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1. Acsour’s experience of connecting to the system of electronic sick leave certificates
Starting from 1 July, the Social Security Fund has launched a system of electronic sick leave certificates (ESLC). Under the new rules, a clinic must issue to an employee, at his or her choice, a sick leave certificate either in hard copy or in electronic form. At Acsour, we have tested the new service and are ready to share our experience with you.
First, it is possible to execute an ESLC only if the following conditions are met:
- the clinic has connected to the special ESLC Medical Information System;
- the employer has opened an Account for the Insured on the website of the Social Security Fund;
- the employee has signed a consent to receive an ESLC.
If any of the conditions are not observed, the physician will issue a sick leave certificate in hard copy.
To connect to the ESLC system, the following stages should be completed:
1) The CEO of the company should register on the government services portal.
It is only possible to create the account of a company if the company’s CEO has his or her own personal account.
2) Register your company on the public services portal.
In his or her Personal Account on the portal, the company’s CEO may add the company and complete all required stages of registration.
3) Register the Insured’s Account on the website of the Social Security Fund.
On the Social Security Fund’s website, the Personal Account needs to be entered using the login and password of the company’s CEO on the government services portal. Then, the website is allowed access to the keys and electronic signatures of the company’s CEO. Then the necessary certificate of electronic signature is chosen in the system. All subsequent operations with the ESLC are carried our using the insured’s account on the website of the Social Security Fund.
However, when connecting to the system, Acsour has identified the following drawbacks:
- Not every company’s CEO has a personal account on the government services portal. For example, some companies’ CEOs are foreign nationals and do not need such an account in their private lives;
- The website of the Social Security Fund is accessed only by using the login and password of the company’s CEO on the government services portal. Consequently, every employee responsible for handling sick leave certificates will obtain access to the CEO’s personal information;
- It is only possible to connect the company to the CEO’s personal account on the government services portal using a specific version of the Mozilla Firefox browser.
To sum up, the procedure of connecting to the ESLC system remains imperfect at present, and Acsour has suspended its work with the system. Our specialists are lobbying the Social Security Fund on this issue. Acsour is monitoring the situation and will keep you informed of any significant developments.
2. The Ministry of Finance has explained how personal income tax and insurance contributions accrue on severance pay
When an employment agreement is terminated because of a company’s liquidation or downsizing, an employee is supposed, under Russian Labour Code, to receive severance pay and average monthly salary for the period of finding new employment.
In the event of dismissal by agreement of the parties, an employee may count on receiving payments as stipulated in his or her employment agreement and any collective bargaining agreement. In a case of dismissal, none of the above payments are subject to social contributions and personal income tax within a limit of three times the amount of average monthly salary (six times for regions of the Far North).
In the event of downsizing, it is possible to dismiss an employee with his or her written consent before the expiry of a two-month period by paying to him or her additional compensation in proportion to the average salary for the period left until the notice period expires. This compensation does not relate to severance pay and average monthly salary for the period of employment and, therefore, is not subject to personal income tax and social contributions, no matter what the amount. For instance, if a company has paid two months’ average salary as additional compensation and two months’ basic salary as severance pay, the whole amount will not be subject to either personal income tax or social contributions.
For any questions relating to the taxation of compensation payable on dismissal, please contact your company’s manager at Acsour.
3. An employee has obtained Russian citizenship: does the Ministry of Internal Affairs have to be notified of any changes in his or her occupation?
In August, the Russian Supreme Court considered a precedent-setting case in which the employer had failed to notify the authorities on time of the termination of an employment agreement with a foreign national.
Under Russian legislation, an employer must, within three business days, notify the regional migration authority of the entry into and termination of an employment agreement or a civil-law contract with a foreign national.
However, the Supreme Court has issued a decision recently from which it follows that if, at the time the employment agreement was terminated, the employee had obtained Russian citizenship, there is no need for further migration control over his or her occupation.
Acsour’s specialists will help you to handle migration issues relating to your employees.
4. No payment your company makes for vacation packages of your employees’ children is subject to insurance contributions and personal income tax
The social package granted by some companies covers full or partial compensation to employees of vacation packages for children. Acsour’s specialists have insight into the taxation of such compensation.
According to the explanation of the Russian Finance Ministry, the full or partial compensation of the cost of vacation packages for children under 16 years old, which is payable to employees, is not subject to personal income tax, provided the following conditions are met:
- the vacation package is purchased for a sanatorium or health resort facility located within Russia;
- the expenses from such compensation are not taken into account when the tax base for profit tax is calculated.
Further, the Finance Ministry believes that if the company transfers money to pay for the vacation for an employee’s family member directly to the health resort facility, the price of the vacation package is not subject to social contributions, because it is a payment for an individual who is not an employee of the company.
The Labour Ministry expresses a similar position, but adds that if the cost of a vacation package is paid directly for an employee, it is subject to social contributions.
The courts maintain the position that the payment of vacation packages for employees’ children is not subject to any social contributions no matter to whom the amount was transferred.
We recommend that you adhere to the positions that entail lesser risks, i.e. those of the Labour Ministry and of the Finance Ministry, in particular that the cost of vacation packages is not subject to social contributions if the Company transfers the money directly to a health resort facility.
Acsour will be happy to answer your questions regarding the taxation of compensations to employees.
5. An employer may not use an employment agreement to limit an employee’s right to select the forum for a dispute
The Russian Supreme Court has confirmed that the right to select the forum for judicial proceedings belongs to an employee.
Since last October, employees have been permitted to file lawsuits seeking to protect their employment rights either at the place of their residence or at the place where the employment agreement is performed.
If the employer makes provision in the employment agreement that disputes with the employee will be resolved in a specific court, this provision, in the opinion of the Russian Supreme Court, worsens the position of the employee as compared with the position stipulated in legislation. Thus, such a contractual provision may not be applied.
Please contact Acsour with respect to any matters relating to the proper drafting of employment agreements.