It happens that employees are dishonest in their duties, because of which not only the common cause suffers - the organization can be fined. It would seem that if the unexpected financial costs are the employee’s fault, collecting them from him would be a fair decision. But is this so by law? Is it possible to reimburse the amount of an administrative fine imposed on an organization at the expense of the guilty employee? We'll figure out.
Question: Based on the results of a documentary check carried out by the State Labor Inspectorate of compliance with labor legislation, the pharmacy organization was found guilty of committing an administrative offense under Part 1 of Art. 5.27 of the Code of Administrative Offenses of the Russian Federation, and was fined. Having paid the fine and found out whose fault this violation occurred, the pharmacy decided to recover the amount of material damage from the guilty employee. Is such a decision legal? View answer
Varying degrees of responsibility
An organization, that is, a legal entity, cannot itself commit illegal actions. Specific people are always guilty of them - intentionally, through negligence or mistake. Who will be responsible for this? Supervisory authorities usually decide.
FOR YOUR INFORMATION! Fines imposed on organizations are usually several times larger than the corresponding amounts provided for fining officials.
Administrative legislation, the main sanction of which is a monetary fine, provides for the prosecution of both the legal entity as a whole (“fine on the organization”) and specific officials. As a rule, this is the management or chief accountant of the company.
Question: Can a director, confident that the accountant is to blame for the violation, recover from him the amount of damage in the amount of the fine imposed on the organization? View answer
Why is it better to pay immediately in front of the inspector?
Thus, according to the letter of the law, paying a fine on the spot does not exempt the driver from being subject to a double fine or arrest under Part 1 of Article 20.25 of the Administrative Code. But in fact, in most cases this will help avoid punishment. But a traffic police officer, as a rule, will tell you about this right away.
But there is another significant advantage if you close the debt, even if the inspector has drawn up a protocol for the court. The fact is that the judge, seeing that you have already paid, will also accept this fact as a significant mitigating circumstance. Yes, this will not necessarily help to avoid prosecution, but the court may impose a more lenient punishment - a double fine - instead of a strict punishment in the form of arrest.
Pay, since you are financially responsible?
Certain categories of workers - cashiers, storekeepers, accountants, etc. – bear full or partial financial responsibility for their activities, this is reflected in their employment contracts. If the company suffers financial loss as a result of their mistake, they are legally obligated to pay it back. Art. 233 of the Labor Code of the Russian Federation states that an unlawful action or inaction that caused direct actual damage is the basis for its material compensation by the guilty party. But there are serious nuances in this legislative norm:
- the injured party must prove the damage caused to it and its extent;
- direct actual damage is a decrease or deterioration in the condition of fixed assets or property owned by the employer or third parties.
Thus, a formal administrative fine, even imposed due to the fault of an employee, cannot be recognized as direct damage to the company. This means that there is no direct legislative justification for compensating the amount of an administrative fine from an employee.
Can an organization recover an administrative fine imposed on it from an employee involved in a violation ?
Why is it difficult to collect a fine from the culprit?
The indicated interpretation of the law makes it possible to collect a fine from an employee guilty of imposing it in two ways. There are several reasons for this:
- The fine is paid by the person found guilty by the relevant authorities. And in the protocols of inspectors, specific persons are mentioned extremely rarely; supervisory authorities appeal to the company, and not to specific individuals. It turns out that the employee himself is not held administratively liable by law.
- A culpable act or omission is not always actually within the employee’s job responsibilities. If the case goes to court, all documentary evidence is raised and the wording is carefully studied. And if the employment contract or charter does not directly state that the action performed or not performed was actually the responsibility of this particular employee, there will no longer be any grounds for collecting a fine from him.
- Many actions or inactions that turn out to be guilty are classified by the court as an ordinary business risk for which a specific person cannot be held accountable.
- If the fine was paid by the employee, this will mean that his employer did not receive an administrative penalty, while a legal entity’s evasion of administrative liability is not allowed.
- The court most often sides with workers as the least protected party. It is the employer who must prove the guilt of his employee and the amount of damage caused, and doubts in such cases are usually interpreted in favor of the defendant.
The question of the possibility of collecting from an employee the amount of an administrative fine of a company due to his fault in practice is resolved ambiguously. Judges in most cases defend the rights of workers and recognize that it is unlawful to collect a fine imposed on an organization from an employee. View the court's opinion
No fine is collected from the employee
Since the employee is exempt from bearing the costs of reimbursing the amount of the fine, the question arises: does he have an object of taxation under personal income tax? The Russian Ministry of Finance believes that the object of taxation under personal income tax will be. In letters dated 08/22/2014 No. 03-04-06/42105, dated 04/12/2013 No. 03-04-06/12341, dated 04/10/2013 No. 03-04-06/1183, he indicated that if the employer established the amount of damage caused by the employee damage, the cause of its occurrence and the limit of the employee’s financial liability, refusal to recover the damage caused from the guilty employee leads to the emergence of income (economic benefit) received in kind, subject to personal income tax.
But according to the Federal Tax Service of Russia, the amount of the fine paid cannot be considered as income received by the driver of a vehicle owned by the company. Consequently, there is no object of taxation under personal income tax (letter dated April 18, 2013 No. ED‑4-3/ [email protected] ).
We agree with the tax authorities. The specifics of determining the tax base for personal income tax when receiving income in kind are established by Art. 211 of the Tax Code of the Russian Federation. From its provisions it follows that income in kind appears when the employer pays for goods (work, services) in the interests of the taxpayer. Payment of the fine is carried out in the interests of the organization, since it is on it, and not on the employee, that the fine was imposed. The list of income in kind is given in paragraph 2 of Art. 211 of the Tax Code of the Russian Federation. It does not mention income received as a result of the employer's refusal to collect damages from the at-fault employee. Let us note that this point of view is supported in court (resolution of the Federal Antimonopoly Service of the Moscow District dated 03/15/2006, 03/09/2006 No. KA-A40/1434-06).
Presumption of guilt
There are representatives of the organization who are a priori considered guilty of all the troubles that occur, including financial ones. These are those individuals who pay for increased wages and a high rank with an increased degree of responsibility, including for the actions of their subordinates. We are talking about representatives of the management level.
Is it possible to recover from an employee an administrative fine paid through his fault by an organization ?
In 2014, amendments were made to the Civil Code of the Russian Federation stating that directors and collegial management bodies are obliged to compensate for any losses caused as a result of erroneous decisions - this is part of normal business risk.
IMPORTANT! Disputes regarding compensation of this kind fall within the competence of civil law rather than the Labor Code of the Russian Federation and are considered in arbitration court. Most often, decisions are made not in favor of managers.
A company that pays a fine due to the fault of the general director (most often by that time already former) has a fairly good chance of winning a lawsuit to recover this amount from him, as evidenced by numerous precedents.
There are often situations when a company driver in a company car during working hours, while performing work (official) duties, violates the Traffic Rules (hereinafter referred to as traffic rules). One of the reasons is excessive speed when avoiding traffic jams that arose due to traffic accidents along the route of the car while performing production tasks set by time.
Let’s say that the company, as the owner of the vehicle, paid the fine for traffic violations in full on time. The amount of this monetary penalty was not presented to the driver for reimbursement. Does the driver of the company have income subject to personal income tax?
Fine for violating traffic rules – damage to the company
According to the Russian Ministry of Finance in a published letter, in the described situation, due to the actions of the employee, the company suffered damage in the form of costs to pay the fine, which led to a decrease in its movable property.
The fact is that the employee’s obligation to compensate the employer for direct actual damage caused to him is enshrined in the provisions of Article 238 of the Labor Code of the Russian Federation. According to it, the need for a company to make costs or excessive payments for the acquisition, restoration of property or to compensate for losses incurred by its employee in relation to third parties is direct actual damage. According to paragraph 2 of Article 130 of the Civil Code of the Russian Federation, money is movable property.
Claiming compensation for damage is a right, not an obligation of the employer
Financial department specialists in a published letter drew attention to the fact that it is the employer’s right to demand compensation for damage caused by an employee. This is stated in Article 22 of the Labor Code of the Russian Federation.
Moreover, the company, on the basis of Article 240 of the Labor Code of the Russian Federation, may not recover damages from the guilty employee. That is, she has the right to release him from certain property obligations. The employer can do this in whole or in part.
Please note that the decision to refuse to collect damages from the guilty employee must be formalized by order. The reasons for its publication may be, for example, the employee’s previous services to the company or significant contribution to its development.
It should also be borne in mind that the employer’s right to refuse to collect the damage caused or to reduce its amount may be limited by the owner of the organization’s property in the cases provided for:
- federal laws, other regulatory legal acts of the Russian Federation;
- laws and other regulatory legal acts of the constituent entities of the Russian Federation;
- regulatory legal acts of local governments;
- constituent documents of the organization.
In case of refusal of collection, taxable income arises
Let’s assume that a company, in accordance with the Labor Code of the Russian Federation, has established:
- the amount of damage caused to her by a specific employee;
- the reason for its occurrence;
- limit of employee liability.
Then, according to the Russian Ministry of Finance, the company’s refusal to recover the damage caused from the guilty employee leads to the emergence of income (economic benefits) in kind for that employee. This income is subject to personal income tax.
The fact is that, in accordance with Article 41 of the Tax Code of the Russian Federation, income is recognized as economic benefit in cash or in kind. It is taken into account to the extent that it can be assessed and determined in relation to individuals in accordance with Chapter 23 “Income Tax for Individuals” of the Tax Code of the Russian Federation.
Thus, in the situation under consideration, the company must take into account the amount of the fine it paid in the income of the driver who violated the Traffic Rules and calculate personal income tax on it. The Russian Ministry of Finance provided similar explanations earlier, for example, in letters dated June 17, 2014 No. 03-04-05/28925, dated April 10, 2013 No. 03-04-06/1183, dated November 8, 2012 No. 03-04-06/10 -310.
Cases where taxable income does not arise
From the published letter of the Ministry of Finance of Russia it also follows that the driver does not have income subject to personal income tax if the company refuses to collect from him the amount of the paid fine for violating traffic rules if there are grounds that exclude the financial liability of this employee. In particular, this is the occurrence of damage due to (Article 239 of the Labor Code of the Russian Federation):
- force majeure;
- normal economic risk;
- extreme necessity;
- necessary defense;
- failure by the employer to fulfill the obligation to provide appropriate conditions for storing property entrusted to the employee. This includes the absence of orders (instructions, other binding documents), the implementation of which by employees entails causing damage to the employer’s property.
Thus, if a company can prove that an employee violated traffic rules, for example, due to extreme necessity, it has the right not to calculate personal income tax if it refuses to collect the amount of the paid fine from him.
Tax service position
It should also be borne in mind that Article 2.6.1 of the Code of Administrative Offenses of the Russian Federation provides for bringing the owner of the vehicle to administrative liability for traffic violations recorded by means of photography, filming, and video recording (special technical means with such functions). A sign that an employee has income in kind is the company’s payment for goods, work, services, property rights for him or in his interests (Clause 2 of Article 211 of the Tax Code of the Russian Federation). Since the company, brought to administrative responsibility on the basis of Article 2.6.1 of the Code of Administrative Offenses of the Russian Federation, paid the fine for itself, and not for the employee, the employee does not receive income in kind. This position was taken by the Federal Tax Service of Russia in letter dated April 18, 2013 No. ED-4-3/7135.
Or maybe it’s still possible to collect?
Despite the complexity of legally supported collection of the amount of an administrative fine from a negligent employee, the simple concept of justice suggests that sometimes such compensation will be lawful. Many experts share this opinion, emphasizing that unreasonable or dishonest actions of an employee are grounds for recovering from them damages caused to the organization in the form of a fine.
NOTE! A simple mistake in such cases is not enough - the employee must be proven guilty.
In some cases, a fine can be interpreted as a loss that is subject to compensation, and therefore, recovery from the financially responsible person.
“Correct” execution of fine collection
Recovery of material damage from an employee is carried out within the framework of Art. 248 Labor Code of the Russian Federation. It is important to follow the fundamental principles:
- if the employee bears full financial responsibility, the amount can be recovered in full;
- the amount of recovery cannot exceed the employee’s monthly earnings if financial liability is limited;
- it is necessary to prove a direct cause-and-effect relationship between the employee’s actions and the damage (fine) received by the company.
If the employer has decided to carry out the procedure for collecting a fine from an employee, he must remember that it can be challenged by the employee in court.
If a fine is going to be deducted from wages, you must comply with the requirements and restrictions imposed by Art. 137 Labor Code of the Russian Federation.
IMPORTANT INFORMATION! The employer must issue an order to collect the fine no later than one month from the date of its appointment, otherwise this requirement loses legal force.
Other options
An employer who is justifiably indignant at an employee’s negligence can punish him in other legal ways. If it is not possible to collect a fine by law, and the employee himself does not express a desire to voluntarily compensate for it, no one deprives his superiors of the right to apply other disciplinary measures:
- comments;
- reprimands;
- dismissal (if the offense falls under the grounds set out in clauses 5, 6, 7, 9, part 1, article 81 of the Labor Code of the Russian Federation);
- deduction of bonuses (if the bonus is not part of the salary, but is assigned based on the results of work, which should be confirmed in the local regulations of the organization).
