Employment termination law and legislation in Russia

1. Dismissal of employees

1.1 Reasons for dismissal

An employee may be dismissed at the initiative of the employer based on one of the following grounds:

  • Unsatisfactory performance during a probationary period;
  • failure to meet the requirements of the job due to lack of qualifications (confirmed by an appraisal);
  • repeated failure to perform duties without justifiable reasons following a disciplinary sanction;
  • liquidation of the company;
  • redundancy or staff cuts;
  • change of company’s proprietor (with respect to the dismissal of the company’s executive, his deputies or the chief accountant);
  • a single severe breach of duty including absence from the workplace without good reason for a whole working day (irrespective of the length of that working day), and absence from the workplace without good reason for more than four consecutive hours during the working day; attending work in a state of alcoholic, narcotic or other intoxication; disclosure of secrets protected by law (state, commercial, service and other) made known to the employee during the course of his employment, including the disclosure of another employee’s personal data; committing pilferage, including theft, in the workplace of others’ property, embezzlement, wilful destruction or damage to property as confirmed by a decision of a court, judge or other authorised body or an official empowered to hear administrative offence cases; violation (as established by a labour protection commission) of labour protection requirements, if this results in severe consequences (industrial accident, disaster) or is known to have created a real hazard with these consequences;
  • commission of culpable actions by an employee directly handling money or valuables if these actions provide grounds for the employer to lose confidence in him;
  • immoral deed committed by an employee engaged in educational functions that is incompatible with his duties;
  • adoption of an unjustifiable decision by the executive of a company, his deputies or the chief accountant that results in losses to the company’s property, its illegal use or other damage to the company’s property;
  • a single severe breach of duty by the company’s (or branch / representative office’s) chief executive officer or his deputies;
  • presentation of forged documents by the employee upon the conclusion of the employment agreement;
  • other cases envisaged in the employment agreement with the chief executive officer of the company, members of the collegial executive body of the organisation, distant employees and home-based employees;
  • in other cases specified by federal laws (e.g. a special ground for dismissal of a chief executive officer if a decision is passed by the authorised body of the company).

1.2 Form

For all dismissals irrespective of the ground:

  1. order for the dismissal (written form, hard copy), signed by a duly authorised representative of the employer and signed by the employee to confirm familiarisation with the order;
  2. information on an employee’s employment with the employer or employee’s workbook specifying the ground for dismissal, signed by
    a duly authorised representative of the employer and returned to the employee against a signature in the workbook register and the workbook itself;
  3. payslip specifying the sums to be paid to the employee upon dismissal. Other documents may be required depending on the ground for dismissal.

1.3 Notice period

The notice period depends on the ground for dismissal. For instance, in case of staff redundancy or company liquidation the notice period is not less than two months. If dismissal is due to unsatisfactory performance during the probationary period (which can last a maximum period of three months for ordinary employees and six months for some executive positions, the statutory notice period is only three days. If an employee is dismissed for a single severe breach of duty, no notice period is required.

1.4 Involvement of works council

Works councils (or other employee representative bodies, except for trade unions) are not to be involved in employment termination issues unless stipulated in a collective bargaining agreement.

However, under Russian law, employees may either be represented by trade unions, or (where there is no trade union or less than half of company employees are members of an established trade union) elect other employee representatives. Other employee representatives cannot be involved in the protection of an employee’s individual rights, but only in the collective relationship with the employer (e.g. negotiating collective bargaining agreements).

1.5 Involvement of a union

If an employee is a trade union member, providing prior notice to and further consultations with the trade union may be required depending on the grounds for dismissal.

1.6 Approval of state authorities necessary

Dismissal of an employee under 18 is only permitted with the consent of the corresponding state labour inspectorate and the commission for children and the protection of their rights (except in the event of the liquidation of the company).

1.7 Collective redundancies

The criteria for mass dismissals are provided in industry sector or territorial agreements. Usually, the main criteria for a mass dismissal are indicators such as the number of employees dismissed in connection with the liquidation of a company, or the reduction of a large number of employees over a certain calendar period. The following criteria for mass redundancy are currently applied in Moscow: liquidation of a company with a staff of 15 or more persons; reduction of 25 % of the staff within 30 calendar days; reduction of a company’s staff of 50 or more persons within 30 calendar days; 200 or more persons within 60 calendar days; or 500 or more persons within 90 calendar days.

In case of mass dismissal, it may be required to notify the employment centre and trade union three months in advance. 

1.8 Summary dismissals

Not applicable.

1.9 Consequences if requirements are not met

Reinstatement, continued payment of salary, and civil, administrative and criminal liability under Russian labour law.

1.10 Severance pay

An employee’s entitlement to severance pay will depend on the grounds for dismissal.

For instance, if an employee is dismissed on disciplinary grounds, no severance pay will be due.

If an employee is dismissed due to company liquidation or staff redundancy, he/she will be entitled to severance pay of one month’s average salary on the dismissal date. Furthermore, if the employee does not find a new job within the second month after dismissal, he/she may apply to the employer for one more month’s average salary. Finally, the employer will have to pay the employee one more month’s average salary for the third month of unemployment if the employee applied to the employment service within the first two weeks after dismissal, but failed to obtain a job.

1.11 Non-competition clauses

Non-competition clauses are not enforceable in Russia.

1.12 Miscellaneous

The employer cannot terminate employment agreements with pregnant women except in the event of liquidation of the company. There are also restrictions on termination by the employer for other categories of employees, e.g. women who have children up to three years of age; men who have three or more children, one of them up to three years of age, if one’s spouse is unemployed; single mothers bringing up children aged up to 14 years (in the case of a disabled child, aged up to 18 years) and other persons bringing up children without a mother.

2. Dismissal of managing directors

2.1 Reasons for dismissal

In practice, the following grounds are generally used to dismiss a managing director at the initiative of the employer:

  • liquidation of a company;
  • adoption by a managing director of an unjustifiable decision that results in losses to the company’s property, its illegal use or other damage to the company’s property;
  • a single severe breach of duties by a managing director;
  • upon removal of a managing director of a debtor company under insolvency legislation (bankruptcy);
  • by a decision of the general meeting of shareholders or board of directors (as specified in the company’s charter);
  • on other grounds stipulated in an employment agreement with a managing director.

Other grounds may also be used to dismiss a managing director (e.g. unsatisfactory performance during a probationary period, repeated failure to perform duties without justifiable reasons following a disciplinary sanction, etc.). But they are rarely applied in practice due to the specific status of the managing director.

2.2 Form

The set of documents varies depending on the grounds for dismissal. But irrespective of the grounds for dismissal, the following documents will be required:

  1.  a decision (written form, hard copy) of the general meeting of shareholders or board of directors (as specified in the company’s charter);
  2. an order for the dismissal (written form, hard copy), signed by a duly authorised representative of the employer and presented to the managing director against a signature;
  3. information on the managing director’s employment with the employer or the managing director’s workbook specifying the grounds for dismissal, signed by
    a duly authorised representative of the employer and returned to the managing director against a signature in the workbook register and the workbook itself;
  4. a payslip specifying the sums to be paid to the managing director upon dismissal.

2.3 Notice period

The notice period depends on the ground for dismissal. 

For instance, in case of company liquidation the notice period is not less than two months. 

If dismissal is due to unsatisfactory performance during the probationary period (which can last a maximum period of six months), the statutory notice period is only three days. 

If a managing director is dismissed for a single severe breach of duty or by a decision of the general meeting of shareholders or board of directors (as specified in the company’s charter), no notice period is required.

2.4 Involvement of works council

Work councils are not involved in a managing director dismissal unless this is stipulated in a collective bargaining agreement.

2.5 Involvement of a union

If a managing director is a trade union member, prior notice to and further consultations with the trade union may be required depending on the grounds for dismissal.

2.6 Approval of state authorities necessary

No.

2.7 Collective redundancies

Not applicable.

2.8 Summary dismissals

Not applicable.

2.9 Consequences if requirements are not met

Reinstatement, continued payment of salary, civil, administrative and criminal liability under Russian labour law.

2.10 Severance pay

A managing director’s entitlement to severance pay depends on the grounds for dismissal.

For instance, if a managing director is dismissed on disciplinary grounds, no severance pay will be due.

If a managing director is dismissed by a decision of the general meeting of shareholders or the board of directors (as specified in the company’s charter) in the absence of any culpable action by the managing director, then the managing director is entitled to severance pay at the rate set in the employment agreement, but not lower than three times the average monthly earnings of the managing director.

If a managing director is dismissed due to the company liquidation, he/she will be entitled to severance pay of one month’s average salary on the dismissal date. Furthermore, if the managing director does not find a new job within the second month after dismissal, he/she may apply to the employer for one more month’s average salary. Finally, the employer will have to pay the managing director one more month’s average salary for the third month of unemployment if the managing director has applied to the employment service within the first two weeks after dismissal, but failed to obtain a job. 

2.11 Non-competition clauses

Non-competition clauses are not enforceable in Russia.

2.12 Miscellaneous

The employer cannot terminate employment agreements with pregnant women except in the event of liquidation of the company. There are also restrictions on termination by the employer for other categories of employees, such as women who have children up to three years of age; men with an employed spouse who have three or more children, one of whom is three years of age or younger; single mothers with children 14 years and younger (in the case of a disabled child, 18 years and younger); and other persons raising children without a mother.