FSZN: about envelope salaries

What seems like a benefit today may turn into a loss tomorrow.

It is no secret that employers, especially in non-state organizations, often pay wages in two parts. The larger part of the wage is unofficial ("in an envelope"), which the employer pays to the employee but does not document, and the smaller part is official, from which state social insurance contributions are paid to the Social Protection Fund of the Population (hereinafter referred to as the Fund).

Motivating an employee to agree to "envelope" wages, the employer argues that they are concerned about the employee: without paying taxes, the amount of wages paid to the employee in hand will be larger than the official amount. At the same time, the employer conceals that the employee loses social protection.

Thus, the employer tries to reduce labor costs, personal income taxes, and contributions to the budget of the state extra-budgetary social protection fund of the Republic of Belarus (hereinafter referred to as the fund's budget). However, such savings sometimes lead to the fact that economic entities are subsequently charged both the amounts of under-accrued and underpaid taxes and contributions, as well as penalties for their late payment.

This is a serious problem not only for the country's economy but also for every citizen receiving such "windfalls." Paying wages "in an envelope" is a violation of citizens' rights to benefits, pensions, and other social guarantees.

It is even worse when wages are paid entirely "in an envelope" and mandatory insurance contributions to the fund's budget are not paid at all. Not every resident of our country, agreeing to shadow money, sees the other side of the coin. After all, when applying for a pension, employees will face difficulties:

- firstly, periods of work during which insurance contributions were not paid in accordance with the legislation on state social security will not be included in the length of service;

- secondly, only those amounts will be taken into account when calculating the pension amount

earnings, from which mandatory insurance contributions have been paid. And, theoretically, the employee will only retain the right to recover damages from the dishonest employer through court proceedings.

Unofficially paid wages will also affect the amount of social benefits in the event of health problems. The employee will not receive payment for sick leave for temporary disability and for pregnancy and childbirth, or will receive it only based on the official actual salary.

Furthermore, in favor of legalizing income, let us cite some arguments related to the purchase of housing, a car, currency, payment for children's education, and other large expenses. After all, such transactions are under the control of tax authorities, where a citizen will have to confirm their expenses by the presence of legal sources of income, i.e., a comparison of income and expenses and the reliability of information about income and property declared in the tax returns.

Thus, receiving wages "in an envelope" negatively affects not only the income of the fund's budget, from which pensions and benefits are paid, but also, first and foremost, the working citizen themselves.

The future of every employee is, above all, in their own hands! And it is up to them to decide whether to receive an official salary with personal income tax and mandatory insurance contributions withheld to the fund's budget, or to agree to the employer's proposed condition of receiving wages "in an envelope" and remain socially unprotected, depriving themselves of the right to receive social benefits and a decent pension for life.

Consequently, the citizen themselves should primarily be interested in the documentary formalization of labor relations.

A citizen who agrees to work without a labor contract and, accordingly, to receive wages without reflecting them in the employer's accounting records, must remember that they risk not receiving wages for the time worked, compensation for unused leave, the employer may dismiss the employee at any time, and in the future such work will not be

included in the length of service when assigning a pension.

In conclusion, we note that by working for an employer legally, a citizen receives social protection and a decent pension in well-deserved retirement.

In accordance with the Law of the Republic of Belarus of May 26, 2021 No. 112-Z "On Amendments to Codes on Criminal Liability", the responsibility of employers for paying wages "in envelopes" has been strengthened in the Republic of Belarus, and since June 19, 2021, criminal liability has been introduced for evasion of payment of mandatory insurance contributions (Article 243³ of the Criminal Code), and primarily related to the payment of wages "in envelopes". Criminal liability is provided exclusively for proven intentional actions related to the non-payment of mandatory insurance contributions, provided that the amount of unpaid payments exceeds a large size - 2.5 thousand basic units (currently - 72.5 thousand rubles).

As of today, 2 criminal cases have already been initiated on the fact of paying wages "in envelopes" and incomplete payment of mandatory insurance contributions to the Social Protection Fund of the Population.

We also want to remind that officials of organizations that accrue mandatory insurance contributions on all payments to employees in accordance with the legislation, but do not transfer them to the fund's budget within the established deadlines, bear administrative responsibility (Article 12.15 of the Code of the Republic of Belarus on Administrative Offenses).