The Court of Cassation on the Issue of Applicability of Article 411 of Civil Code of RA to Delayed Salary․
According to the current legislation in cases of unlawful hold of another person’s monetary assets, avoiding returning them, usage them through other payment default or unjustified receipt or saving at the expense of another person interests shall be charged on the sum of these assets. Interests shall be calculated from the day of default until the day of termination of the obligation in accordance with bank interest rates established by the Central Bank of the Republic of Armenia for the relevant time periods. This procedure shall be in force, unless another amount of damage compensation or interest rate is envisaged by law or contract. Where another size of damage compensation or interest rate is envisaged by law or contract for a certain time period, the procedure envisaged by this point shall not apply only during the given time period (clause 1 of Article 411 of Civil Code). In legal practice courts satisfy claims on levying interest prescribed by the Article 411 of Civil Code on the sum to be levied for forced absenteeism.
The Court of Cassation has stated that the regulation prescribed by the Article 411 of Code as a general rule is not applicable in the case when precise size and regulation on liability is envisaged by law or contract as a special rule.
The Court of Cassation has outlined that payment procedure of salary as remuneration of works done and liability for non-remuneration is envisaged by Labor Code.
So, in accordance with the general rule, salary shall be paid to the employee at least once a month by the 15h day of the following month. When the obligation is not fulfilled upon Labor Code 0.15% interest of the salary shall be paid for each day as a penalty. In addition, the size of liability is limited; it cannot exceed the sum to be paid as a salary. This regulation actually provides for a special liability of employer, which ensures the employees to exercise their right to get salary in the time period envisaged by the law.
The Court of Cassation has found that Labor Code provides for special rule for non-payment of salary. Taking into account the regulation of article 411 of Civil Code and the fact that upon clause 4 of Article 1 labor relations are regulated by civil legislation and other legal acts unless otherwise provided for labor legislation, the Court of Cassation stated that in these cases regulation of liability of the Article 198 of Labor Code shall be applied for non-payment of salary.
As it follows, when levying unpaid salary the penalty of 0.15% interest shall be applied but not exceeding the amount of salary to be paid.