There is no legal definition and no specific laws that regulate outsourcings in Russia. However, outsourcing relationships are generally regulated by various rules contained in different laws. Generally, an outsourcing is understood to mean the practice of purchasing certain services from a service provider which can cover certain needs of the customer. This can be done either remotely, or by the service provider providing the customer with employees.

Civil law matters in outsourcing agreements are regulated by the general provisions of the Civil Code of the Russian Federation (Civil Code). These are generally the rules on services contracts and trust management contracts, as well as various intellectual property (IP) related provisions.

Special outsourcing rules in relation to the hiring of temporary staff can be found in Russia's employment laws. As a general rule, staff leasing is prohibited under Article 56.1 of the Labour Code of the Russian Federation (Labour Code). However, since 2014, the hiring of temporary staff has been allowed in limited cases for licensed HR agencies or within a group of companies and parties to shareholders agreements (however, a new separate law defining the special features of this type of outsourcing has not yet been approved by the Russian legislative bodies).

Directive 2001/23/EC on safeguarding employees' rights on transfers of undertakings, businesses or parts of businesses (Transfer of Undertakings Directive) does not apply in Russia, neither are there similar national legal rules. The transfer of employees, if any, by an outsourcing arrangement is regulated under general employment rules.

Since 2014, the Labour Code of the Russian Federation (Labour Code) has provided the possibility for employees to be transferred in order to temporarily perform duties in the interest of, on the territory of and under the control of, other individuals and legal entities under a contract on the hiring of staff.

However, parties to an outsourcing contract should be cautious, as borrowed labour is generally prohibited. To avoid breaching the Labour Code, the parties must differentiate between "permitted" and "restricted" transfers. The main difference between them is the strict framework of circumstances and parties in which the hiring of staff is allowed (which includes the provision of staff by private recruiting agencies that have the relevant accreditation).

Under Russian law, workers are not transferred directly using outsourcing contracts structured as services contracts. Instead, workers are temporarily hired out to the customer to perform duties under an outsourcing contract. The subject matter of an outsourcing contract is the "provision of services" by the supplier. The supplier's personnel perform the obligations assigned to them not directly in the interests of the customer, but as part of performance of their duties under their employment contract or sub-supplier contract with the supplier. If employees of the supplier are transferred to the customer on a permanent basis, the employment contracts between the employer and with the supplier must be terminated and the employees will be required to enter into an employment relationship with the customer. Therefore, after termination of the outsourcing contract employees do not return to the supplier.

The transfer of customers' employees is not regulated by Russian law, and generally employees are not transferred to the supplier. If the customer's employees are permanently transferred while services are being provided by the supplier on the basis of the outsourcing contract, the employment contracts with the customers' employees are terminated.

Termination of employment contracts is subject to the general rules on the termination of employment contracts, including terms and guarantees such as compensation for unused vacation and benefits provided for in the employment contract.

Services by the customer's employees may be granted to a supplier under a services contract. The provision of services by customers' employees can be set out in the outsourcing contract and/or be contained in a separate services contract. After the outsourcing contract ends, the employees are returned to the customer unless they are transferred according to a separate services contract and its term does not depend on the term of the outsourcing contract. It should be noted that while employees are performing their duties, their employment contracts with the customer remain in force.

The following consequences may arise in the event of a change of supplier:

The mechanism for termination is similar to the procedure for changing suppliers and heavily depends on the legal form of the relationships between the customer, supplier and employees.

In cases where employees are temporarily transferred to the other party to the contract, they return to their employer if the basis for their transfer becomes invalid. If the transfer is based on a new employment contract or separate services contract, the termination of the outsourcing contract does not directly influence the relationships based on the above contracts.

Not applicable.

The terms and conditions of employment are generally not retained by the transferee when employees transfer from one entity to another as part of an outsourcing. When employees are outsourced in Russia from a licensed agency providing workers for the customer, it is typically structured under a contract for the provision of staff. The terms and conditions for employment in this scenario are set out in an employment contract entered into between a licensed professional services agency (service provider) and the employee. The employment contract must include a provision stipulating that the employee will perform, by order of the employer, an employment function defined within the contract, carried out in the interests of and under the managerial control of the customer (and not the service provider (that is, the employer)).

The service provider and customer will also enter into an additional agreement, which includes information about the receiving party (the customer), the place and date of conclusion, number and period of validity of the outsourcing contract between the service provider and the customer. If agreed by the supplier and the customer, the additional agreement may also include the following provisions:

When employees are outsourced in Russia from a HR agency providing workers for the customer, the employee's length of service (and any other assigned benefits) with the previous customer would not be transferred to the new customer as part of an outsourcing arrangement.

Not applicable, see above, Length of Service.

Not applicable, see above, Length of Service.

Under the Labour Code, the service provider has an obligation to harmonise the remuneration for those employees sent to work for the customer under an outsourcing contract with that of the customer's employees. Accordingly, remuneration for the outsourced employees must be no worse than the remuneration provided to the customer's employees performing the same labour functions and having the same qualifications.

Not applicable, see Question 5.

Not applicable. Dismissals can be implemented freely (and at any time) as part of an agreement with a licensed HR agency.

Not applicable.

Not applicable.

The statutory redundancy rules apply, including the pay calculation.

A severance pay in the amount of one months' average salary is paid on the last day of employment (dismissal date).

If the employee is unable to find a new job within one month after the dismissal date, they are entitled to a second severance payment for one months' average monthly salary for the second month (or for an amount calculated pro rata for that month if the employee finds work).

In exceptional cases, if decided by the Russian State Employment Service (SES), the employee will be entitled to a third severance payment for a further one months' salary (or for an amount calculated pro rata for that month if the employee finds work), if the employee has applied to the SES within 14 business days from the dismissal date and has not found a new job with its assistance for the two-month period following the dismissal date.

Provision of personnel based on a secondment agreement is permitted when the personnel are seconded by Russian HR agencies, provided such persons:

The provision of personnel based on a secondment agreement is also allowed when the personnel are seconded by group companies, including foreign companies and their subsidiaries or other affiliates, when such persons are seconded either:

The details of any secondment within group companies is due to be set out in a new law. This new law will hopefully answer questions on the work permit and visa regulations for seconded foreign employees.

In both cases, the consent of an employee to being seconded is required. In addition, the consent of the trade union of the host company is required if more than 10% of the total number of employees of the company are to be seconded. Furthermore, a supplementary agreement on secondment to the employee's individual employment contract must be concluded, which must provide that the secondeed employee's working conditions are the same as for employees of the host company.

The provision of personnel as secondees is prohibited in the following cases:

Not applicable.

Russian law requires the transferor to obtain written (ink on paper) consent from the employees whose personal data is to be transferred. The relevant consent must specifically authorise the transfer of the employees' personal data to the specific transferee and for a specific purpose. In addition, the transferor and the transferee must enter into an agreement (or at least add a provision into their agreement in the event of a data transfer) which must stipulate that the transferee will ensure that it will provide at least the same level of data protection as that applied by the transferor.

Furthermore, the parties must include special provisions in relation to data processing, which specifies, for example:

Furthermore, the parties should take the account whether the jurisdiction of transfer is considered to provide an adequate level of protection in relation to the personal data. In the event of a cross-border data transfer, the transferor must notify the data protection authority of the intended data transfer. In the event of a cross-border transfer to a "non-adequate" jurisdiction, the transferor would have to wait for a specific authorisation of the data protection authority before the transfer can be performed.

As noted in Question 13, Russian law requires the transferor to obtain the written (ink on paper) consent from the employees whose personal data is to be transferred. The relevant consent must specifically authorise the transfer of their personal data to the specific transferee and for a specific purpose. Furthermore, in the event of a cross-border data transfer, the transferor must also comply with the rules for notifying the data protection authority on the transfer (see Question 13).

The employee may withdraw their consent to the data transfer at any time which would result in the obligation for the transferee to remove their data and no longer process it. The transferor would have to make sure that the transferee has complied with the relevant obligation.