Unified Social Contribution (USC) Benefits for New Jobs

Автор: admin_dev

Дата оновлення: 03 April 2013

The benefit that provides compensation of 50% of the accrued and paid USC for the month in which it is paid has been in effect since early 2013

USC Benefit for Creating a New Job

The benefit, which provides compensation of 50% of the accrued and paid USC for the month in which it is paid, has been in effect since early 2013; it is established by Part 3 of Article 24 of the Employment Law. This benefit applies in cases where the employer has created at least one new job and employed a worker in it, having first concluded an employment contract with them (the number of such jobs and employees is not limited). The duration of the benefit is limited to 12 months, which follow the 12 months from the moment the employee was hired or from the second year of their employment.

In doing so, the employer must also meet the following requirements:

• The person employed at the new job should be paid a salary equal to three times the minimum wage for 12 months from the date of employment. This requirement must also be met during the following 12 calendar months during which the employer intends to use the aforementioned benefit;
• not reduce the staff headcount and the payroll fund (although the Employment Law does not specify exact timeframes, this period is most likely 24 months from the date the worker was hired for the new job).

By the way, based on the definition of a new job set out in paragraph 12 of Part 1 of Article 1 of the Employment Law, one of the conditions for entitlement to such a benefit is the absence of a reduction in the employer’s average number of employees during the previous 12 months.

Resolution No. 153 of the Cabinet of Ministers dated 13.03.2013 (Procedure No. 153) establishes the procedure for compensating part of the actual costs of employers related to the Unified Contribution paid for mandatory state social insurance.

According to paragraph 3 of Procedure No. 153, its scope (and therefore the benefit) does not apply to employers who are business entities formed as a result of the liquidation of another legal entity within 12 months preceding the creation of the new job, and to budgetary institutions. This is important because the Employment Law does not establish this.

It is worth noting that paragraph 9 of Procedure No. 153 establishes conditions under which the benefit is preserved if the contract with the person employed in the new job was terminated, but a new one was concluded with another person employed in the same job, provided that their salary is not less than three minimum wages in the calendar month of payment of the Unified Contribution in total under the subsequent employment contracts.

There is no such condition for the benefit established by Article 24 in the Employment Law. There is a similar one, but it concerns a different USC benefit established by Part 1 of Article 26 of this Law. However, this clarification is favorable for the employer, as it allows extending the period of benefit use in a situation beyond their control — the employee’s resignation.

How to obtain the benefit

Suppose the employer has met all the requirements and is eligible for the specified USC benefit. How can they use it? According to paragraph 5 of Procedure No. 153, to obtain compensation of part of the amount of USC previously paid, the employer should submit a certificate of compliance with the conditions for compensating part of the actual costs related to the payment of the mandatory state social insurance contribution in the form specified in Procedure No. 153 to the PFU authority within 12 months from the date of the employment contract. The certificate may be submitted on any day within this period, but the earlier the better, since the PFU needs to plan funds in its budget for compensation to the employer in the coming year.

The decision to return funds to the employer is made by the territorial PFU authority after receiving the corresponding information from the territorial State Labor Service authority. The maximum decision timeframe is calculated as follows:

• 5 working days from the moment of receiving the certificate to send a request to confirm the information specified in the certificate (from the PFU authority to the territorial State Labor Service authority)
• a monthly period (unspecified what is meant, but assume approximately 30 calendar days on average) to confirm the information (from the territorial State Labor Service authority to the PFU authority);
• 10 days (since it is not specified which, possibly calendar days) for the PFU to make the final decision on the payment of compensation.

As specified in paragraph 8 of Procedure No. 153, compensation is paid monthly for 12 calendar months after the passage of 12 months from the date the person was employed at the new job, based on a report. Funds are transferred to the employer’s bank account indicated in the certificate from the PFU authority’s account.