Employment and employee benefits in the Russian Federation: overview

A Q&A guide to employment and employee benefits law in the Russian Federation.

The Q&A gives a high level overview of the key practical issues including: employment status; background checks; permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; intellectual property; restraint of trade agreements and proposals for reform.

To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits: Country Q&A tool.

The Q&A is part of the global guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-guide.

Contents

Scope of employment regulation

1. Do the main laws that regulate the employment relationship apply to:
  • Foreign nationals working in your jurisdiction?

  • Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

Russian law applies to foreign nationals employed in Russia, unless Russian federal laws or international treaties to which Russia is a party provide otherwise.

Laws applicable to nationals working abroad

Russian employment law applies to employment relationships in the Russian Federation and to employment relationships between a Russian employer and a Russian employee assigned by their Russian employer to work abroad.

 

Employment status

2. Does the law distinguish between different categories of worker? If so, what are the requirements to fall into each category, the material differences in entitlement to statutory employment rights and are there any maximum time periods for which each category of worker can be engaged?

Categories of worker

The categories of workers are:

  • Employees.

  • Agency workers.

  • Independent contractors.

An employee works under an employment agreement and performs their employment duties on a regular basis for regular remuneration (that is, a salary) on behalf and under the control of an employer. Employees are entitled to statutory guarantees provided under employment legislation.

An independent contractor works under a civil law contract, not an employment agreement. Independent contractors are usually engaged for a limited period of time. They are paid for the achievement of a particular result, rather than the performance of an employment function. Independent contractors are not entitled to any of the statutory guarantees provided to employees (for example, minimum salary, paid annual leave, limits to the duration of a working week and so on).

An agency worker is an employee who performs their employment duties not on behalf of their employer, but on behalf and under the control of another entity to which they are seconded. Agency workers have the same rights as employees and benefit from additional guarantees (see Question 15, Agency workers). Employees can only be seconded in cases prescribed by the law.

Misclassification of an employee as an independent contractor can lead to either:

  • Recognition of the relationship between the client and the independent contractor as an employment relationship.

  • Administrative liability consisting of a fine of up to RUB100,000 for the employer and up to RUB20,000 for its officers.

Officers are employees who perform organisational and administrative functions within an employer.

Entitlement to statutory employment rights

Only employees are entitled to statutory employment rights.

Time periods

Employment contracts can be concluded for an indefinite period or for a fixed term not exceeding five years. The duration of civil law contracts is not limited. Fixed-term employment contracts can only be concluded in cases provided for by the Labour Code or federal laws. Fixed-term employment contracts entered into in cases other than those set out in the Labour Code will be regarded by the courts as concluded for an indefinite term.

 

Recruitment

3. Are any grants or incentives available for employing people? Does any information/paperwork need to be filed with the authorities or given to new employees when employing people?

Grants or incentives

Generally, there are no grants or incentives for employing people.

Filings

For an employee whom it is the first place of employment, the employer must:

  • Create an employment record book.

  • Apply to the Pension Fund for the issuance of a mandatory state pension insurance certificate.

For other employees, the employer must make a record of the employment relationship in the employee's employment record book.

 

Background checks

4. Are there any restrictions or prohibitions on carrying out background checks in relation to applicants?

There are no express restrictions or prohibitions on carrying out background checks in relation to applicants. However, an employer cannot use the results of background checks as a ground to reject an application for employment if the applicant has sufficient qualifications for the position. This is to ensure that only the relevant employment-related skills and qualifications are taken into account when deciding whether or not to employ an applicant. Background checks must comply with data protection requirements (see Question 16).

 

Permission to work

5. What prior approvals do foreign nationals require to work in your country? What information/paperwork needs to be kept or filed with the authorities when they start work?

Visa

Procedure for obtaining approval. Two types of visas can be issued to foreign nationals who wish to work in Russia:

  • Single-entry ordinary working visa.

  • Multiple-entry ordinary working visa.

Those visas are issued by a Russian diplomatic or consular mission. Single-entry ordinary working visas are granted for a period of up to three months. Multiple-entry ordinary working visas can be granted to highly qualified specialists for the period of their employment contract (but for not more than three years). Highly qualified specialists are foreign nationals who have particular work experience, skills and achievements in a certain area, and whose monthly wage will exceed RUB167,000, or another amount depending on their area of expertise.

Cost. A single-entry ordinary working visa costs US$50 (US$100 for fast-track issuance). A multiple-entry ordinary working visa costs US$150 (US$300 for fast-track issuance).

Time frame. Both single- and multiple-entry ordinary working visas can be issued within four to 20 business days, or within three business days (for an additional fee), following the submission of documents.

A single-entry ordinary working visa can be renewed by applying for a multiple-entry working visa for the period of the employment contract (but for not more than one year). A multiple-entry ordinary working visa can be renewed indefinitely for additional three-year periods.

Sanctions. An employer is not liable for an employee's failure to obtain or renew their visa. An employee who does not have the necessary visa can be found liable for breach of the Russian visa regime. This offence can result in an administrative fine of up to RUB5,000, and in deportation from Russia.

Permits

Foreign nationals who require a visa to enter and stay in Russia can only be employed after they obtain a work permit.

There are annual quotas for the number of work permits that can be issued to foreign nationals in each Russian constituent entity (region). After those quotas are exceeded, an employer's application for the permission to engage foreign employees and for individual work permits will be rejected. Quotas do not extend to highly qualified specialists and certain other qualified professionals (for example, various categories of engineers, computer professionals, various creative professionals, senior executives and so on). These professionals can be employed in Russia even if the annual quota is exceeded.

Procedure for obtaining approval. The general procedure for approval of the employment of a foreign national comprises the following steps:

  • Quota allocation. The employer must obtain a quota allocation from the authorised body of the constituent entity where its business is located.

  • Permission to engage foreign employees. Before or when obtaining individual work permits, the employer must obtain the permission to engage foreign employees from the General Administration for Migration Issues of the Ministry of Internal Affairs. The permission to engage foreign employees is valid for one year.

  • Individual work permit. After or when obtaining the permission to engage foreign employees, the employer must obtain an individual work permit for each foreign employee from the General Administration for Migration Issues of the Ministry of Internal Affairs. Individual work permits are valid until the expiration of the respective employees' employment contracts, but for not more than one year.

Permissions to engage foreign employees and work permits can be renewed.

An employer that wishes to employ a highly qualified specialist does not need to apply for a quota allocation or for a permission to engage a foreign employee, but only needs to apply for an individual work permit. An individual work permit for a highly qualified specialist is valid for the term of the employment contract or civil law contract, but for not more than three years.

Cost. The employer must pay the following state duties:

  • Permission to engage foreign employees: RUB10,000 for each foreign employee.

  • Individual work permit: RUB3,500.

Time frame. Applications for quota allocations are processed within 25 days. Applications for permissions to engage foreign employees are processed within 30 days. Applications for individual work permits are processed within ten business days. Applications for individual work permits for highly qualified specialists are processed within 14 business days.

Sanctions. Employing a foreign national without a permission to engage foreign employees or without an individual work permit is punished by:

  • An administrative fine of up to RUB800,000 or administrative suspension of operations for up to 90 days (for the employer).

  • An administrative fine of up to RUB50,000 (for the employer's officers).

 

Restrictions on managers and directors

6. Are there any restrictions on who can be a manager or company director?

Age restrictions

There are no age restrictions on who can be a manager or company director.

Nationality restrictions

From 1 January 2016, Turkish nationals can only be employed by a limited number of entities listed in Decree of the Russian Government No 1458 dated 29 December 2015. This restriction does not apply to Turkish nationals employed before 31 December 2015.

Other restrictions

There are certain sector-specific requirements relating to the qualifications of chief executive officers (CEOs), members of boards of directors, members of management boards, and chief accountants. For example, CEOs, members of boards of directors, members of management boards and chief accountants of lending institutions and insurance companies must comply with the qualification and reputation standards laid down by the law and the Bank of Russia.

 

Regulation of the employment relationship

7. How is the employment relationship governed and regulated?

Written employment contract

Employment contracts must be concluded in writing in the Russian language (bilingual contracts are also permissible). If a person starts working without a written employment contract, but with the employer's express or implied consent, an employment contract is deemed to exist. In that case, any restrictions that may have been intended for the employment arrangement (for example, fixed term of employment or probation period) will not be recognised.

The employment contract must specify, among other things, the:

  • Place of work.

  • Job description.

  • Employment commencement date.

  • Effective term and reason for concluding a fixed-term contract (where applicable).

  • Salary.

The provisions of an employment contract are invalid if they attempt to exclude or restrict the employee's rights as guaranteed by the Labour Code. Employment contracts can include additional terms if they are not less favourable than the terms and conditions under the legislation, collective bargaining agreements and internal regulations.

Implied terms

Statutory employment guarantees are implied into the employment contract (for example, restrictions on working hours, duration of annual leave and so on).

Collective agreements

Trade unions and employers can conclude collective bargaining agreements for a term not exceeding three years (renewable). Collective bargaining agreements regulate the following matters (among others):

  • Remuneration systems.

  • Compensation and benefits.

  • Working hours.

  • Health and safety.

The provisions of a collective bargaining agreement automatically become binding on all the employees of an employer.

Authorised governmental bodies, unions of employers and trade unions within an industry can conclude sector-specific agreements. Those agreements set out the general requirements for a specific sector with regard to wages, guarantees, compensation, benefits and so on. Generally, the provisions of a sector-specific agreement are binding on all employers operating in that sector, unless they opt out of the agreement.

Authorised governmental bodies, unions of employers and trade unions in a territory can conclude federal, inter-regional, regional and territorial agreements. Those agreements set out the general requirements for a specific territory with regard to wages, guarantees, compensation, benefits and so on. Generally, the provisions of a territorial agreement are binding on all employers operating in the relevant territory, unless they opt out of the agreement.

 
8. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?

An employer cannot unilaterally change the material terms and conditions of employment, which include the:

  • Employment function.

  • Salary.

  • Working hours.

There are exceptions in cases of:

  • Temporary transfers of employees in the event of emergency for up to one month.

  • Organisational or technological changes in working conditions, where the previous arrangements between the employer and the employee cannot be preserved.

In the latter case, the employer must notify the employee of the imminent changes at least two months in advance, and offer the employee any other available positions if the employee refuses to work under the new conditions. If the employee does not accept any of the positions offered and does not agree to work under the new conditions, the employment is terminated following the expiration of the two-month notice.

 

Minimum wage

9. Is there a national (or regional) minimum wage?

From 1 July 2016, the minimum monthly wage is RUB7,500. Constituent entities (regions) of the Russian Federation can establish regional minimum wages, which cannot be lower than the federal minimum wage. There are no salary caps or mandatory payment methods in Russia, except for certain state-owned enterprises.

 

Restrictions on working time

10. Are there restrictions on working hours? Can an employee opt out on either an individual or collective basis?

Working hours

Working hours cannot exceed 40 hours per week. Certain categories of employees benefit from reduced working hours, as follows:

  • Employees under 16: 24 hours per week.

  • Employees between 16 and 18 and disabled employees: 35 hours per week.

  • Employees working in hazardous working conditions and teachers: 36 hours per week.

  • Medical personnel: 39 hours per week.

Overtime work is not prohibited, but generally requires the employee's consent and additional payment.

Rest breaks

Rest periods include the following:

Work during rest periods, especially on weekends and public holidays, is generally prohibited. However, in extraordinary cases, employees can be required to work on weekends or public holidays, provided that they give written consent. This requires additional payment or the provision of an additional day off.

Shift workers

Shift workers enjoy the same guarantees as other employees in respect of working hours and rest periods. Certain categories of employees benefit from guarantees regarding the maximum duration of a shift (for example, the duration of a shift is limited to five hours for employees between 15 and 16 years of age, and to seven hours for employees between 16 and 18 years of age). Employees cannot work two consecutive shifts.

 

Holiday entitlement

11. Is there a minimum paid holiday entitlement?

Minimum paid holiday entitlement

Employees are entitled to 28 calendar days' minimum paid holiday. Some employees have longer minimum paid holiday entitlements (for example, employees under 18 (31 days) and teachers (42 or 56 days)). Additionally, certain employees are entitled to additional paid holiday during a year, including:

  • Employees working in the Far North and equivalent regions.

  • Employees working in hazardous and dangerous conditions.

  • Employees with irregular working hours.

Collective bargaining agreements or internal regulations can increase the statutory duration of paid holiday leave.

Certain employees are also entitled to unpaid leave. An employer must grant unpaid leave to certain types of employees on the employee's request (for example, war veterans) or under certain circumstances (for example, the birth of a child).

Public holidays

There are at least 14 days of public holidays in Russia. Public holidays are not included in the minimum paid annual holiday entitlement.

 

Illness and injury of employees

12. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Who pays the sick pay and, if the employer, can it recover any of the cost from the government?

Entitlement to paid time off

Employees can take sick leave in the event of illness or injury. Sick leave can also be granted to an employee taking care of a sick child or sick relative. Employees do not receive their regular salary during sick leave. They receive a temporary incapacity allowance paid from the Social Insurance Fund of the Russian Federation from insurance payments made by the employer. The amount depends on the length of service and varies from 60% to 100% of the employee's average salary over the previous two years. A maximum amount is determined every year (RUB1,772.60 per day in 2016). Collective bargaining agreements, internal regulations and individual employment contracts can provide that the employee's salary continues to be paid for the duration of sick leave.

Entitlement to unpaid time off

There is no entitlement to unpaid time off. An employee can only request unpaid leave in certain circumstances (see Question 11).

Recovery of sick pay from the state

An employer can recover statutory sick pay from the Russian Social Insurance Fund. Sick pay paid by an employer in addition to statutory sick pay cannot be recovered from the state.

 

Statutory rights of parents and carers

13. What are the statutory rights of employees who are:
  • Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?

  • Carers (including those of disabled children and adult dependants)?

Maternity rights

Women are entitled to maternity leave of 70 days before the birth (84 days in the event of a multiple pregnancy) and 70 days after the birth (86 days in the event of a birth with complications and 110 days in the event of the birth of two or more children). During maternity leave, women receive an allowance from the Social Insurance Fund out of insurance payments made by the employer. The allowance corresponds to 100% of the employee's average salary over the previous two years. A maximum amount is determined every year (RUB 1,772.60 per day in 2016).

Pregnant employees can make a request, and employers must provide them the opportunity, to work part-time.

Pregnant women also benefit from additional guarantees (for example, they cannot be instructed to work overtime, during nights, on weekends and on public holidays).

Paternity rights

All guarantees provided to women in connection with maternity are granted to men raising children without a mother.

Surrogacy rights

There are no special regulations on surrogacy rights. A surrogate mother is entitled to maternity leave (see above, Maternity rights). One of the biological parents of the child is entitled to parental leave (see below, Parental rights).

Adoption rights

Employees who adopt a newborn child are entitled to leave from the day of adoption until the child is 70 days (110 days if two or more children are adopted). A woman can request that this leave be replaced with maternity leave of the same duration. Adoptive parents can also take parental leave until the child is three years old.

Parental rights

One of the parents of a child or any other relative can take parental leave until the child is three years old. During parental leave, a person can work part-time or from home. In any case, a person on parental leave is entitled to receive a monthly allowance until the child reaches one-and-a-half years of age. This allowance is equivalent to 40% of the person's average salary over the previous two years. A maximum amount is determined every year (RUB21,554.82 per month in 2016).

Carers' rights

A parent, adoptive parent or guardian of a disabled child under 18 is entitled to four additional paid days' leave per month and can take annual paid leave at any time that is convenient to them.

A parent, adoptive parent or guardian of a disabled child under 18, or a person who takes care of a sick family member, can request (and the employer must provide them) a part-time working schedule.

Carers are also entitled to certain additional guarantees, such as additional unpaid leave and restrictions on night work, overtime work and weekends and public holidays work. A parent or a legal guardian of a child under 14 can request a part-time working schedule.

In the event of sickness of a child or relative, a carer is also entitled to a temporary incapacity allowance (see Question 12).

 

Continuous periods of employment

14. Does a period of continuous employment create any statutory rights for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Statutory rights created

An employee working for a continuous period of at least 15 years for an employer that duly pays contributions to the Pension Fund of the Russian Federation is entitled to a pension. This requirement is applied cumulatively with an age requirement (55 years).

The period of continuous employment (insurance tenure) is also a factor in determining the amount of temporary incapacity and maternity allowances (see Questions 12 and 13).

Consequences of a transfer of employee

An employee retains their period of continuous employment on any type of transfer to a new entity or on a change of employer.

 

Fixed term, part-time and agency workers

15. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees? To what extent are part-time workers entitled to the same rights and benefits as full-time workers?

Temporary workers

Employment contracts can be concluded for a fixed term not exceeding five years. Fixed-term employees have the same rights as employees who are hired for an indefinite term. If an employer does not terminate a fixed-term employment contract by notifying the employee in writing three days before the expiration of the contract, and the employee continues working, the employment relationship will be renewed for an indefinite term.

If a fixed-term employment contract was concluded unlawfully, the employee can request a court to reclassify the contract as an employment contract for an indefinite term. The same applies if an employer concludes a fixed-term contract to avoid hiring an employee for an indefinite term.

Agency workers

Agency workers are entitled to the statutory benefits provided by their employer (the agency). In addition, agency workers are entitled to certain guarantees (for example, their salary must not be lower than that of the permanent employees of the employer to whom they are assigned). Agency workers are also entitled to compensation for work in hazardous and dangerous conditions.

Part-time workers

Part-time employees have the same rights as full-time employees. However, they are paid in proportion to their time of work or volume of work covered.

 

Data protection

16. Are there any requirements protecting employee privacy or personal data? If so, what are an employer's obligations?

Employees' data protection rights

The privacy and personal data of employees are protected. In particular, employees have the right to:

  • Obtain comprehensive information on the storage and processing of their personal data.

  • Freely access their personal data (which includes the right to copy their data).

  • Request the exclusion or adjustment of inaccurate or incomplete personal data, and of data processed in violation of the laws on personal data.

  • Request that all persons to whom inaccurate or incomplete personal data were provided be notified of any exclusions, adjustments or additions.

Employers' data protection obligations

An employer can only process an employee's personal data for the following purposes:

  • Complying with laws and regulations.

  • Assisting the employee in obtaining employment, education and promotion.

  • Ensuring employees' safety.

  • Ensuring the security of property.

  • Ensuring quality and quantity control.

The employer must obtain the employee's personal data from the employee, unless the employer obtains the employee's written consent to obtain their data from a third party. Generally, an employer cannot acquire or process special categories of employee personal data, including personal data relating to the employee's nationality, race, political, religious and philosophical views, health and personal life.

An employer must ensure the protection of employees' personal data and comply with restrictions to the transfer of employees' personal data. An employee's personal data can only be transferred to a third party on the employee's written consent, except in special circumstances (for example, threats to the employee's life and health). An employee cannot, under any circumstances, transfer an employee's personal data to a third party for commercial purposes without the employee's written consent.

Access to employees' personal data can only be granted to authorised persons to the extent required by the functions they perform.

 

Discrimination and harassment

17. What protection do employees have from discrimination or harassment, and on what grounds?

Protection from discrimination

Russian law prohibits discrimination on any grounds. Employees who are discriminated against can seek moral damages in court. Those claims are not subject to any statutory limitation period.

Protection from harassment

Russian law does not provide any special protection from harassment.

 

Whistleblowers

18. Do whistleblowers have any protection?

Russian law does not provide any special protection for whistleblowers.

 

Termination of employment

19. What rights do employees have when their employment contract is terminated?

Notice periods

The duration of notice periods depends on the grounds for termination.

An employee must give two weeks' notice to the employer. An employee who is a chief executive officer or a member of the management board must give notice at least one month before the proposed termination date. An employment contract can be terminated before the expiration of the notice period by mutual agreement. The termination is effective from the date specified in the employee's resignation notice if the reason for termination is either the:

  • Employee's inability to continue work (for example, commencement of studies or retirement).

  • Employer's breach of the labour laws, internal regulations, collective bargaining agreements or employment contract.

The duration of the notice to be given by employers ranges from zero (if the employment contract is terminated for cause) to two months (in the case of liquidation of the employer organisation).

Severance payments

Severance payments depend on the grounds for termination.

Employees terminated due to liquidation or redundancy are entitled to a severance payment equal to their average monthly wage. Additionally, the employer must pay the dismissed employee their average monthly salary during the period they are looking for a new job (but for no longer than two months from the date of termination). In exceptional cases, an employee can receive their average monthly salary for a third month following the date of termination, based on a decision of the Employment Agency (if the employee addressed that body within two weeks of dismissal and was not employed).

An employment agreement or a collective bargaining agreement can provide for a higher severance pay.

The average monthly salary of an employee used for the calculation of the severance payment is based on the payments made under the employer's remuneration plan (including salaries and bonuses). All payments accrued for the previous 12 calendar months are divided by the number of actual working days during that period, and multiplied by the number of days in the relevant month.

Employees are entitled to a severance payment equal to two weeks' average earnings if they (among other things):

  • Are called up for military service or assigned to an equivalent alternative civilian service.

  • Reject a transfer to another locality in connection with the employer's relocation.

The average daily wage of an employee used for the calculation of this severance payment is calculated by taking all payments accrued for the previous 12 calendar months, and dividing them by the number of actual working days in that period.

Chief executive officers (CEOs) of a company and members of the management board who are dismissed without cause by a decision of the company's authorised body are entitled to a severance payment equivalent to at least three average monthly salaries. This severance payment is limited to three average monthly salaries for CEOs and members of the management board of certain state-owned companies.

Procedural requirements for dismissal

The procedural requirements for dismissal are set out in the Labour Code and depend on the grounds for termination. No filings are required for dismissal, except for redundancy or termination of employment due to the employer's liquidation (see Question 21). Generally, dismissal does not require the approval of trade unions or the Employment Agency. The dismissal of a member of a trade union requires consultation with the trade union in certain cases (for example, termination for cause, redundancy and so on).

If the employer does not comply with the procedure for termination, the employee can seek reinstatement and monetary compensation for the period of forced unemployment.

 
20. What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

Employees benefit from the following protections against dismissal:

  • An employer can only dismiss an employee on the grounds provided for by the law or the employment contract (to the extent permitted by the law), for example:

    • unsuitability of the employee for the position held or job performed, due to insufficient qualifications, as confirmed by the results of the employee's evaluation;

    • repeated failure of the employee to perform their employment duties without justifiable reasons, where the employee is subject to a valid disciplinary action;

    • culpable actions of the employee directly involved in handling monetary or other valuables, if those actions constitute grounds for the employer's loss of trust in the employee.

  • A dismissal must follow the procedures set out by the law.

  • Certain categories of employees are protected from dismissal (see below, Protected employees).

Protected employees

The dismissal of certain categories of employees is restricted under Russian law, in particular:

  • Pregnant women cannot be dismissed, unless dismissal is due to the employer's liquidation.

  • The dismissal of the following employees is only possible in a limited number of cases (for example, employer's liquidation, repeated failure to perform employment duties without a reasonable excuse and so on):

    • women with a child under three;

    • single mothers or other persons raising a disabled child under 18 or a child under 14; and

    • sole provider of a family with multiple children, a disabled child under 18 or a child under three.

  • Minors can only be dismissed with the approval of the State Labour Office and the Juvenile Affairs Commission.

  • Employees who become disabled cannot be dismissed on this ground. The employer must offer the employee another position with acceptable working conditions. However, the employment contract can be terminated if there is no suitable vacancy or if the disabled employee refuses the employer's offers.

 

Redundancy/layoff

21. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs? Are there special rules relating to collective redundancies?

Definition of redundancy/layoff

Redundancy is either the elimination of certain positions within a company or a reduction of the overall number of employees. As a general rule, the employer does not need to present evidence of any grounds for redundancy. There are special rules on collective redundancies (see below, Collective redundancies).

Procedural requirements

The procedure for redundancy is as follows:

  • The employer issues an order that specifies the conditions of redundancy.

  • The employer informs the regional labour office and gives notice of the redundancy, two months before the termination date, to each employee to be made redundant (acknowledged by their signature) and to the relevant trade unions. The employer can also terminate an employment contract before the expiration of the two-month period with the written consent of the employee, subject to the payment of additional compensation equivalent to two months' average salary (or in proportion to the period left before the expiration of the notice period).

  • The employer consults with the trade union, if employees who are members of that union are to be made redundant.

  • During the two-month notice period, the employer must offer any other positions to employees being made redundant (including lower positions or positions with a lower wage). The termination of an employee's employment contract will only take effect if there are no suitable vacancies or if the employee does not accept a new position.

In the event of redundancy, employees with higher productivity results and higher qualifications have preferential rights to keep their positions. Certain employees have a preferential right to retain their employment (for example, employees with two or more dependants or employees who do not have other working individuals in their family).

Redundancy/layoff pay

See Question 19, Severance payments.

Collective redundancies

Collective redundancy is defined as any of the following:

  • Dismissal of at least 50 employees within 30 days.

  • Dismissal of at least 200 employees within 60 days.

  • Dismissal of at least 500 employees within 90 days.

These criteria can be amended in industrial or territorial agreements.

In the event of collective redundancy, an employer must notify the regional labour office and the relevant trade union(s) three months before the termination date.

 

Employee representation and consultation

22. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? What does consultation require? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?

Management representation

Employees are not entitled to management representation under Russian law.

Consultation

There are no consultation requirements under Russian law. Employers must only consult with trade unions for the:

  • Enactment of internal regulations.

  • Termination of employment of trade unions' members.

Major transactions

Employees do not participate in the conclusion or approval of major transactions.

 
23. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?

A trade union can challenge internal regulations and termination decisions adopted without consultation and/or contrary to the trade union's opinion (see Question 22).

 

Consequences of a business transfer

24. Is there any statutory protection of employees on a business transfer?

Automatic transfer of employees

Employees are automatically transferred in the event of a business transfer.

Protection against dismissal

There are no protections against dismissal in the event of a business transfer.

Harmonisation of employment terms

In the event of a business transfer, the buyer cannot harmonise the terms of employment of the transferred employees with those of existing employees.

 

Employer and parent company liability

25. Are there any circumstances in which:
  • An employer can be liable for the acts of its employees?

  • A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

An employer is liable for the illegal acts committed by its employees in the performance of their functions, unless it can prove that it took all the measures to prevent those acts.

Parent company liability

A parent company cannot be held liable for the acts of a subsidiary company's employees.

 

Employer insolvency

26. What rights do employees have on the insolvency of their employer? Is there a state fund which guarantees repayment of certain employment debts?

Employee rights on insolvency

Employees of an insolvent employer are entitled to receive their salary and severance payments, after satisfaction of any claims relating to death or injury caused by the insolvent employer. All other claims against the employer rank below employment debts.

State guarantee fund

There is no state fund that guarantees repayment of employment debts.

 

Health and safety obligations

27. What are an employer's obligations regarding the health and safety of its employees?

An employer must comply with state standards of labour protection. Non-compliance with these standards can result in administrative liability consisting of a fine of up to RUB150,000 (for the employer) and up to RUB30,000 (for its officers).

For example, the employer must:

  • Ensure safety in the course of the operation of buildings and equipment, the conduct of technical processes, and the use of tools, raw materials and products.

  • Create and maintain a management system for labour protection.

  • Use certified individual and collective means of protection.

  • Purchase and provide special clothing and footwear.

  • Train its employees in relation to work safety and first aid, and conduct relevant knowledge tests.

  • Arrange medical checks, including at the request of employees.

 

Taxation of employment income

28. What is the basis of taxation of employment income for:
  • Foreign nationals working in your jurisdiction?

  • Nationals of your jurisdiction working abroad?

Foreign nationals

Foreign nationals working in Russia are subject to income tax, regardless of whether they qualify as residents or non-residents for taxation purposes. Income tax is applied to employment income paid by Russian organisations and representative offices/branches of foreign organisations in Russia.

Nationals working abroad

Employment income paid to Russian nationals working abroad is subject to taxation in Russia, provided that the Russian national does not stop being a Russian resident for taxation purposes. A Russian resident is an individual who is physically present on the Russian territory for at least 183 calendar days within a consecutive 12-month period.

 
29. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

The rate of taxation on employment income is 13% for Russian residents and 30% for non-residents.

Social security contributions

Social security contributions are not withheld from a taxpayer's employment income. They are levied on the employer on a monthly basis.

The amount of social security contributions is calculated based on an employee's monthly salary. Generally, the employer must pay:

  • 22% of an employee's salary to the Pension Fund of the Russian Federation.

  • 2.9% of an employee's salary to the Social Insurance Fund of the Russian Federation.

  • 5.1% of an employee's salary to the Federal Compulsory Medical Insurance Fund.

 

Bonuses

30. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded, whether generally or in particular sectors?

Bonuses are commonly paid in Russia. There are sector-specific guidelines on the payment of bonuses, for example, in the banking sector and for certain state-owned companies (for example, bonuses can depend on the employer reaching certain key performance indicators, can be deferred, and so on).

 

Intellectual property (IP)

31. If employees create IP rights in the course of their employment, who owns the rights?

Under Russian law, IP rights created by employees in the course of their employment vest in the employer. Employees are entitled to remuneration for the creation of IP rights.

 

Restraint of trade

32. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Restriction of activities

It is not possible to restrict an employee's activities during their employment, unless the law provides otherwise. For example, a chief executive officer can only take up secondary employment if they obtain the consent of an authorised body of their primary employer. Additionally, a person under 18 years of age cannot have a second job.

Post-employment restrictive covenants

Russian law does not provide for post-employment restrictive covenants, other than confidentiality undertakings. The enforceability of other restrictive covenants is questionable, as they limit an employee's right to choose their place of employment.

 

Proposals for reform

33. Are there any proposals to reform employment law in your jurisdiction?

Proposals to reform Russian employment law include the following:

  • Collective bargaining agreements. It is proposed to make it mandatory for employees and employers to enter into collective bargaining agreements that document their obligations towards each other.

  • Guarantees on insolvency. It is proposed to establish a state salary guarantee fund that will pay all salary debts in the event of an employer's insolvency.

  • Secondments. It is proposed to regulate the secondment of employees by employers other than accredited private employment agencies. Currently, the law only allows and regulates secondments by private employment agencies, subject to certain exceptions.

 

Online resources

Official Legal Information Portal

W http://pravo.gov.ru/

Description. This is an official website that publishes all legal acts of the Russian Federation. The website is kept up to date.



Contributor profiles

Anna Maximenko

Debevoise & Plimpton LLP

T +7 495 956 3858
F +7 495 956 3868
E avmaximenko@debevoise.com
W debevoise.com

Professional qualifications. Russia, Civil law, 1999

Areas of practice. Mergers and acquisitions; general corporate advice; employment; anti-trust; data protection; regulatory issues, including banking, insurance and healthcare and pharmaceuticals.

Recent transactions

  • Advising a leading pharmaceutical company on a compliance review of employment and migration practices, policies and procedures.
  • Advising several top executives of public Russian companies in connection with employment and termination agreements.
  • Advising the Russian subsidiary of a leading Western company on issues related to transfers and redundancies of employees, dealings with trade unions, imposition of disciplinary sanctions and termination of employees due to performance issues.
  • Advising American International Group on issues related to the protection of commercial secrets and termination of employment.
  • Representing the Russian subsidiary of a leading Western company in several employment litigations.

Languages. Russian, English

Professional associations/memberships. Association of Anti-monopoly Experts.

Publications

  • "Executive Compensation & Employee Benefits", Getting The Deal Through.
  • "Pharmaceutical and Medical Devices Market in Russia: Trends and Developments", CEE Legal Matters.
  • "Between A Rock And A Hard Place: Anti-Corruption Compliance And Antitrust Law In Russia", CEE Legal Matters.
  • "Russia Issues Detailed Recommendations on Compliance with Russian Anti-Corruption Laws", Corporate Compliance Zeitschrift.

Elena Klutchareva

Debevoise & Plimpton LLP

T +7 495 956 3858
F +7 495 956 3868
E emklutchareva@debevoise.com
W debevoise.com

Professional qualifications. Russia, Civil Law, 2013

Areas of practice. Mergers and acquisitions; general corporate advice, employment; data protection; anti-trust; regulatory issues, including healthcare.

Recent transactions

  • Representing the Russian subsidiary of a leading Western IT company in several employment litigations.
  • Advising the Russian subsidiary of one of the major foreign investment banks on a number of employment issues, including termination, remuneration, outsourcing and revision of existing employment arrangements.
  • Advising one of the leading Russian industrial companies on the long-term incentive plan structuring and implementation.
  • Advising the Russian subsidiary of a leading Western company on issues related to transfers and redundancies of employees, dealings with trade unions, imposition of disciplinary sanctions and termination of employees due to performance issues.

Languages. Russian, English

Publications

  • "Russia Executive Compensation & Employee Benefits", Getting the Deal Through.
  • "Pharmaceutical and Medical Devices Market in Russia: Trends and Developments", CEE Legal Matters.
  • "Rights and Duties of Shareholders: Change of Setting", Corporate Lawyer.
  • "Russian Pharmaceutical and Medical Devices Market in the First Six Months of 2015: Legal Highlights", CEE Legal Matters.

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