When a holiday leave gives you less money in Russia
Make provision for a rainy day but in good time’ is true for Russia. As we speak, many people are thinking of the place for the New Year holidays. The Government of the Russian Federation has already approved the public holiday calendar for the next year: 1-10 January, 2016 are non-working days.
If you want to have another week off (e.g. from January, 11 till January, 15), hold on! You may come up a significant part of your income short.
New Year fairy-tale and fact
«I remember the time when the top-managers of one foreign company were going on a holiday leave in January. I showed them in figures how much money they would lose. No more questions – none of them wanted such a holiday!», – said my colleague who deals with payroll.
We often face the fact that foreign managers are not aware of the Russian legislation. However, public holidays in May and June are over and it turned out Russian employees also do not always understand why it is not a good idea to go on holiday in the months with more public holidays.
In fact, it’s simple: the fewer working days in the month, the more such day costs. In addition, a leave day costs less compared to a working one (due to another calculation method).
Let’s look into this matter further.
- Holiday pay
Holiday pay is calculated based on the average annual daily earnings which is divided by 12 months and the average monthly number of calendar days – 29.3.
Let’s assume that the company manager’s wage is 200,000 rub. per month. He decided to prolong his winter holiday and take 11-15 January inclusive as a holiday leave.
Calculating his average daily wage:
2,400,000/ 12 / 29.3 = 6 826 rub.
Thus, the holiday pay for 5 days in January is:
6,826 * 5 = 34,130 rub.
The actual working days (and not the calendar ones) are taken into account in calculation of a wage.
Consequently, in our example the cost of 1 working day in January, 2016 is:
200,000 / 15 = 13,333 rub.
The manager will be in the office for 10 days out of 15 possible due to the holiday leave in January. Thus, his wage for January is:
13,333 * 10 = 133,330 rub.
Total for January:
34,130 (holiday pay) + 133,330 (wage) = 167,460 rub.
Loss of income is:
200,000 – 167,460 = 32,540 rub.
That means over 16% of a common monthly income of such manager. It goes without saying that if the manager took two weeks instead of one, his loss would be enormous.
Warn your employees!
To avoid painful surprise and indignant questions to the accounting department, we advise to warn the employees about New Year, May, June and November public holidays in advance. It’s better to give an example in figures like we did.
You will demonstrate your concern for the employees as they will be warned about possible financial loss. Moreover, such unpleasant news will dissuade many managers from taking a New Year holiday leave referring to ‘a slack period in January’. That means you will not have to decide who will work if everyone goes on holiday.