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Legal implications of the Industrial Agreement for oil and gas sector companies and their service providers

25/04/2014

The term for submission by employers of their reasoned refusals to accede to the Industrial Agreement for the years 2014 – 2016 for oil and gas sector companies and their service providers in the Russian Federation (the “Agreement”) expires on 13 May 2014.

Scope of the Agreement

The Agreement came into force on 1 January 2014 and applies to companies operating in the oil and gas industry, oil and gas facilities construction, oil and gas refining, petroleum product procurement, oil and gas chemistry, oil and gas pipeline transportation, gasification and operation of gas facilities, transportation and sale of liquefied gas, geological exploration of hydrocarbon deposits, petrochemical production as well as companies operating in the field of oil and gas machine building.

The Agreement also applies to companies that provide maintenance, transportation, research and development and design services to companies in the oil and gas sector.

The Agreement does not expressly exclude from its scope of application any Russian branches or representative offices of foreign companies that pursue the aforementioned types of business activities.

Provision of additional benefits and allowances to employees

The Agreement provides for a considerably larger scope of additional guarantees and compensations for personnel working in the oil and gas sector compared with the scope of such guarantees and compensations established by the current legislation of the Russian Federation. For example, according to the terms of the Agreement, employers are obliged to ensure:

  • an obligatory annual salary adjustment for inflation;
  • an increased rate for night pay;
  • an additional paid day-off to allow those who are made redundant to search for jobs;
  • cash payments from the employer’s funds to victims of industrial accidents;
  • additional payments from the employer’s funds to increase allowances for temporary disability, maternity and child birth;
  • the granting of additional days-off for family crisis leave; and
  • other benefits and allowances provided for by the Agreement.
Application of the Agreement and the possibility of a reasoned refusal

The Agreement applies to employers who are members of the All-Russia Association of Employers in the Oil and Gas Sector and to employers who have authorised the said Association to negotiate their collective agreements and to enter into the Agreement or accede to it after its conclusion on their behalf.

Furthermore, the Agreement will automatically apply to all other employers who pursue the aforementioned types of activities in case they do not submit their reasoned refusals in written form to accede to the Agreement within 30 calendar days of the date of the official publication of the proposal to accede to the Agreement.

Taking into account the date of the official publication of the proposal to accede to the Agreement, a reasoned refusal may be filed with the Ministry of Labour and Social Security of the Russian Federation by 13 May 2014, inclusive.

We recommend that employers who come within the scope of application of this Agreement, including those who became bound by the Agreement due to having failed to submit their reasoned refusals to accede to the Agreement by the specified deadline, amend their in-company regulatory documents in line with the terms of the Agreement. Employers who fail to comply with the terms of the Agreement may be held administratively liable in accordance with the current legislation of the Russian Federation.

Source
CMS Client Alert | April 2014 | Energy
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Authors

Fedoreev Valeriy
Valeriy Fedoreev
Partner
Moscow
Irina Skvortsova