is tell your boss that he increased someone’s salary and is “rubbing” you. Solve your problems without involving anyone in resolving the conflict situation. In the end, if you are really worth that much, quit and sell yourself for more to another company.
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How does the minimum wage affect employee wages?
The minimum wage, which stands for minimum wage, is set at the state level. In 2021, Federal Law No. 421 is in force in the Russian Federation, in which the minimum wage is set at 9,489 rubles. This is 85% of the living wage. In the future, the government plans to equalize both of these indicators, so the minimum wage will increase, which employers should take into account.
Important
Each Russian region has its own minimum wage, established by local authorities. This is what local employers need to focus on.
As Article 133 of the Labor Code states, the monthly income of an employee who has worked the entire reporting period cannot be less than the minimum wage, so this is a very important indicator. True, if an enterprise is not subject to the minimum wage agreement in the region, changes in this indicator will not affect the wages of its employees.
As a result of passing the probationary period
In most enterprises, before hiring an employee, he is required to undergo an internship, after which a choice is made: the employee is suitable for the job or his skills are insufficient . Since the salary level during the internship is much lower than the salary of full-time specialists. In these circumstances, raising the level of remuneration motivates the desire to develop in the company, achieving career growth.
If the organization has in its internal documentation a procedure according to which this action is carried out. Then, after a successful internship, the employee must write a memo stating an increase in wages.
Justification of the reasons for salary growth
Wage increases must be justified. Therefore, management has to take care of the proper execution of this process and draw up documents that will confirm that the decision was made lawfully.
The employee whose salary is going to be increased must be notified in advance. In particular, this is provided for in Article 74 of the Labor Code, according to which the manager must tell the employee why his salary will be increased. This must be done in writing, two months before the planned salary increase.
Important
The employee whose salary will be increased must sign the document to prove that he knows about management’s plans.
The main reasons for the increase in wages are inflation in the country and special circumstances. The latter include:
- Obtaining higher education that corresponds to the employee’s specialization. In this case, the document on the basis of which the salary will be increased will be the diploma provided by the employee.
- Increased qualification level. For example, an employee has completed special courses and trainings necessary to perform his duties, providing a document confirming their completion.
- Solid employee experience. For example, after working for 10 or 15 years at an enterprise, you can count on an increase in wages, if, of course, the employee’s qualifications also grew along with the experience gained.
- Receiving additional education.
If the increase in salaries is associated with the situation in the country’s economy, that is, an increase in prices for basic goods and inflation, it will be enough to issue an appropriate order indicating this reason.
Important
If the salary has increased due to inflation, there is no need to notify the employee in advance; the employer must notify the entire team unilaterally.
Salary reduction: legality, permissible reasons
In most cases, salary reduction is a legal action that does not violate applicable regulations. The main thing is that the employer himself complies with all the rules specified above. It is permissible to reduce wages both for one employee and for all at once.
A downward change in salary is permissible if the following conditions are met:
- Reorganization of an enterprise when the technical and organizational conditions for performing work change.
- Demotion of employees.
- A real decrease in the company's income. In this case, the manager reduces salaries to avoid a complete shutdown of production.
Without the reasons described above, employers have no right to reduce wages.
Registration of salary increase
Proper documentation of salary increases includes the following processes:
- A corresponding order is drawn up (form T5). The document must indicate the date from which the employee’s or employee’s salary will increase. If there are several employees, it is advisable to arrange their list in the form of a table. Or issue several orders. Specify the passport details of the staff members whose salaries will be raised, and the number of the department in which they work;
Important
If, along with an increase in wages, an employee receives a promotion, that is, a new position, this must be indicated in the order.
- When the order is issued, you need to make changes to the employee’s documents. We are talking about documents from the HR department. In particular, data on salary growth should be included in the additional agreement, which is filed with the existing employment contract. Changes are made to the employee’s personal card, and if he has a new position, then to the work book.
- If the salary of all personnel is raised, it is advisable to issue an order on remuneration in advance, which indicates the prospect of indexation. This document will be required to be signed by all employees upon review at the time of employment. In this case, indexation is carried out on the basis of an order and additional agreements to the employment contract are not needed.
- A certificate with a list of employees whose salaries are to be increased is sent to the accounting department. The document must indicate how much each amount of remuneration has increased. You can enter a percentage or coefficient if we are talking about the overall growth of salaries in the enterprise.
The date the order for salary increase is issued will become the start date of new payments.
Remember
If the manager issued an order, for example, on the 12th, and increased salaries began to be accrued only on the 1st of the next month, this violates the rights of employees. They can complain to the labor inspectorate. In addition, all documents drawn up during the salary increase must be signed by both the manager and the affected subordinate. This will help avoid conflict situations in the team and will become an evidence base.
Registration of salary changes for all employees or several
It often happens that management decides to change salaries for all employees or for a certain group. If the salary increases, then no prior agreements will be required.
You just need to formalize an agreement that the working conditions are changing. For example, that wages are increasing. The document sets out the reasons for such grounds along with the period during which the changes will apply.
But employees have the right to refuse such adjustments. For example, when a salary increase contributes to the loss of the right to one of the benefits.
If one of the subordinates refuses, but the others do not, then for the first one it will be necessary to provide for a reduction in job responsibilities. Otherwise, the situation will look like discrimination to inspectors.
Tips for employers to increase wages
The main mistake an employer can make is to rely on personal motives when raising wages. You cannot raise an employee’s salary simply because he is a relative, he has a good relationship with his boss, and he is liked by the team. It is necessary to be based on the professional qualities, successes, achievements of the employee, his importance to the enterprise.
For example : it is unfair if the salary of the deputy store manager has increased significantly, but the salary of the manager himself has remained at the same level.
It is not recommended to separately raise the salaries of employees who work in the same position and perform the same work. In this case, it is advisable to award a bonus to the distinguished employee.
The law regulates only a few individual issues relating to wage increases. There are no specific, step-by-step instructions that would be contained in the laws of the Russian Federation or codes. We have presented the most common procedure, generally accepted at most enterprises, for justifying and processing wage increases. It is legally sound and serves as a clear recommendation.
What to do if an employee asks for a salary increase
“Netology” understands what a boss should do if an employee comes to him and asks for a salary increase.
Evgeny Pugachev, regional director of Fort Capital:
He worked as the head of an engineering and analytical center, supervising 15 people, and from time to time employees asked for a salary increase.
There was always one requirement on my part: solving an unconventional or new problem for an employee. De facto - advanced training. At the same time, no one relieves him of his previous duties.
We achieve two things at the same time:
- optimizing time to complete previous tasks,
- solving a new problem that develops both the business and the employee.
In fact, we have advanced training and optimal work processes. Many specialists then went for promotions in a natural way.
He acted similarly when asking for a promotion. He gave authority from the moment the request was received, and two months later he made changes to the staffing table. Those who “can’t pull it off” merged themselves.
Daniil Pavlyuchkov, CEO of Mailburn:
A change in salary without a position is quite a rare case. In 80% of cases, this is the initiative of an employee who comes up and says that “it’s time.” I don’t see anything bad or shameful in this, the main thing is that the request is justified. Any hint of threat, resentment or blackmail inclines me towards dismissal rather than towards constructive dialogue.
For me, as a leader, the following words can be weighty arguments:
- “I’ve learned X, Y, Z over the last six months and now I use it all the time. I believe that I have grown as a specialist and am worth 5,000 rubles more.”
- “Hi, I’ve been working for the company for over a year now, and the job market has changed a lot. New employees who are just joining now earn almost more than me, and this is unfair. Let me increase my salary so that I feel needed.
- "Hello. It's an awkward conversation, but I can't help but start it. For the last 4 months, I have been the best at fulfilling KPIs among my department. I think these are very good results, but even more can be achieved. And I know I can, but I want confirmation from you. Let’s talk about changes in my salary based on the results of work over the last six months.”
Kirill Klyushkin, Director of Operations at Alconost:
In our company, the main criterion for increasing an employee’s salary is his professional growth. We raised employee salaries several times on our own initiative because we saw their development dynamics. This is something like gratitude and recognition: “You are growing, thank you, and we are growing with you.”
Of course, it is important that the person is loyal, meets our concept of a quality employee and, most importantly, generates great results.
We factor an employee’s growth into both our expectations for his responsibilities and his salary. At the start, you can give a little lower, but agree to return to the conversation about payment again in a few months.
After all, if the starting salary is not very high, it is easy to raise it. And to do this, the employee needs to take relatively small steps.
And this is a great motivator: you grow → see the result → grow more and faster. And if the salary is close to the psychological maximum even without an increase, then in order to receive an increase the employee will be required to do something qualitatively new: expand the range of tasks, take on more responsibility.
Setting specific KPIs does not work for us. Usually we already notice whether an employee stretches and strives to do more than is asked. And the desire to raise wages arises independently, as a reflection of what we see.
Andrey Kulikovsky, Kideria Marketing Director:
The employee needs to be offered a specific scheme on how he will optimize his production costs, reducing the time spent on them, and take on a certain workload.
Maria Zaikina, head of the press service of Svyaznoy:
You should not explain the need to increase your salary for personal reasons. Always keep in mind that this is a business. Everyone's personality is important, but it is impossible to take into account every change in the personal life of every employee, especially in a large corporation where there are at least several thousand of them.
“I have a lot of loans” is a strange argument for a promotion. If you are in trouble and need support, ask the company for one-time financial assistance rather than a salary increase. At least it will be more honest.
Always use numbers as arguments. You saved XXX rubles for the company, increased brand awareness by YYY%, brought in ZZZ new clients, or reduced labor costs on AAA. Come with numbers, and your arguments will receive much more attention. The format for presenting numbers is also very important - let it correspond to the specific perception of your manager.
An analyst will be comfortable seeing information in Excel, and a project manager will be comfortable seeing information in a format similar, for example, to Jira or MS Project.
There is a great example where a creative department employee brought his manager a rationale in the form of an infographic. It was examined, the result was positive, and the manager now sometimes talks about the case itself at conferences dedicated to the successfully completed infographic.
Irina Zhebeleva, HR manager PRT:
Salaries are increased for valuable employees. Accordingly, if you want to get a raise, increase or clearly demonstrate your value to the employer.
Visual demonstration: prepare for the conversation in advance, select cases of your successful activities, with visual data. Remember - they pay for results.
Increase your value: if the result of your activities is difficult to measure, but you want professional and financial growth. Yes, yes, employers value those who are focused primarily on growing professionally and, as a result, financially, and not just financially.
Think about what else you can do in this company? Perhaps you can help colleagues from a neighboring department, learning the basics of a new profession along the way? Perhaps you can take on some additional functions? Develop a service or product that didn’t exist before?
Slightly altering the well-known saying, I can say: activity, patience and work - this is faith, faith! "Work, work, money will come."
Galina Evtyagina, HR Director at KRAM:
Our company has a ranking system (“ranks”), which takes into account three components (without ranking by importance) and forms the employee’s value for the company:
1. Knowledge and qualifications.
2. Special skills.
3. Motivation and loyalty.
This is a kind of qualification scale. An employee who wants to receive a salary increase can declare his desire to undergo an assessment (certification) procedure, which will allow him to receive the next rank and, accordingly, an increase in the permanent part of his salary.
In addition, we have a variable salary component that corresponds to the employee’s current successes (for example, in current projects). The variable component is related to the constant component (interest), but its payment is timed to achieve a financial result for the company.
Katerina Gavrilova, CEO of DigitalHR:
First of all, you need to understand why the employee wants a salary increase. Perhaps in the last few months he began to do more work than was agreed upon when joining the company. In this case, it is necessary to correctly evaluate the entire scope of work and increase the salary accordingly. In such a situation, nothing will change - the employee will receive a well-deserved increased compensation.
There is a second option. There are times in life when a salary increase cannot keep you waiting. We must remember that working relationships come first, so the option of “making the employer feel sorry for you” with your stories is not an option at all. Get ready, you'll have to take on more work: a new task, communicating with a new client, possibly attending conferences after hours, supervising interns.
And, of course, the third option. Simple blackmail in the style of “I’ll just leave for another job.” Here you need to decide how important such a specialist is for the company. As practice shows, even in the case of a salary increase, employers prefer to part with such a specialist when they have found a potential replacement for him. There shouldn't be any "irreplaceable" people. Because no one can know for sure when such an employee will put a spoke in the wheels and suspend the vital processes in the company with his sudden departure.
Natalya Storozheva, general director of the Perspective business and career development center:
I will answer the question from the employee’s perspective. Increasing your own salary is a classic selling your value to your boss.
Be proactive. Ask your manager for a meeting, say that you want to discuss important work issues, that you have ideas and suggestions. During the conversation, demonstrate loyalty to management, interest in work, and willingness to work for the benefit of the company.
Offer something valuable that could change the company's operations for the better. It's good if you know how to attract new clients, increase the efficiency of an advertising campaign, or reduce production costs. Demonstrate your willingness to take on these bold ideas and actually be willing to do it.
Monetize your offers. Make preliminary calculations and show how much money your brilliant idea will help you earn or save. And only after that move on to the fact that you wouldn’t mind if the salary of a unique employee like you, who carried out a super project to attract a large customer to the company, rose by 10-15%.
Demonstrate that you understand the connection between the results of your work and salary growth, that you are not asking for “money up front” and that you are willing to actively work. It is important that the employer feels that you are a reliable employee who can be relied upon.
Don't try to act like a resentful employee who isn't appreciated. Don’t refer to the fact that market salaries are higher, that you don’t have enough money to live, that you want to buy a new car, or that your wife is nagging you. This doesn't motivate anyone to pay you more.
There is no point in blackmailing management by writing “demonstrative” resignation letters, much less threatening to leave for competitors. This may work for a short time, and you may actually get a raise, but at the same time, employers always start looking for a replacement for such an employee. Put yourself in their place and think about who needs an extortionist in the team, ready to defect to the side for a piece of silver.
Don’t raise a wave of popular anger, don’t embarrass your colleagues with conversations like: “The tigers don’t get enough meat!”, don’t organize trade union meetings and don’t try to fight for universal justice. Solve your own problem if you really want to achieve results.
Successful negotiations to you!
More useful tips in our series in the “Corporate Stories” letters. In it, “Netology” talks about the office life of two middle managers - Kolya and Tolya. We send one letter every two weeks.
Indexation for public sector employees
In budgetary organizations, this procedure occurs according to instructions received from above. The necessary amounts for its implementation are provided by the federal and regional budgets. In some cases, indexation is entirely generated by regional funds.
The procedure for employees of federal institutions provides that payments are made on the basis of a decree of the President of the Russian Federation and are regulated by the law on the state budget. In regional budgetary organizations, payments are made on the basis of the laws on the budgets of the relevant constituent entities of the Russian Federation.
However, in certain periods indexation may not occur. This situation occurred from the beginning of 2014 to the end of 2021. From January 1, 2021, indexation was resumed.
