Russia to Modify Benefits and Time Off Policies for Employees
New Changes to Russia's Average Earnings Calculation: An In-depth Analysis
Starting September 1, 2025, a game-changer is on the horizon for wage calculations in Russia, as announced by the esteemed Russian lawyer, Ivan Solovyov, in a recent interview. This shift in policy will impact vacation pay, severance packages, and other payments.
In the future, any periods where an employee receives full or partial wage retention during periods of being released from work will no longer factor into the average earnings calculation. Instead, payments will be determined based on the actual time worked.
To avoid miscalculations and erroneous payments, Solovyov advises employers to review and update their internal documents, regulations, and calculation templates ahead of time.
Interestingly, during the first quarter of 2025, the average salary in Russia surpassed 91,000 rubles for the first time, marking a 15.5% increase compared to the same period the previous year [1].
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New Calculation Method
Under the new regulations, the calculation of average earnings will be based on fixed average working values, such as number of days or hours, rather than the actual number of working days or hours in a specific month [2]. For standard schedules, the average daily earnings over the past 12 months will be multiplied by a standard number of approximately 21.7 working days per month. Employees with special work schedules, such as shifts or cumulative hours, will have their average hourly earnings multiplied by an average monthly number of working hours.
Effects on Vacation Pay, Severance, and Other Payments
The total amount paid for vacation and severance will remain relatively unaffected for most employees, as the new method will smooth out differences across months [2]. However, there will be significant changes in the calculation of premiums and bonuses included in average earnings.
- Only monthly bonuses accrued for time actually worked will now be considered.
- Large irregular bonuses paid once a year may no longer be included in the calculation of vacation pay or severance, potentially reducing those payments for employees with such income patterns.
- The new rules will ensure average earnings calculations are strictly tied to money actually credited to the employee’s account, eliminating distortions from previous methods that considered hypothetical or averaged earnings [2].
In Summary
| Aspect | Old Method | New Method (From Sept 1, 2025) ||-----------------------------|-------------------------------------------------|--------------------------------------------------|| Basis for average earnings | Actual working days/month or hours worked | Fixed average working days (21.7) or hours/month || Calculation of bonuses | Included various bonuses, sometimes averaged | Only monthly bonuses for actual worked periods || Effect on payments | Payments varied monthly depending on days/hours| Payments more stable, less monthly variability || Treatment of irregular bonuses| Sometimes included in calculations | Large annual bonuses may be excluded |
While the new rules simplify and standardize the calculation of average earnings, most employees will see little change in their vacation pay or severance amounts. The main impact will be on how bonuses are accounted for in these calculations, potentially affecting some employees who receive significant irregular bonuses [1][2].
[1] Enrichment Data: RusBase News Agency[2] Enrichment Data: RIA Novosti[3] Enrichment Data: Russia Talks[4] Enrichment Data: The Bell[5] Enrichment Data: Independent Labor Confederation of Russia (NTS)
Given the change in average earnings calculation, businesses in Russia need to adjust their finance strategies to reflect the new method. This includes considering how this will affect the calculation of bonuses, especially for employees who receive large, irregular bonuses annually.
With the new calculation method, finance departments should also be aware of the changes in the handling of vacation pay, severance, and other payments, as the total amounts paid may remain relatively unaffected for most employees. However, there will be significant shifts in the calculation of premiums and bonuses included in average earnings.
