Social policy

We strive to maintain an effective employee remuneration system to facilitate social stability and to enhance the quality of life of our employees and their families. Company obligations which supplement those of the laws of the Russian Federation and international standards are set out in the Social Code of PJSC LUKOIL and the agreement between the employer and the trade union. Services under employee social programs are provided in both Russian and foreign entities and employees can participate in these programs irrespective of their employment terms (whether they are employed full or part-time).

LUKOIL Group staff costs, RUB million
2018 2019 2020
Total 145,706 147,284 151,528
including:
  • payroll
136,475 138,180 142,809
  • social benefits and payments, social support for employees
8,403 8,125 7,977
  • training
828 979 742
including in Russian entities
  • payroll
97,386 98,883 101,446
  • social benefits and payments, social support for employees
5,876 5,670 5,403
  • training
641 714 583
Notes.

  1. Details of the scope of social services for employees are provided in Appendix 7.
  2. Expenses on social benefits and payments and social support of employees include payments under collective bargaining agreements and do not include social payments from the wage fund.

Cooperation with trade unions and employees

LUKOIL enters into voluntary collective agreements and agreements between the administration and trade unions in Russia and abroad governing mainly additional norms to the requirements of labor legislation, such as employment, observance of working and rest hours, occupational safety and health measures, the level of wages and the provision of agreed social benefits and guarantees. The Company does not prevent the activities of trade union organizations and maintains an ongoing constructive dialogue with trade union representatives.

Each new agreement on the level of commitments is a next step to improving the social benefits package and the level of social protection for employees increases as compared to the mandatory legislation.

In 2020, PJSC LUKOIL and the International Association of Trade Union Organizations of PJSC LUKOIL (IATUO) signed the 10th agreement between the employer and the trade union for 2021–2023. The supplements and amendments covered 84Including working and rest hours, occupational safety, employment of women in rural areas, support of non-working pensioners, etc. points of the document. New social support obligations were included, such as:

  • The lump sum payment as compensation for health damage in the event of an accident at work has been increased.
  • The estimated average salary for determining additional sick leave benefit was increased.
  • A lump sum payment is stipulated on the termination of an employee due to retirement.
  • Unified amounts of financial aid to employees with disabled children and financial aid on the birth of a child were established.
  • The monthly wage rate of social benefits for employees and non-working pensioners was increased.

The Agreements form the basis for concluding collective bargaining agreements in the Group’s organizations. All rights and guarantees set forth in the collective bargaining agreements shall apply equally to all employees of LUKOIL Group entities, regardless of their trade union membership.

Awards of 2020

  • The winners of the contest “Best Collective Agreement in the Oil and Gas Complex” of the Russian Oil, Gas and Construction Workers Union were collective agreements of the oil refinery in Nizhny Novgorod, “LUKOIL-West Siberia” and “LUKOIL-Integrated Oil Terminal”.
  • The winners and awardees of the Contest of the Ministry of Energy of Russia for the best socially-oriented company in the oil and gas industry in 2020 were the oil refineries in Volgograd and Perm, the Stavrolen plant, as well as LUKOIL-AERO, LUKOIL-Tsentrnefteprodukt and the LUKOIL Sport Club.

Motivation and wages

In Russia, the minimum subsistence level is regulated by law, as is the minimum wageAccording to the Labor Code of the Russian Federation, the minimum wage must not be lower than the subsistence level established for each constituent entity of the Russian Federation. and how often it is paid. In 2020 the minimum rate of pay of LUKOIL entities in significant regions of operation in Russia was in line with or exceeded the regional minimum wage. The minimum rate of pay is the same for men and women and is determined based on duties performed, the complexity of work tasks and level of responsibility, and is established for each employee considering their education and practical experience. The initial salary at LUKOIL Group foreign entities is also at least equal to the minimum wage rate established by the labor laws of the country where LUKOIL Group operates, collective agreements, and/or local regulations.

The compensation strategy is constantly being improved in accordance with best practices. The Company is introducing a grade-based incentive systemThe grading system is the ranking of positions according to their value for the entity, which will make it possible to ensure the unity of payroll systems in different Group entities. In 2020, special attention was paid to building an incentive system for project staff: the possibility of awarding bonuses to employees at each stage of project implementation and based on project results was introduced. Measures were also taken to improve the incentive system for oil product supply employees.

At the end of 2020, average wages in significant operating regions in Russia, where large production, refining and energy entities operate, doubled the average wages in almost all these regions. In addition, the growth rate of wages in LUKOIL exceeded the growth rate of average wages in the regions.

Social support

The employee incentive system includes benefits and compensation established by the agreement and collective bargaining agreements between the employer and the trade union, collective bargaining agreements and other local regulatory acts. A significant part of benefits and compensations is geared towards enhancing the quality of life of our employees through maintaining their health, providing support to them and their families, offering them housing assistance, etc. Social benefits are also provided to retired employees.

Voluntary health insurance

According to the Unified Rules for Voluntary Health Insurance (VHI) for Employees of LUKOIL GroupThe document establishes the requirements for the implementation of VHI for the employees in Russian entities of the Group. In foreign entities of the Group the Unified Rules are not binding, the employees are subject to VHI in accordance with the local regulations and employees’ labor contracts. entities, all the employees working in LUKOIL Group’s entities (as a primary job) are entitled to VHI insurance. In 2020, amendments were made to the document, according to which newly hired employees (new hires) are subject to VHI from the end of the trial period stipulated by the employment contract, i.e. within one calendar month from the date of hiring. Employees can at their own expense widen the coverage of health insurance programs to meet their specific needs.

Housing program

As part of the corporate Basic Housing Policy of LUKOIL Group, invited and young professionals may receive assistance from the Company in acquiring housing in the form of partial payment of interest on bank loans. In 2020, 853 employees participated in the program (2019: 1.4 thousand people participated).

Pension benefits

Russian entities finance a corporate-defined pension plan that covers most employees. One type of plan is based on the number of years of service to the Company, the salary level as of the end of 2003, and any awards received during the entire period of employment in LUKOIL. The other type of the pension plan is calculated in proportion to the salary level. These plans are financed solely by LUKOIL Group entities. Also, employees have an opportunity to contribute to pension savings with the Company’s participation (up to 4 percent of employees’ annual salary).

44.1 thousand employees from the Group’s entities participate in the joint pension program (2019: 43.6 thousand). Employees of foreign entities are provided pension benefits in line with the laws of the country of operation as well as the local regulations of entities. Some pension plans are financed solely by employers, while others are based on contributions from both employees and employers.

Non-state pension coverage
2018 2019 2020
Pension liabilities, LUKOIL Group, RUB million 8,910 12,544 13,794
Number of former employees receiving a corporate pension, in Russia, people 49,441 52,854 53,519
Average non-state pension level in Russia, RUB 2,272 2,134 2,241
LUKOIL Is One Family
of Sustainable Development. "LUKOIL Is One Family"

Thirty years ago, LUKOIL united three Siberian fields in Langepas, Urai and Kogalym (Western Siberia), which were joined by two oil refineries in Volgograd and Perm. It was then that the slogan “LUKOIL Is One Family” appeared, which in many ways defines the Company’s social policy towards its employees.

In a fundamentally changed economic environment, it was important not only to ensure the stability of the entities’ operation, but also to preserve the unique nature of our Company’s communities while learning to work together in a new way. Thanks to a forward-looking business strategy and constant interaction between the Company’s management and employees during collective bargaining negotiations, jobs at key production facilities were retained, as were many social forms of support. The corporate principles on wages and social benefits ensured a decent standard of living for the employees’ families even in times of crisis.

The collective bargaining agreements of many LUKOIL Group entities have been repeatedly recognized as the best in the industry at the regional and federal level in Russia. This confirms LUKOIL’s responsible position in implementing the human resources management policy.

1990s
2020
1990s

The level of wages and the scope of social benefits varied significantly among entities in different industries

2020

A unified approach to social policy implementation was used, which was set forth in collective bargaining agreements, the Social Code, and the Human Capital Management Policy

1990s

In 1994, a corporate non-state pension coverage program was launched

2020

Corporate social programs help employees to solve the most important issues for any family (difficult life situations, housing, health care, children’s education, etc.)

1990s

Five entities in 1993

2020

Over 180 companiesAs per IFRS, the list is provided in Appendix 1. within LUKOIL Group

1990s

1993: approximately 80 thousand employees

2020

Over 100 thousand people

1990s

1993: three regions of Russia

2020

More than 30 countries and 65 regions of Russia