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Payroll in Russia

Payroll in Russia

PUBLICATIONS \ 28.06.2021


There are several payroll systems that can be applied within the scope of a single company or be combined. The most common systems are:

  • time-based; and
  • piece-rate.

The choice of the payroll system depends on the company’s line of business.

A time-based payroll system

Employees are paid for the time they have actually worked based on the established monthly salary (an hourly or daily rate). This system is generally applied to pay employees who are not engaged in the production process (economists, accountants, and others) or those who are engaged in the process, but perform the same scope of work.

A piece-rate payroll system

This system is introduced to incentivize employees and enhance their performance. The system is generally applied to calculate the salaries and wages of manufacturing personnel.

Under a piece-rate system, a company establishes the tariff rate for a unit of product produced which is documented in the internal regulations, and records the output.

The piece-rate payroll system has such varieties as: straight piece-rate, piece-bonus, progressive piece-rate, piece-wage and commission systems.

The most common of them is the commission system.

This payroll system is often applied for calculating salaries and wages of employees engaged in sales and is established as a percentage of the volume of sales.

The commission system and the time-based payroll system are often combined in practice, when employees receive a fixed salary and a percentage from sales.


A salary is established for an employee by an employment agreement between the employee and the company in accordance with the payroll systems in effect within the company. Article 136 of the Russian Labour Code (the “Labour Code”) obliges employers to pay salaries at least twice a month. Therefore, the monthly salary earned for a month is divided into two portions: the first portion is paid before the end of the month as an advance payment, while the second is paid after the end of the month.

The Labour Code does not establish the specific dates on which the above advance and salary is paid. There is a rule, however: money should be handed over not later than 15 calendar days after the end of the period for which it has been accrued. For instance, an advance is paid on the 25th of each month, while the salary is paid not later than the 10th day of the month. An employer is entitled to set its own dates and to document them in its internal regulations.

If a payroll date falls on a day-off or a holiday, the money should be paid on the previous day.

Salaries are generally paid in Russian roubles only.

In cases for which Russian legislation on currency regulation and currency control provides, salaries can be paid in a foreign currency.

A company may pay salaries in a foreign currency to resident employees if such employees actually carry out their obligations outside Russia (article 9(1)(26 of Law No. 173-FZ and Federal Tax Service’s Letter No. OA-4-17/6361 dated 4 April 2018). Employment agreements with such employees should indicate a place of work that is located outside Russia.

Russian labour legislation does not prohibit the payment of a salary to non-resident employees in a foreign currency. Salaries can be paid via accounts opened with banks located outside Russia.

However! The main risk in the case at hand is the payment of a salary in a lesser amount than the first salary, which constitutes a unilateral change of the conditions of the employment agreement determined by the parties and a worsening of the payroll conditions in the situation at hand.

Please note! It is recommended that cases should be determined when an employee can be paid his or her salary in a foreign currency, what payment procedure should be established, and how this should be documented.

Articles 136(3) and 136(5) of the Labour Code dictate that conditions should be created for the unhindered receipt by an employee of his or her salary using a method convenient for the employee. Accordingly, an employer may not oblige an employee to receive his or her salary in non-cash form; and if the employee wants to receive salary in cash, he or she cannot be forced to receive it on a bank card (the Russian Ministry of Labour’s Letter No. 14-1/OOG-1830 dated 20 March 2015).


Under article 133 of the Labour Code, the salary of an employee who worked his or her monthly standard time and fulfilled his or her job duties being engaged on a full-time basis cannot be lower than the minimum monthly wage. This rule applies to all payroll systems.

From 1 January 2021, the federal minimum monthly wage has been determined based on the median wage, rather than the minimum subsistence level, as was previously the case, and is equal to RUB 12,792. In constituent entities of the Russian Federation, the minimum monthly wage is established by a regional agreement and can be higher than the federal minimum monthly wage (article 133.1 of the Labour Code).


Companies and individual entrepreneurs that are tax agents are obliged to assess, withhold and pay to the state budget personal income tax on employees’ income. The payment dates of such personal income tax depend on the type of income being paid to an employee (clauses 3, 4 and  6 of article 226 of the Tax Code).

The payment dates for personal income tax on salaries are set not later than the day following the date on which the employee was paid his or her income (article 226(6) of the Tax Code).


In some regions, a regional pay coefficient is accrued on a salary based on the specific working conditions owing to the climate or other factors. Examples are the Far North of Russia or mountainous localities. The pay percentage is established by the Russian Government for each region separately.

When salary is assessed based on the regional pay percentage, the pay coefficient is applied to the actual salary before taxes rather than to the fixed salary. All accruals are summed up and multiplied by the pay coefficient for calculation purposes.


A salary adjustment can be required in the following cases:

  1. when a salary is either increased or decreased;
  2. if a salary has been paid in excess;
  3. when errors were made during the calculation of a salary.

The legislation allows for adjustments to the calculation of salaries. Salaries are adjusted based an order. There are no time restrictions on such adjustments. If, however, an employee has been dismissed, the adjustment can be made only within three months after the error was established.


When an employee is dismissed, his or her salary is calculated based on an order terminating the employment agreement. Unless the law provides otherwise, an employee will be paid:

  1. his or her salary as at the dismissal date;
  2. compensation for unused vacation;
  3. severance pay; and
  4. his or her average monthly salary.

The salary should be calculated for the time actually worked. It is important that no personal income tax should be applied within defined limits to the severance pay.