Substantial amendments to Russian migration legislation simplifying the procedure for employing foreign personnel entered into force on 1 July 2010. Federal Law No. 86-FZ of 19 May 2010 (the "Law") amends, in particular, certain provisions of Federal Law No. 115-FZ "On the Legal Status of Foreign Citizens in the Russian Federation" (the "Law on Foreigners") with respect to the employment of highly qualified specialists and work permits issued to foreign citizens working for Russian individuals.
Highly Qualified Foreign Specialists
The Law established a new category for highly qualified foreign specialists, where the only criterion for such categorization is dependent on the amount of the specialist's remuneration. For a foreigner to be considered a highly qualified specialist, he/she should earn no less than 2 million rubles (approximately USD 67,000) per year (the "qualification threshold"). The Government may decrease this amount of remuneration in the future. It should be noted that the Law does not specify whether the qualification threshold is calculated in terms of net income or income after tax. The Federal Migration Service ("FMS") clarified during consultation sessions that the qualification threshold needs to be earned in Russia and with the employer who applies for a work permit for such foreign employee.
It is solely up to the employer to evaluate an employee's competence, level of qualification, working experience, skills and achievements in a particular area in order to establish the relevant amount of the employee's remuneration.
Work Permits and Temporary Residence Permits
Employers are no longer required to obtain quotas to employ highly qualified foreign specialists nor submit reports on vacancies to the employment authorities on a monthly basis. Work permits and visa invitations for highly qualified foreign specialists are issued irrespective of the relevant quotas. A work permit to such a foreign specialist is issued for the term of the employment agreement, but for no more than three years (with the possibility of further prolongation). A work permit may be issued with respect to several constituent entities of the Russian Federation in the event that an agreement with a specialist requires that he/she works or provides services in more than one region of Russia.
The overall time period for obtaining a work permit for a highly qualified foreign citizen is 14 business days. The employer must provide to FMS documents and information which allows to evaluate competence and qualification level of the foreign citizen (copy of diploma, recommendation letters, information on awards received by such foreign citizen, etc.). Such information must be verifiable (i.e. confirmed by relevant documentation).
By the time the employer applies to FMS to request the work permit for a highly qualified foreign citizen the employment agreement with him/her must be signed but come into force subject to receipt of the work permit. Foreign citizen must obtain the work permit personally. FMS (and not its regional departments) issues the work permits for highly qualified foreign personnel irrespective of the region for which they apply. The invitation for the work visa for highly qualified foreign citizens is applied for and issued simultaneously with the application and issuance of the work permit.
A highly qualified specialist and his/her family members (i.e., spouse and children under 18 years old who are foreign citizens) may apply for temporary residence permits for the term of his/her respective employment agreement.
Obligations of Employers of Highly Qualified Specialists
Highly qualified specialists and their foreign family members are subject to voluntary medical insurance from the day of their arrival in Russia. It is considered an essential term of the employment agreement. Pursuant to the FMS clarifications, the employment agreement must indicate the name of the insurance company and details of the policy (number, date, etc.)
The Law also imposes the following additional obligations on an employer of a highly qualified specialist. The employer must:
- notify migration authorities on quarterly basis in relation to (i) the specialists' salary payment, (ii) the cancellation of an employment agreement, and (iii) the provision of unpaid vacations for more than one month; and
- register the specialist with tax authorities and notify migration authorities of this within 30 days from the day when the specialist received a work permit. As of now the procedure for registration of the highly qualified specialist has not been developed.
If the employer fails to perform its obligations under the Law, including mandatory provisions of the employment agreement with the highly qualified specialist, the employer will be banned from utilizing the new regime for the next two years – starting from the moment when the migration authority becomes aware of any such breach.
A highly qualified foreign specialist also enjoys a more favorable tax regime. Such employees will now enjoy a reduced tax rate of 13%, irrespective of the duration of their stay in Russia and whether they are Russian tax residents or not.
Who May Enjoy the New Regime
Employing highly qualified foreign specialists may be enjoyed by only by: (i) Russian commercial organizations; (ii) foreign legal entities having accredited branches in the Russian Federation with respect to employees of such branches; and (iii) Russian scientific, educational and healthcare organizations, provided that the administrative liability for violating the Russian migration legislation has not been imposed on such organizations during the last two years.
Representative offices of foreign companies in Russia are not eligible for using the simplified regime for employing the highly qualified foreign specialists. However, the Law on Foreigners (as amended) exempts Russian representative offices of foreign companies and their employees (irrespective of their level of annual income) within the accreditation quota from the requirement to obtain a permit to engage foreign employees and work permits respectively. This exemption is valid only on the reciprocal basis in accordance with the international treaties of the Russian Federation. We note that representative offices and their employees still have to obtain permits to employ foreign citizens and work permits, respectively, as there are no international treaties executed (save for a treaty with France which has not been ratified yet).
According to comments made by the FMS representatives in publicly held seminars, a foreign citizen may not enjoy the preferences of a highly qualified specialist status if he/she already receives an annual salary meeting the qualification threshold and is employed under an ordinary work permit. To obtain the above status, a foreign citizen should (i) conclude a new labor agreement and (ii) apply and receive a new work permit as a highly qualified specialist.
Quota exempted positions
As a general rule, foreign citizens who are not considered highly qualified foreign specialists may be employed in Russia provided they have obtained work permits within the annual quota approved by the Government of the Russian Federation. However, the Law on Foreigners empowers the Ministry of Public Health and Social Development to establish on an annual basis a list of positions exempted from the quota requirement. Such list usually includes company directors, heads of representative offices, and directors of divisions and departments. The Law now specifies that such list of positions must be issued before 31 March of the current year for the next year. By way of example, the list for 2010 was approved only on 22 December 2009 and entered into force on 23 January 2010. The amendments ensure that companies get the information required for filing quota applications in advance and avoid duplication.
Employment of Foreigners by Russian Individuals
The Law also introduces a new type of permit – a so-called "patent" – on the basis of which foreign citizens may work in Russia. Under a patent, a foreigner may be employed by individuals, but not individual entrepreneurs. The patent is issued for one month, with a possibility of further automatic prolongation, by making a 1,000 ruble (approximately USD 33) payment. A foreign citizen with a patent may only work in the region where the patent was issued.
Employers of foreign citizens who do not need a visa to enter Russia will have to inform FMS not only of the execution of the respective employment contracts with non-visa foreign citizens, but also of their termination and the provision of any unpaid vacation to such foreign citizens for more than one month. Part of the work permits issuing process for non-visa foreign citizens intending to work in Russia as of 1 January 2013 will include taking their photographs and fingerprints. According to the amendments, information included in the work permits must be updated if a new employment agreement is executed with a foreign citizen.