why is the employer obligated to increase your salary?
Today we’ll talk about wage indexation and look at the main questions: what indexation is, why it applies not only to budget employees, how it should be formalized, how often wages should be indexed. Let's look at how employers avoid their job responsibilities and what government bodies think about this: the Ministry of Labor, Rostrud, courts at various levels. Spoiler: every employer in the Russian Federation is obliged to index salaries, and employees should not dance around him with requests for a raise.
What is indexation and what does inflation have to do with it?
Inflation is a process of constant increase in prices for goods and services and, as a result, depreciation of our wages. A year ago, with 100,000 rubles we could go to the grocery store 10 times, but today it’s only 8.
Wage indexation is an increase in earnings to protect against inflation. In order for us to be able to go to the store 10 times this year, we must already receive 110,000 rubles. IN Article 134 of the Labor Code the obligation of each employer to regularly carry out the indexation procedure is fixed.
The state establishes the procedure, size and frequency of indexation for public sector workers: doctors, teachers, doctors, and so on.
But commercial organizations must decide for themselves how and with what frequency they will increase the salaries of their employees. To do this, the company must adopt a special document: a local regulation or a collective agreement. It will spell out the key conditions for indexing.
In an ideal world, every employee should be familiarized with this document upon employment. As with the others, for which each new employee must sign on the familiarization sheet: labor regulations, staffing, labor protection, and so on. But in reality, HR simply gives the new employee an orientation sheet and asks them to put 10-15 signatures in the appropriate lines. And the employee does not particularly require that he be familiarized with these documents. And in vain, because if you have to sue the employer, the internal documents will contain a lot of interesting information that neither you nor your lawyer will know about.
Indexation is the responsibility of every employer, not a right
Now not all employers recognize this formulation. They say that Article 134 of the Labor Code is vague and we don’t owe you anything. There are several arguments and judicial practice not in favor of such employers:
An employer may carefully hide from its employees that such a procedure even exists in order to save on wages. Unfortunately, the labor inspectorate is physically unable to check all employers for compliance with all labor legislation.
If the employer refuses to index the salary, then he is violating labor legislation, which means the employee has the right to write a complaint to the labor inspectorate and/or sue the employer in court, as in this example: “The man had not received a salary increase for five years, and he recovered 4.5 million rubles from his employer.”
Salary increase and indexation are different, but not always
Promotion – the employer can, at its discretion, increase the salaries of some employees who have somehow proven themselves, performed work beyond the norm and are generally great.
Indexation is an obligation on the part of the employer and a guarantee for each employee of the company. Indexation cannot be selectively carried out by some and not given to others.
But the employer may stipulate in a local regulatory document that increasing salaries and/or paying bonuses is equivalent to indexation. The key thing to pay attention to is that indexation is carried out in the same way for all employees, by the same coefficient. However, you cannot increase your salary and cut your bonus by the same amount.
How often should an employer carry out indexation?
The problem with Article 134 is that it does not contain clear regulations and indexing procedures. A normal employer does this regularly: once a year, six months, a quarter. But there are also unscrupulous employers who try to deceive the system: Local regulations established indexation every four years. At the same time, in recent years, a sufficient number of judicial precedents have accumulated when courts punished employers for such an interpretation of the law.
One court ruled that “indexation of wages once every four years is unacceptable” – Determination No. 88-12047/2023 dated June 13, 2023.
Another court “recognized the company’s right to index wages once every few years” – Determination No. 88-7170/2023 dated 08/10/2023.
Rostrud believes that it should be increased every year. For example: https://onlineinspektsiya.rf/questions/view/158603
How much should wages be increased during indexation?
There is no consensus among government agencies on this issue. The Ministry of Labor in 2018 outlined its position: “Wage indexation is its increase by the inflation rate”. More is possible, but less is not.
But at the same time, Rostrud says, that it is possible to increase not the entire salary, but only some part. The main thing is that this is stated in the local act/agreement. For example: a programmer receives 100,000 rubles per month, and only the minimum wage needs to be indexed annually – in 2024 it is 19,242 rubles. Let's index the minimum wage: 19,242 × 10% = 1,924 rubles. The salary after indexation will be: 100,000 + 1,924 = 101,924 rubles.
Convenient, isn't it?
Can an employer index one employee by 5% and another by 10%? Or not index someone at all?
Yes, but the labor inspectorate will consider this a violation:
Can an employer implement indexation through a bonus?
Maybe, but such an order must be enshrined in a normative act or a collective agreement. And such a procedure should look the same for each employee.
Did the CEO sign an order according to which each employee receives a fixed bonus within the framework of the local regulation on indexation? This is indexing, everything is okay.
The employee was paid a bonus, and six months later they said that this was his indexation? This is a violation, this is not allowed.
Can an employer do this?
Maybe too. But the chances of winning a trial with such wording are approximately zero. The courts and the Ministry of Labor allowed only one situation when the employer could not carry out indexation – serious losses. But even here, disputes continue, since business is a risk for those who started and organized it. And you can’t shift the company’s financial problems onto the employees.
conclusions
The issue of indexing is becoming more and more elaborate and unambiguous. There are still points of contention that employers take advantage of, but it is a matter of time before we see new rulings from the Supreme Court.
Also, this is not the first time that legislators have made an attempt to amend Article 134 and fix everything that departments and courts have agreed on:
If you are faced with a violation of your labor rights in terms of wage indexation, then you can:
File a complaint with the labor inspectorate.
File a complaint with the prosecutor's office.
Take the company to court.
Look for colleagues in the same situation and unite with them: together it is always easier to fight for your rights.
