Until recently entering into civil law (service) contracts (which are in effect employment relations) was prohibited by decisions of the Russian courts, but were not prohibited by legislation.

The recently adopted amendments to the Labour Code toughen Russian authorities’ ability to differentiate between labour and civil law relations. The new paragraph of Article 15 of the Labour Code states that entering into civil law contracts, which in fact regulate employment relations, is prohibited.

Further the newly adopted Article 19.1 of the Labour Code establishes an order for acknowledging civil law relations as employment. Such acknowledgement may be made by an employer upon the respective request of an employee or by a court.

In addition, amendments were introduced to the Administrative Code which established fines for the conclusion of civil law contracts instead of labour contracts. For the company’s officials the fines are up to 10,000 (ten thousand) Rubles and for the company - up to 100,000 (one hundred thousand) Rubles.