Reducing the number and staff of employees: we formalize it correctly

Legal basis

The Labor Code regulates such an event as a reduction in the number or staff of employees in articles relating to dismissal issues and providing for compensation and guarantees to employees.
The Labor Code regulates the reduction of the number or staff of employees in sufficient detail and clearly, but when applying the norms of the code, questions always arise. Judicial practice is of great importance; the Supreme Court often issues clarifications on the procedure for applying articles of the law, for example, Resolution of the Plenum of the Supreme Court No. 2 of March 17, 2004, which pays a lot of attention to this issue, is still relevant on this issue. The reduction in the number of employees occurs at the initiative of the employer; this basis for termination of the employment contract is formulated in Art. 81 Labor Code of the Russian Federation. Art. 178-180 are entirely devoted to guarantees and compensation for a person dismissed on such grounds.

Who should not be laid off?

Some categories of employees cannot be dismissed on this basis. Clause 2 of Article 81 of the Labor Code of the Russian Federation cannot be applied to:

• those on sick leave (Part 6 of Article 81 of the Labor Code);
• women in an “interesting” position (Article 261 of the Labor Code);
• mothers of children under 3 years old;
• single mothers, if their children are under 14, and disabled children are 18 years old;
• persons in whose care there is a child without a mother;
• members of the trade union organization (clauses 2, 3, 5 of Article 81 of the Labor Code).

IMPORTANT! Workers from these categories who have been subject to unlawful layoffs are easily reinstated through the courts, causing the employer a lot of trouble.

Mass layoffs

An employer has certain obligations when carrying out a massive reduction in the number or staff of an organization's employees. Mass scale criteria are established in sectoral and territorial agreements. As a rule, mass is established by the number of people fired during a certain period of time. If there are no sectoral and territorial agreements, it is necessary to use the criteria established in the Regulations on the organization of work to promote employment in conditions of mass layoffs. This document was approved by Resolution of the Council of Ministers of the Russian Federation No. 99 of 02/05/1993, but it is valid:

• within a period of 30 calendar days - 50 people or more;
• within a period of 60 calendar days - 200 people or more;
• within a period of 90 calendar days - 500 people or more.

How to fill out a work book correctly

If a reduction is carried out at an enterprise, an entry in the work book is made according to the rules of the above Instructions, as well as according to the standards of Art. 84.1 Labor Code of the Russian Federation. It states that all entries in employee work books must comply with established legal standards. It is necessary to enter the number of the Code article, paragraph and subparagraph.

According to current standards, an entry in the labor record when staffing is reduced is made in the form of one of the following formulations:

• “Dismissed due to a reduction in the number of employees of the organization, paragraph 2 of part one of Article 81 of the Labor Code of the Russian Federation”;
• “The employment contract was terminated due to a reduction in the number of employees of the organization, paragraph 2 of part one of Article 81 of the Labor Code of the Russian Federation.”

The personnel officer has the right to use any of the above formulations of his own choice, since both of them are considered correct.

Important condition: the entry in the labor record for redundancy is made in full without any abbreviations. For example, it is unacceptable to simply enter “Russia” instead of “Russian Federation”. Any deviation from this requirement is considered a violation, which entails unpleasant consequences.

The following is a sample entry in a labor reduction notice:

Also see “Rules for filling out work books in 2022.”

Reasons

A reduction in the number or staff of workers is two different reasons for reducing the number of workers - labor units:

• if changes in the staffing table lead to a decrease in the number of units of one position, the number of employees is directly reduced;
• if entire structural units or specific positions with people are excluded, staff reduction occurs.

Of course, it is possible to reduce the number of staff and the number of positions in parallel; this is a common practice. First, management makes a decision, then implements it - dismissal occurs to reduce the number or staff of employees. Typically, the manager alone makes such a decision, and it is formalized in accordance with the nomenclature of affairs adopted at the enterprise. Or, but much less frequently, the decision is formalized in the protocol of the collegial executive body (depending on the system of management bodies and the distribution of their powers in the organization).

Entry in the work book about hiring and dismissal

Usually, making entries in work books about the hiring and dismissal of employees does not cause difficulties for personnel officers. Moreover, you can find many examples on the Internet. True, they are not always correct, and errors are often not obvious.

Entry in the work book about hiring and dismissal (with errors)

Error 1 Fundamental. There is no need to obtain a work book, since this is the first place of work

Since 2022, employees entering work for the first time will not have paper work books - they are only required to generate information about their work activities in accordance with Art. 66.1 Labor Code of the Russian Federation.

In the example, the appointment record was made under No. 1 and dated January 2021. Consequently, before joining this organization, the employee had no work experience, so there was no need to issue a work book at all.

Error 2 The full name of the organization is not specified

Before recording an appointment, in column 3 of the “Job Information” section, both the full name of the organization and its abbreviated name (if available) should be indicated as a heading[1].

The example does not indicate the full name. The Labor Inspectorate considers this a violation of the requirements of a regulatory legal act (NLA) containing labor law norms.

Attentive personnel officers undoubtedly noticed another flaw: the serial number of the entry and the date of hire are located opposite the name of the organization. This cannot become a reason for administrative punishment, and the Pension Fund of the Russian Federation does not consider this a gross mistake. Therefore, there is no need to cancel such an entry, but in the future you should first enter the title (name of the organization), and then number the entry and set the date of receipt.

Error 3 The appointment record is formulated incorrectly

The appointment record must indicate:

• name of the structural unit (if the condition of working in a specific structural unit is included in the employment contract); • name of position (work), specialty, profession indicating qualifications[2].

There is one mistake and omission in the wording of the admission note:

1. The name of the structural unit is not specified. 2. The phrase “accepted by the cashier” was used incorrectly.

The name of the structural unit must correspond to the name in the staffing table. In the schedule generated in the software, you can find absolutely uninformative names of departments (for example, “main department”, “store”). But it is unlikely that these names will be indicated in the employment contract with the employee. If the company is small, structural divisions are not identified in the staffing table at all, therefore, they will not be indicated in the employment contract. Usually, if an organization owns several stores, their names are specified (assigned the number “Store No. 2” or the clarifying name “Store on Yubileiny”). In this case, the specified name is also indicated in the employment record (unless, of course, the name of the structural unit is indicated in the contract with the employee).

Now let’s figure out what’s wrong with the phrase “Accepted by the cashier.”

If the work corresponds to the profession specified in the Unified Tariff and Qualification Directory of Work and Professions of Workers (UTKS), then the employee is hired not for the position, but for work according to the profession (for example, “Hired as a 3rd category cook”). Do you agree that “Hired as a janitor” sounds strange? Janitor is a profession from ETKS; the correct spelling is “Accepted as a Janitor.”

If the job corresponds to the position specified in the Unified Qualification Directory of Positions of Managers, Specialists and Employees (USC), then recruitment for the position occurs (for example, “Accepted for the position of accountant”).

Cashier is a position of an employee, so in this case it is more appropriate to write “Accepted for the position of cashier.”

Error 4 The word “order” is shortened

It is not allowed to write “pr.” instead of “order”[3]. In the example, the word “order” is abbreviated, which is a violation of the requirements of the regulatory legal acts containing labor law norms. Such a violation may result in administrative liability in accordance with Part 1 of Art. 5.27 Code of Administrative Offenses of the Russian Federation.

Error 5 Incorrectly formulated notice of dismissal

Part 4 of Art. 66 of the Labor Code of the Russian Federation establishes the following:

Extract of the Labor Code of the Russian Federation

[…]

The work book contains information [4] about the employee, the work he performs, transfers to another permanent job and the dismissal of the employee, as well as the grounds for termination of the employment contract and information about awards for success in work. Information about penalties is not entered into the work book, except in cases where the disciplinary sanction is dismissal.

[…]

In full accordance with Part 4 of Art. 66 of the Labor Code of the Russian Federation, Procedure No. 320n establishes the rules for making a record of dismissal: • upon termination of an employment contract on the grounds provided for in Part 1 of Art. 77 of the Labor Code of the Russian Federation, an entry about dismissal in the work book must be made with reference to the corresponding paragraph of part one of the said article [5]; • upon dismissal (termination of employment contract) in connection with the employee’s transfer to another employer (to another organization), the entry in the work book must begin with the word “Dismissed”[6].

Given these rules, you can find three errors in the dismissal record:

1. It should have been written “Dismissed by agreement of the parties...”. 2. It is necessary to clarify part of the article when referring to Art. 77, 81, 83 of the Labor Code of the Russian Federation and a number of others. 3. You cannot use an abbreviation in the title of the law; the words “Russian Federation” are written in full.

Error 6 The employee no longer has to certify records upon dismissal

Until September 2022, the previous (now repealed) Rules for maintaining and storing work books required that the employee certify all entries made in his work book during his work. There is no such requirement in Order No. 320n. Therefore, the employee’s signature after recording the dismissal is not required.

Entry in the work book about hiring and dismissal (without errors)

[1] Clause 10 of the Procedure for maintaining and storing work books, approved. By Order of the Ministry of Labor of Russia dated May 19, 2021 No. 320n (hereinafter referred to as Order No. 320n).

[2] Clause 10 of Order No. 320n.

[3] Clause 3 of Order No. 320n.

[4] Here and further in the extract it is emphasized by the author.

[5] Clause 17 of Order No. 320n.

[6] Clause 22 of Order No. 320n.

Algorithm of actions

If an employer needs to correctly reduce the number of employees, step-by-step instructions will help you do this without missing anything important.

Step 1. Issue an order.

Step 2. Identify employees who cannot be laid off.

Step 3: Conduct a personnel audit to identify those who have advantages over others in the same positions.

Step 4. Send notices of layoffs (to employees, trade union, employment center).

Step 5. Offer vacancies to those who are planned to be fired.

Step 6. Dismiss those who did not agree to the transfer (fill out documents, pay what is due).

We will analyze in detail the procedure for reducing the number and staff of employees step by step.