Home / Doing business in Russia 2020 / Employment and migration / Formalising the employment relationship
  1. Introduction
    1. Political and administrative structure
    2. Legal environment
  2. Common forms of business structures for foreign investors
    1. Main types of structure
    2. Registration, liquidation and reorganisation of business structures
    3. Shareholders’ and participants’ agreements
    4. Strategic industries
  3. Anti-monopoly issues
    1. General legal and regulatory framework
    2. Scope of application of the Competition Law
    3. Anti-competitive practices and restriction of competition
    4. Liability
  4. Tax system
    1. General approach
    2. Corporate taxation
    3. Incentives
    4. Special tax regimes
    5. Taxation of individuals
    6. Double taxation treaties
  5. Customs regulations
    1. Mutual trade between the EEU members
    2. General approach
    3. Trade between EEU and non-EEU countries
  6. Currency control
    1. Foreign currency transactions
    2. Consequences of breach/Penalties
  7. Lending in Russia
    1. Lending documents and governing law
    2. Jurisdiction
    3. International finance transactions and repatriation requirements
    4. Security interests
    5. Recognition of security trusts
    6. Syndicated loans
    7. Enforcement
    8. Suretyships and guarantees
    9. Bankruptcy considerations
    10. Other lending related issues
  8. Employment and migration
    1. Formalising the employment relationship
    2. Managing employment relationships
    3. Terminating an employment agreement
    4. Specifics of employing foreign nationals
  9. Personal data protection
    1. General approach
    2. Scope of the Data Protection Law
    3. Liability
    4. Right to be forgotten
  10. Intellectual property
    1. General approach
    2. Contractual aspects of intellectual property rights
    3. Rights over the results of intellectual activity
    4. Company names, trade names, trademarks and appellations of origin
    5. Intellectual property rights infringements
    6. IP Court
  11. Advertising issues
    1. General approach
    2. Scope of application of the Advertising Law
    3. Violations of the Advertising Law
    4. Liability
  12. Anti-corruption and compliance
    1. General approach
    2. Legal framework
    3. Compliance requirements for companies
    4. Concept of corruption in Russian law
    5. Possible targets of bribery
    6. Liability and penalties for corruption
    7. Example of sector-specific anti-corruption measures
  13. Real estate and construction
    1. Rights to real estate
    2. Real estate transactions
    3. Resolution of real estate disputes
    4. Planning and construction issues
  14. Corporate bankruptcy
    1. Insolvency criteria
    2. Stages of bankruptcy proceedings
  15. Import substitution and production localisation in Russia
    1. Measures affecting goods importation and current import substitution legislation
    2. Localisation incentives
    3. Sector-specific impact of import restrictions and localisation requirements
  16. Banking sector
    1. Legislative and regulatory framework
    2. Licensing and operations
    3. Deposit insurance
    4. The anti-money laundering law
    5. Bank secrecy
    6. FATCA and CRS
  17. Environment, energy efficiency and renewables
    1. Environment
    2. Energy efficiency
    3. Renewables
  18. Infrastructure and public private partnerships
    1. General approach
    2. Key PPP legislation
    3. Russian PPP environment
    4. Financing
    5. Legal issues
    6. Prospects for infrastructure projects
  19. Oil & gas
    1. Legislative framework
    2. Ownership and licensing
    3. Restrictions on foreign investors
    4. Licences
    5. PSAs

Employment and migration

The Labour Code of 30 December 2001 (the “Labour Code”) outlines the main provisions applicable to employment arrangements in Russia, along with numerous decrees and instructions, as approved by the competent state authorities. Migration issues are mainly regulated by Federal Law No. 115-FZ “On the Legal Status of Foreign Nationals on the Territory of the Russian Federation” dated 25 July 2002.

Below is a general description of employment law provisions as they apply to all employees, as well as how they apply to foreign employees specifically.

Key contacts

Contact
Fedoreev Valeriy
Valeriy Fedoreev
Partner
Head of Employment and Sports Law
Christophe-Huet
Christophe Huet
Partner
Avocat Associé

Formalising the employment relationship

Employment agreement

Under the Labour Code employment agreements must be concluded in writing (except for teleworkers with whom it is possible to conclude the agreement electronically, i.e. using electronic digital signatures) and contain certain mandatory terms and conditions. Such mandatory terms include place of work, job position, job duties, commencement date, term of employment, remuneration, working time regime, etc. Employment agreements may contain additional terms and conditions, such as probationary period and confidentiality clauses.

The parties’ rights and obligations under the employment agreement must comply with the minimum requirements set by law. An individual employment agreement must not result in an employee’s terms and conditions of employment being worse than the terms and conditions of employment stipulated under the overriding requirements of employment law; otherwise, the legislation will supersede the provisions of the respective employee’s employment agreement.

Term of employment

Employment agreements may be concluded for an indefinite term or for a fixed term; a fixed-term employment agreement may be concluded for a period of not more than five years.

The law provides for a limited number of grounds when an employment agreement may be concluded for a fixed term. These include, in particular, the following (the list is not exhaustive):

  • an employee replacing a temporarily absent employee;
  • project-related or seasonal employees;
  • general directors, deputy general directors or chief accountants;
  • employees of companies created for a specific term and purpose;
  • employees engaged under the terms of secondary employment.

If a fixed-term employment agreement is concluded in breach of the Labour Code, the competent state authorities may recognise it as concluded for an indefinite term.

Salary

The statutory minimum gross monthly salary is set at RUB 12,130 (EUR 1731) for the whole of Russia. At a regional level, a higher minimum monthly salary may be approved. For example, the minimum monthly salary in Moscow is currently set at RUB 20,195 (EUR 288). 

Salary is to be determined in the employment agreements and paid in roubles in instalments at least twice a month.

Probationary period

An employment agreement may provide for a probationary period which must not exceed three months. For general directors, deputy directors, chief accountants, deputy chief accountants and directors of representative offices, branches or other divisions, a longer probationary period may be established. This longer period must not exceed six months.

Both employers and employees are required to give the other party three calendar days' written notice when terminating the employment agreement during the probationary period. When dismissing an employee for failure to pass the probationary period, employers have an obligation to provide the employee with reasons for dismissal in writing. The employee may appeal the employer’s decision in court.

The following employees cannot be subject to a probationary period:

  • pregnant women and women with children under the age of 18 months;
  • under-18s;
  • young persons graduating from state-accredited educational institutions of primary, secondary or higher professional education, upon completing their education and applying for their first job within one year of graduation;
  • certain other categories of employees as set forth by law and a collective bargaining agreement.
Working hours and leave

A normal working week is 40 hours. Overtime is permitted upon the employer’s written request and, as a rule, requires the employee’s consent. Overtime may not exceed a total of four hours in two consecutive days and is limited to 120 hours in total per year.

An open-ended working day regime may be established for certain categories of employees, if set out in the employer’s internal regulations and relevant employment agreements. This type of working day regime entails the employee being periodically engaged in additional work upon the written request of the employer without requiring the employee’s written consent. Under this regime, the overtime work does not result in additional remuneration but does provide the employee with at least three additional days of paid leave per year.

The statutory annual paid leave for all employees is 28 calendar days. In certain cases expressly stated in the Labour Code, employees are entitled to additional paid leave.

Confidentiality obligation imposed on the employee

Russian law does not contain express provisions imposing confidentiality obligations on employees. If an employer wishes its employees to be subject to this type of obligation, it must (i) incorporate a confidentiality undertaking in the employment agreement of each employee concerned; (ii) adopt a set of internal regulations specifying the procedures for processing and obtaining access to confidential information; and (iii) implement the confidentiality regime provided for by law (i.e. use of safes, stamp “secret”, etc.). In the absence of these measures, it will be almost impossible to hold an employee liable in the event of disclosure.

Restrictive covenants

Generally, Russian legal practice remains critical of the use of various restrictive covenants in employment agreements. For instance, non-competition clauses, though not directly prohibited by Russian law, are deemed as violating an employee’s constitutional right to work and, therefore, unenforceable by the courts.

Another example is the narrow scope of the application of the “garden leave” concept (i.e. the practice by which an employee is instructed to stay away from work during his/her notice period). The Labour Code prohibits discharging an employee from further obligations under his/her employment agreement at the employer’s discretion, except for a limited number of instances provided in the Labour Code. These exceptions are generally treated as the discharge of an employee from performing his/her work obligations in circumstances where there is a threat to a person’s health, life or property.

Liability

Liability of the employee

An employee who breaches obligations established in his/her employment agreement may be subject to disciplinary sanctions and/or bear material liability.

The Labour Code strictly regulates the disciplinary procedure, and non-compliance may result in the employee successfully challenging the disciplinary sanction in court.

An employee’s material liability is generally restricted to compensation for the direct damage caused to the employer’s property at the employee’s fault or negligence. This liability is limited to an amount equivalent to the employee’s monthly average salary.

However, the Labour Code sets out some exceptions to the limitation of material liability rule. It provides that an employer may, under certain conditions, impose full material liability where an employee:

  • fails to protect valuable items entrusted to him/her, as evidenced by documents signed by the employee;
  • intentionally damages property;
  • causes damage when in a state of alcoholic, drug or other intoxication;
  • causes damage as a result of criminal actions for which he/she has been sentenced by a court;
  • causes damage as a result of an administrative offence as determined by the relevant state body;
  • divulges confidential information;
  • causes damage outside of his/her work duties; and/or
  • has entered into an individual or a collective agreement on full material liability with the employer.

Full material liability extends to all damage incurred by the employer as a result of the fault of the employee.

Also, in the employment agreement, an employer may provide for full material liability for certain categories of employees (e.g. chief accountant, deputy general director, etc.). The general director of a legal entity is always subject to full material liability regardless of whether his/her employment agreement includes such a provision.

If the employer wishes to be compensated for the damage it suffered, it must follow a specific procedure and request from the employee a written explanation of the cause of the damage. Following this, the employer must specify the amount and cause of any damage inflicted within one month of the alleged damage having occurred. If the employer does not exercise its right within this time period, compensation may only be recovered with the voluntary consent of the employee or through legal proceedings.

Liability of the employer

The limitation period within which an administrative claim can be brought against an employer for failure to comply with labour laws is one year from the date that the violation was committed or, with respect to ongoing violations, from the date that the violation was discovered by the authorities. The maximum administrative fine that may be imposed on an employer’s official for non-compliance with labour law requirements has been increased to RUB 30,000 (EUR 429). Furthermore, in the event of a recurring offence, the official may be disqualified for a term of up to three years. The maximum administrative sanctions that may be imposed on legal entities include an administrative fine of RUB 200,000 (EUR 2,860) and/or administrative suspension of activities up to 90 calendar days.

Notably, in accordance with the current law-enforcement and court practice, the penalty for the same offence may be imposed simultaneously on both the company and the general director or other authorised officer of the company. Moreover, if the same offence is simultaneously committed against a number of employees, the total amount of administrative fine imposed on the official or the entity for such offences may in some cases be calculated taking into account the total number of employees affected by the relevant offence.

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Employment history recording

As of 1 January 2020, all employers must submit the information on each employee’s employment to the Russian Pension Fund in electronic format. In relation to employees’ labour books (“trudovaya knizhka”) that have been obligatory before 2020, employers will only have to continue maintaining them if employees request this. Starting from 1 January 2021, employers will no longer be required to establish and maintain labour books in paper format for employees entering their first employment.

Specifics of hiring foreign nationals

If the employee is a foreign national, he/she may commence employment in Russia only once the steps described in the Specifics of employing foreign nationals section have been completed.

In essence, employment law applies to foreign nationals to the fullest extent provided for in the Labour Code. Therefore, the employer is obliged to enter into an employment agreement with any foreign national and follow all rules and procedures which flow from their employment relationship.

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[1] At the notional exchange rate of RUB 70 = EUR 1, as used for convenience throughout this guide. Back ↑

Key contacts

Fedoreev Valeriy
Valeriy Fedoreev
Partner
Head of Employment and Sports Law
Christophe-Huet
Christophe Huet
Partner
Avocat Associé