An employee is declared bankrupt... What should an employer do with personal income tax?

Dismissal due to bankruptcy: legislative norms

Termination of cooperation with personnel due to financial insolvency is regulated by a number of articles of the Labor and Civil Codes, the Constitution of the Russian Federation and Law No. 127-FZ. These documents establish the procedure for terminating employment relations, the order of payments upon dismissal in bankruptcy, as well as their amount.

Staff reduction is carried out according to the regulations established in paragraph 1 of Art. 81 Labor Code. According to the Law, employees can be dismissed only after bankruptcy proceedings are completed. But in fact, this is not profitable for a bankrupt company, since it will have to pay wages for the entire time when the company was no longer operating. Therefore, many employers stop cooperating before the company is liquidated through bankruptcy.

Workers are laid off or sent on unpaid leave. But at the same time, it is necessary to observe the order established in the Labor Code; last of all, the employment relationship is severed with:

• women with dependent children under three years of age;
• single mothers or fathers with children under 14 years of age or a disabled child;
• pregnant women and those on maternity leave;
• disabled people;
• other groups of socially vulnerable persons established by Art. 81 Labor Code.

Mass reduction based on the provisions of Art. 129 of the Law “On Insolvency” is carried out by a bankruptcy trustee.

When do such financial problems lead to the liquidation of a company?

The company is liquidated in the process of so-called bankruptcy proceedings. If the company's financial situation is truly hopeless, a bankruptcy trustee is appointed. This happens if it is impossible to somehow correct the financial condition of the enterprise, even the measures taken by the arbitration court do not bring any results.

Article 65 of the Civil Code of Russia states that due to the financial insolvency of the enterprise and its inability to fulfill its obligations, it must be liquidated. That is, failure to fulfill obligations is a direct reason for this. If we talk about the rights of employees of bankrupt organizations, then no matter what the company’s management does, the employees are protected by the Labor Code of Russia.

Closing a company on the initiative of the founders

In some cases, the founders begin this procedure. Most often, they begin this after the enterprise ceases to operate. In this case, there are no longer any employees at the company. That is, the question of dismissing them is no longer worth it. During the process of liquidation of organizations, all actions to terminate contracts with them must be carried out in strict accordance with the law.

Procedures for managing and dismissing working personnel become the responsibility of the bankruptcy trustee. If the procedure for dismissing employees was carried out with any violations, the company’s employees have the right to sue it.

Most often (with rare exceptions), the court takes the side of the employees of the bankrupt organization and orders considerable compensation to be paid to the dismissed employees.

Therefore, the question of the bankruptcy of an enterprise and the future fate of its employees does not always carry something bad in the answer.

The procedure for dismissal in bankruptcy

To avoid litigation on labor disputes, in the event of a massive layoff of employees due to a legal entity being declared financially insolvent, the established regulations must be strictly observed. All actions are performed in stages:

1. At the meeting of founders, a decision is made to terminate activities and initiate bankruptcy proceedings. A statement of claim is filed with the Arbitration Court.
2. The manager is obliged to send a notice to the territorial employment center about the upcoming layoff. For mass dismissal, no later than 90 days, for partial dismissal, no later than 60 days before the date of dismissal.
3. Based on Art. 81 of the Labor Code, notifications are drawn up for each employee in two copies, all employees personally familiarize themselves with the document against signature. One copy is given to the employee, the second is sent to the archive. If one of the staff refuses to endorse the document, then a report is drawn up, which must contain the signatures of two witnesses and a manager. The reduction is notified 2 months before the appointed date.
4. Dismissal orders come into effect. Each employee familiarizes himself with this document personally and signs it. If an employee expresses disagreement and does not sign the order, a report is drawn up signed by witnesses (2 people) and the manager.
5. On the last working day, all payments to staff are made, accounting, personnel and other documents stored in the accounting department are issued.

After notification of layoffs, each employee has the right to terminate the employment relationship at his own request before the appointed date.

How are workers notified of upcoming dismissal?

So, based on the provisions of established practice, most often, when an enterprise is declared bankrupt, the procedure for its liquidation then begins.

The liquidation of such a company, in other words, means that it no longer requires its own employees, and they must be legally dismissed - that is, their existing employment contracts must be terminated.

Most often, the bankruptcy procedure of a company leads to the introduction of bankruptcy proceedings against it. When bankruptcy proceedings are carried out, all its affairs are managed by an external specialist. He is obliged to conduct affairs related to personnel management in this company.

Thus, based on the provisions of the second paragraph of Article 129 of Federal Law No. 127-FZ of October 26, 2002 “On Insolvency (Bankruptcy)”, no later than within a month after bankruptcy proceedings have been introduced against the company proceedings, the bankruptcy trustees must send a notice to employees about the termination of their employment contracts.

The period during which employees are guaranteed the safety of their own workplace and the corresponding salary for the position held is regulated by Article 180 of the Labor Code of the Russian Federation.

Thus, in this section of this regulatory legal act the following is established: if an employment contract with employees of a bankrupt company is carried out due to its liquidation, employees must be notified of the imminent dismissal no later than 2 months before the date on which it is planned to take place.

In addition, it is worth remembering that, according to the same Article 180 of the Labor Code of the Russian Federation, it is necessary to comply with the established form of informing employees about their upcoming dismissal due to the liquidation of a bankrupt company. For example, it talks about the mandatory recording of such an order in writing. In this case, the provision of the corresponding written document must be carried out to each employee personally.

In turn, after reading the contents of such a document, the employee of the bankrupt company must confirm that the information has been communicated to him. He must personally sign the relevant document.

In other words, the person who is the head of the enterprise and is responsible for issues related to personnel management, at the time of the liquidation procedure of the bankrupt company, must issue notices in sufficient quantity - that is, as many as there are employees in this company.

Payments and compensation upon dismissal in bankruptcy

On the last working day, the company is obliged to make full payments to the staff. Payouts include:

• wages for the time actually worked, according to Art. 127 Labor Code;
• if the vacation was not used, or part of it remained unused, compensation is due (Article 140 of the Labor Code);
• bonuses;
• severance pay in the amount of the average monthly salary based on Art. 178 TK;
• compensation for the second and third months after dismissal in the amount of the average monthly salary.

By law, the organization is obliged to pay severance pay for 2 months after the layoff, but if the employee is registered with the employment center, then he will receive compensation for the third month.

The law establishes special conditions for residents of the Far North. A legal entity pays benefits for 3 months after dismissal, and the employment center makes payments for 6 months.

If an employee quits voluntarily after notice, but before the date of mass layoff, he is only entitled to pay and compensation for unused vacation. But in court you can recover from the employer:

• average earnings during forced absence based on Articles 234, 394 of the Labor Code;
• moral damage under Art. 394 TK;
• on the basis of Art. 94 of the Civil Law Code, a legal entity will be obliged to reimburse legal costs incurred by the employee during labor proceedings.

After the liquidation of a legal entity due to bankruptcy, severance payments are primarily made to the categories of employees who are most vulnerable: pregnant women, maternity leavers, disabled people, single parents.

Payment of average monthly income while looking for a new job

Employee benefits include money that they must use while looking for a new position. Employers themselves can find an employee a new place for professional exploits, but only if there is such an opportunity.

If finding a new job is not possible, it is wise to provide reasonable support to a former employee who is searching. But at the same time, the employee must also comply with certain conditions. For example, having registered with the Employment Service, he will receive a guaranteed monthly salary for another 3 months. During this time, it is quite possible to find a new job. Labor exchange employees can also help with this.

Dismissal of employees during bankruptcy: entry in the work book

In the event of a massive staff reduction during the liquidation of a legal entity due to bankruptcy, personnel documents are drawn up in the general manner. The record contains the following information:

• serial number;
• date of dismissal (day, month, year);
• name of the legal entity, position held by the dismissed person;
• reference to the legislative act on the basis of which the employment relationship was terminated;
• number and date of the order to terminate the employment contract.

Termination of cooperation may be carried out on the basis of one of the following articles of the Labor Code:

• clause 2 part 1 art. 81 - at the initiative of the employer in connection with the liquidation of the company, the decision is made by the bankruptcy trustee;
• clause 1 part 1 art. 77 - by agreement of the parties, if management and staff reached an understanding after notification of the dismissal of employees, but before the date of its implementation;
• clause 3, part 1, art. 77 - at your own request.

The entry in the work book is certified by the wet seal of the legal entity and the signature of the employee who filled out the personnel document.

On the day of dismissal, employees are issued the following documents:

• work book;
• a certificate of the amount of pension contributions and the status of the personal account;
• salary certificate in form 182n;
• certificate, diploma, certificates and other educational documents.

A copy of the dismissal order will also be provided upon request.

Payment of compensation

The question of what an employee should do in the event of bankruptcy of an enterprise also implies that he will receive some compensation. First of all, this is severance pay, which is equal to the employee’s average monthly salary. The employer is also obliged to provide fired employees with security guarantees while they are looking for work. For two months from the date of termination of the employment contract, the same amount of severance pay will be paid so that the employee can find a new job. If he is hired earlier, the employer will stop payments.

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Dismissal of a director in case of bankruptcy of an enterprise

Termination of employment relations with a manager due to the bankruptcy of a company is regulated by a number of legislative acts: Law No. 127-FZ, Decree of the Government of the Russian Federation No. 234 of March 16, 2000, Resolution of the Constitutional Court No. 3-P of February 3, 2010 and No. 116 (2005). The decision to dismiss a director is made by:

• meeting of founders, if the Arbitration Court has not yet ordered bankruptcy proceedings;
• bankruptcy trustee on the first day of assuming his duties.

In the first case, a protocol on the decision must be drawn up and filed with the personal file. If the company has one founder, then one solution is enough. The form of the Order for the dismissal of a director is established by Resolution of the State Committee of Statistics No. 1 (2004) and is issued in form T-8.

The manager is entitled to all payments established in the general order. The entry in the labor record must be supplemented with a reference to the decision of the meeting of founders.

Why you can’t apply for resignation at your own request

The required payments can only be received if the documents that contributed to the dismissal (that is, the application) indicate that the company is bankrupt and therefore can no longer perform its functions of providing employment services.

When an employee writes a statement “in his own way,” he admits that the dismissal is his initiative. That is, the employee is entitled to less payments, compensation, etc. This is not beneficial to him in the first place. But employers sometimes require employees to do just that when going through bankruptcy proceedings. It is up to the parties to decide whether to defend their opinion or not.

No one is safe from being fired, but it is doubly offensive if they are fired not through the person’s fault, but because the company has gone bankrupt. In this case, you need to look for a new job, which often takes a lot of time. In addition, in such situations, they often do not receive wages for several months. If the company is liquidated, there is a risk that this money will not be fully recovered.

The court made a decision, and then what?

An application to declare a citizen bankrupt is accepted by the arbitration court, provided that the claims against the citizen amount to at least five hundred thousand rubles and these requirements are not fulfilled within three months from the date on which they must be fulfilled (clause 2 of Article 213.3 of the Bankruptcy Law) .

Having considered the application, the court decides how justified the claim was, and based on the results of the proceedings, it either leaves the application without consideration, or terminates the bankruptcy case, or introduces one of the bankruptcy procedures (Articles 213.2, 213.6 of the Bankruptcy Law):

• debt restructuring;
• sale of property;
• settlement agreement.

The process of consideration by the court of an application to declare an individual insolvent (bankrupt) and all subsequent procedures prescribed takes quite a long time.

This fact was also recognized by the Russian Ministry of Finance in Letter No. 03-04-06/59816 dated October 13, 2016. The financiers also gave recommendations on what a tax agent should do in this situation. Although, unfortunately, these recommendations are vague and contradictory. Judge for yourself.

Officials of the Ministry of Finance made it clear (they did not say this directly) that employers of bankrupt citizens should not withhold personal income tax from payments made in their favor, since a moratorium on all taxes applies to persons in the process of bankruptcy.

In accordance with paragraph 30 of Article 2 of Federal Law 26.10.2002 N 127-FZ “On Insolvency (Bankruptcy)”, a moratorium is a suspension of the debtor’s fulfillment of monetary obligations and payment of mandatory payments.

In other words, during bankruptcy proceedings, employees do not have to pay taxes, including personal income tax, on any of their income. Accordingly, tax agents should not withhold this tax from employee salaries and other payments in their favor.

The validity of what has been said is confirmed by the following legislative norms:

• clause 1 art. 213.11 of Law No. 127-FZ, which states that from the date of the arbitration court’s ruling recognizing a citizen’s application for bankruptcy as justified and introducing the restructuring of his debts, a moratorium is introduced on satisfying the claims of creditors for monetary obligations, for the payment of mandatory payments, except for the cases provided for this article;
• para. 5 tbsp. 2 of Law No. 127-FZ, which includes taxes, fees and other obligatory contributions paid to the budget of the corresponding level of the budget system of the Russian Federation as obligatory payments;
• Art. 23 and 24 of the Tax Code of the Russian Federation - the last norm establishes the tax agent’s obligation to withhold and transfer taxes, which, in turn, is a derivative of the taxpayer’s obligation to pay taxes, defined by the first article.

From the above norms taken together, the Ministry of Finance concludes that the moratorium on the payment of taxes provided for by Law No. 127-FZ applies equally to both taxpayer-employees and tax agents.

It turns out that from the date the arbitration court makes the above-mentioned determination, the employee in respect of whom the procedure for restructuring his debts has been introduced has the right to a deferment in paying tax.

Please note that this procedure applies ONLY to the procedure for restructuring a citizen’s debts and ONLY to obligations that arose before the introduction of bankruptcy proceedings.