The Constitutional Court issued yet another opinion on basic principle of overtime pay

In Ruling No. 35-P issued on 27 June 2023 the Constitutional Court of the Russian Federation once again expressed a position regarding basic principle of payment for overtime work. The Court qualified p.1 of Article 153 of the Labor Code as non-corresponding to provisions of the Constitution.

According to the norm in question, overtime should be paid in the amount not less than 1,5 pay for first 2 hours of overtime and not less than double pay for the 2^nd and subsequent overtime hours.
According to position of the Court, the current wording allows to calculate pay for overtime work using base pay without taking into account payments of compensatory or incentive nature — i.e., execute calculation based on part of the total remuneration. This approach does not correspond to the meaning of the legislative guarantee of payment for overtime work in an increased amount compared to similar work performed within the regular working hours. The Court specifically pointed out that when calculating payment for overtime work employers must use all items payable due to objective circumstances that exist regardless of whether the work is performed within the regular working hours or not, as well stimulating payments aimed at increasing of performance, and, generally, tied to KPI achievement.

The Constitutional Court stated that the current labor legislation must be updated accordingly and before such amendments are made, the single rate of overtime pay should be calculated taking into account payments of compensatory and incentive nature, which are included in the regular total remuneration.

It is important to note that the Constitutional Court expressed a similar position back in 2018 (Ruling No. 26-P issued on 28 June 2018); however, at that time the Court did not mandate to amend the legislation.

Based on the logic expressed by the Constitutional Court, the same logic and pay principles shall be applied to all periods of work beyond the regular working hours, including overtimes within summarized working hours regime and work on weekends and non-working holidays.

Our People Advisory Services department will be glad to provide support in revising and transforming remuneration systems.