Work-related performance incentives

We seek to maintain a competitive employee remuneration system. Our goal is to attract, retain, and motivate individuals whose qualifications and performance will ensure the successful implementation of our mission and the achievement of our business goals.

Under an agreement between LUKOIL and the trade union association, the minimum rate of pay in Russian subsidiaries is established as being no less than the subsistence minimum of the employed population. The base salary depends on the employee’s established duties, the challenges inherent in their work and the level of responsibility, and is set individually for each employee taking into account their level of education and practical experience.

In 2017 the starting salaryWe took the maximum of the following three figures to define entry-level salaries at subsidiaries operating in a specific region: the subsistence minimum as a whole for the Russian Federation, the subsistence minimum in the respective Russian region, and the regional minimum wage. in Russian operating regions of the LUKOIL Group exceeded the established regional minimum wage in the respective regions by on average 25%. The starting salary of employees of LUKOIL Group foreign subsidiaries is set at no lower than the minimum wage in the countries where the Group operates, as established by labor legislation norms and/or the collective bargaining agreement and/or internal regulations.

The incentive system for employees in Russian subsidiaries also consists of a wide range of benefits and compensations established by the agreement between the employer and the trade union organization, collective bargaining agreements, and other internal regulations. Within the benefits and compensation system considerable attention is paid to issues that affect the quality of life of employees, such as maintaining their health, helping employees and their families, and providing assistance on home purchases. Social support is also provided to employees that have retired from the Company.

Voluntary health insurance

Additional voluntary health insurance programs are provided to over 90% of the employees of Russian subsidiaries; employees have the option to make additional payments to add services to the existing voluntary health insurance program in order to meet their specific personal needs.

Housing program

1,410 employees participated in a housing program in 2017.

The program is implemented under the Fundamental Principles of the LUKOIL Group’s Housing Policy, and aims to proide production staff (invited specialists and young specialists) with housing and help employees improve their housing conditions by subsidizing interest rates on bank mortgage loans.

Pension support

The estimated value of pension liabilities at the end of the reporting period was RUB 10,367 million. The pension plan covered over 52,000 employees.

Pension coverage for the employees of foreign LUKOIL Group subsidiaries is provided in accordance with the legislation of the country in which the subsidiary operates and local regulations.

Non-state pension coverage in Russian subsidiaries of LUKOIL Group
2015 2016 2017
Number of former employees receiving a corporate pension 41,422 43,094 46,294
Average non-state pension size, RUB 2,100 2,290 2,240