Employer’s liability for the detention of wages to the employees may be increased

Article is prepared by Alexey Vorobyov, a lawyer of Confidence Group, 28.03.2016

The draft federal law prepared by the Government of Russia, providing raising employers' liability for the delay in the payment of wages to workers and a number of other illegal acts in labor relations, was introduced for consideration to the State Duma of the Federal Assembly of Russia.

The urgency of this draft law and, therefore, the need to consider it carefully is proved by the fact that the situation with payment of wages has been changing for the worse for the recent years in Russia.

Russian regions suffer the most of all, such situation emerged in small private enterprises, in the public sector, starting to affect the medium-sized businesses as well.

The authors of the draft law explains in the note that, according to the data of the Federal State Statistics Service, as of October 1, 2015 the total wage arrears amounted to 3 466 million rubles. The total wage arrears increased by 233 million rubles (7.2%) as compared to September 1, 2015, and by 934 million rubles (36.9%) as compared to October 1, 2014.

The explanatory note to the draft Federal Law № 983383-6 «On Amendments to Certain Legislative Acts of Russia on increasing the employers' liability for violations of the law relating to the remuneration of labor ", points that it was developed in response to the List of orders of Russian President after a meeting of the State Council of the RF as of October 4, 2013 aimed to increase the liability of employers for violating the law relating to the remuneration of labor. The changes concern the optimization of legal regulation of the timing of wages payments and the tightening of liability for violation of the relevant legal regulations and other offenses in ​​labor law.

The Labor Code of Russia (hereinafter - the LC RF), the RF Code of Administrative Offences (hereinafter - the Code of Administrative Offences), the Civil Procedure Code (hereinafter - the Code of Civil Procedure of Russia) are supposed to be the subject of changes.

This draft law provides clarification of the provisions of Article 136 of the Labor Code regarding the timing of wages payments to the employee. It is proposed to establish that the exact date of payment of wages is determined by no later than 10 calendar days after the end of the period for which it is accrued.

At the same time, the draft law proposes to amend Article 5.27 of the Code of Administrative Offences, providing increased responsibility for violation of labor laws for those previously brought to administrative responsibility for a similar offense. For this purpose the numbering of Parts of Article 5.27 of the Code of Administrative Offences is proposed to change: Part 2 of Article 5.27 of the Code of Administrative Offences provides increased responsibility for repeated violation specified in Part 1 of Article 5.27 of the Code of Administrative Offences; Part 5 Article 5.27 of the Code of Administrative Offences provides increased responsibility for repeated violation specified in Part 3 of the Code of Administrative Offences.

The optimizations of the provisions of Article 136 of the Labor Code correlate to the changes of Article 5.27 of the Code of Administrative Offences. Article 5.27 of the Code of Administrative Offences is planned to be added with Part 6 assuming, as a separate administrative component, partial or complete failure to pay wages to employee within the prescribed period if these actions do not contain a criminal offense.

In case of this violation, officials may receive a warning or an administrative fine in an amount from ten thousand to twenty thousand rubles, for persons conducting entrepreneurial activity with no separate legal identity the fine in an amount from one thousand to five thousand rubles. The fine for legal entities in the same situation is from thirty thousand to fifty thousand rubles.

The draft law also proposes to add Part 7 to Article 5.27 of the Code of Administrative Offences, establishing increased responsibility for the same action made by a person previously prosecuted for the same offense.

Part 7 of Article 5.27 of the Code of Administrative Offences provides an administrative fine for officials in an amount from twenty thousand to thirty thousand rubles or disqualification for a period of one to three years; an administrative fine for persons conducting entrepreneurial activity with no separate legal identity - from ten thousand to thirty thousand rubles; for legal entities - from fifty thousand to one hundred thousand rubles. It means that if the draft low is adopted, partial or complete failure to pay wages to employee within the prescribed period will be dedicated to the separate administrative component.

The negative consequences for the employer committed the act will include not only administrative responsibility. The draft federal law proposed to toughen the financial responsibility of the employer, adding Article 236 of the Labor Code with provisions. Provisions state that in case of non-payment (or partial payment) of wage to worker within more than one hundred and eighty days, the employer is obliged to pay them with interest payments (cash compensation) in the amount of not less than one hundred and fifty of acting key rate of Bank of Russia, from the non-paid-in-time amount for each day of delay, starting from one hundred eighty-first day after the delay to the day of actual payment inclusive.

The existing position of Article 236 of the Labor Code, determining the payment of interest on the unpaid amount at the rate of one three-hundredth of the acting key rate of Bank of Russia, is still being present. The draft federal law proposes to oblige the employer to pay interest twice a larger size (one hundred and fifty of the acting key rate of Bank of Russia) upon the expiration of one hundred and eighty days after the failure of the payment period.

This means that the draft law involves the introduction of a progressive scale to increase the size of the monetary compensation, if the non-payment of wages continues for more than six months.

Authors of the draft law propose to add to the Article 360 of the Labor Code changes, allowing unscheduled inspections of employers by the state labor inspectors, including cases of late payment of wages or wage-setting at a rate below the minimum wage. Now such inspections may be carried out in case of complaints with the consent of the prosecution. If the draft law is adopted, state authorities will have more opportunities for actions against violations of workers' labor rights by employers.

At the same time, the draft law recommends to optimize the text of Article 392 of the Labor Code, which largely affects the interests of employees: "Employees have the right to apply to the court for resolution of individual labor disputes on dismissal within one month from the date of delivery of the copy of the order of dismissal or the date of grant of the work record book. Employees have the right to apply to the court for resolution of individual labor disputes of non-payment of wages fees and other payments within one year from the date of payment of the wage fixed term, in other disputes - within three months from the day when he/she knew or should have known about the violation of the rights".

In addition, the draft law intends to add to the CCP a Part 6.3, providing that actions for the restoration of labor rights may also be filed in the court at the plaintiff's residence.

All these changes fully meet the interests of the workers, who are often faced with a lack of opportunities to claim their rights. In addition, the draft law stimulates employers to take workers labor rights more seriously.

This is especially important under the rough ride on labor market and the economy. Such tightening of liability for the offense, and optimization of a number of other legal mechanisms will contribute to the relief of the existing problems.

It gives us all grounds to estimate this draft law as positive and hope for its adoption as soon as possible.