- Almost everything in Russia must be done
formally and on paper;
- Contracts are normally for an indeterminate
term - fixed-duration employment contracts are almost unheard-of;
- It is very difficult to terminate an employee;
and
- Any employee, without regard to seniority or
nationality, is free to leave the company after just two weeks’ notice and
has the right to work for a competitor immediately.
What is the main source of labor and employment law in Russia?
The Labor Code is the main codified statutory act and it governs the relationship between
employees and employers of all types.
The parties to an employment
relationship cannot contract differently from what is imposed by Russian labor
law. Therefore, if any provision
of the employment agreement harms or makes the employee’s situation worse it
will be considered invalid under the Labor Code.
Employees are entitled to minimum
guarantees and protections that are mandatory and cannot be altered, even if
the employee allows the employer to do so. This allows the employees to have a bargaining power normally
not found in the many countries.
Who is an employee?
And an employer?
An employee is a natural person
who enters into an employment relationship with a an entity/natural person for
the personal execution of work, with an specific remuneration and under the
employer’s subordination.
An employer is a natural
person or a legal entity that is an employment relationship with an individual.
It must provide the employee with
work specified in an agreement and it must ensure that the labor conditions are
adequate and legal. Furthermore,
the employer pays remuneration on a regular basis.
Does a foreign employer
need to have a local entity in Russia to employ local workers?
Russian law does not require a
foreign employer to set up a local entity in order to employ workers in Russia.
Individuals can be employed by a
company which is incorporated in a country other than Russia and has no
representation in Russia. However, a signed employment contract between a local
worker and an entity having no representation in Russia still will be guided by
Russian law as the main place of work is Russia. And, a foreign entity might be considered to have a Permanent
Establishment (PE) in Russia, which could have profound corporate tax
consequences.
Are employment contracts
necessary in Russia?
Yes. Under Russian law, an
employment contract is necessary and should be executed in writing.
However, if the company fails to
have a contract, the employment relationship will still exist and be valid, and
it will be considered to have existed upon the actual commencement of work.
In this case, the employer is
obliged to conclude an employment agreement within three days of the employee’s
actual commencement of work. Therefore, an employment contract not
executed in writing still is considered concluded and thus binding, effective
and enforceable if the employee has commenced work with the employer’s
knowledge.
In general, employment agreements
in Russia are for an indefinite term. A fixed-term employment agreement (for up to five years) may
be concluded only in limited circumstances (for example, temporary positions,
or temporary replacement of an employee).
Are there specific
terms that every employment agreement should have?
Absolutely!
Besides basic information for
employee and employer, such as name and taxpayer identification number, every
Russian employment agreement should include:
- Employee job title; occupation; the specific
type of work the employee is to perform;
- The place of work, and whether the employee
is hired to work in the organization’s branch, representative office or
another detached structural unit located in another area;
- Start date and, if the agreement is for a
fixed-term, the effective term of the agreement and the circumstances
serving as grounds for why having a fixed-term employment contract under
the Labor Code or other federal law;
- Compensation and benefits;
- Working hours and leisure hours;
- If necessary, the terms and conditions
defining the nature of work (mobile, traveling, en route, or other kind of
work); etc.
Can we prepare the
contract in a different language than Russian?
Russian, as the official language
of the Russian Federation, must be used by all companies in their employment
agreements, regardless of their ownership structure.
However, if you are sending
foreign employees to work in Russia, in practice, the employment contract
will also be signed in the fluent language of the foreign employee. That will
guarantee that the individual has a clear understanding of rights and
responsibilities under the agreement.
How must salary payments be
made in Russia?
Salary in Russia must always be
paid in Russian currency (rubles). Employees should be be paid not less than twice per month,
and must receive at least the minimum monthly wage established by law.
Many foreign companies tend to
pay the employees in a currency different than the Rubles. This is considered a violation of
Russian law which the authorities deem discriminatory.
What else do I need to
know about employment regulations in Russia?
In addition to the specifics I
mentioned above, you also should know about the following if you have employees
in Russia:
- Employment contracts may be terminated only
for certain reasons. Dismissal
should be effected in strict compliance with the procedures established by
law; failure to follow these procedures may serve as grounds to prove the
dismissal to be unfair.
- Russian labor law is bureaucratic, and thus
employers are required to keep a large amount of internal documents and
closely follow the procedures stipulated by law which also require
execution of various documents.
- Background checks and medical examinations
are mandatory for certain jobs, while for other jobs, requesting such
information on the applicant or employee might constitute invasion of privacy.
- Non-competition agreements, and customer and
employee non-solicitation agreements, are generally not enforceable in
Russia.
- Discriminatory conduct may constitute a
criminal offense;
- The employer in most cases acts as taxpayer
or a tax agent.
- To obtain certain (extended) rights to the
intellectual property created by the employee, the employer should
undertake certain actions within a limited time span.
- The employer should not impede employees
meetings and strikes, and lockout is prohibited.
- Workplace safety regulations require special
training of employees, certification of workplaces, investigation of
workplace accidents, etc.
- The employer should not impede employees
meetings and strikes, and lockout is prohibited.
- Sale of business (shares, assets of the
company) does not generally constitute ground for dismissal.
- Maintain an ongoing dialogue with employees
to build loyalty. The ethical and moral aspects of employment are
considered very important in Russia.
- Be aware that the Russian labor code applies
to all types of employees from all nationalities.
- Initial recruiting processes are crucial,
since it is very complicated to dismiss an employee.
This posting is
intended to provide a brief overview of labor and employment law in Russia. It is not intended as a substitute for
professional legal advice and counsel.
The views expressed
in the Members Section are personal and do not reflect the official policy or
position of BRIC CENTER.
To submit your article or posting, email info@briccenter.com
