This newsletter provides a general overview of the most important changes to Russian employment and immigration laws in 2018 and covers the key aspects of court practice on employment-related issues.

1. Legislation changes

1.1 Retirement age

In 2018, the Russian parliament passed the pension reform bill based on which the retirement age will be gradually raised from 55 to 60 for women and from 60 to 65 for men. As consequence of the pension reform, a new category of employees, known as “pre-retirement employees”, has been introduced into the legislation.

Pre-retirement employees are those who have five years left before they reach the age allowing them to receive an old-age state pension. An interim period of 2019 to 2027 has been set to determine the retirement and pre-retirement age depending on year of birth and gender. Employment and dismissal of pre-retirement employees have become more risky for employers.

Starting from 14 October 2018 dismissing a pre-retirement employee or refusing to employ them without admissible justification is subject to criminal prosecution and punishable by a fine of RUB 200,000, the total value of the convicted person’s salary or other income over a period of up to 18 months or community service up to 360 hours.

1.2 Medical check-ups

Starting from 1 January 2019, all employers are obliged to grant employees one paid working day for a regular medical check-up once every three years upon request.

1.3 Annual leave for employees with several children

Employees with three or more children under the age of 12 can set their annual leave dates themselves. This means that these employees are not obliged to take leave on the dates set out by the company holiday schedule.

2. Immigration

2.1 New obligations of an inviting party

The Federal Law on the legal status of foreign citizens in the Russian Federation has been amended. In particular, additional responsibilities will be placed on companies inviting foreign citizens to Russia both for business and employment.

Starting from 16 January 2019, any company acting as an inviting party has to make sure that the invited foreign citizen

(i) performs activities that actually comply with the declared purpose of entering Russia, and

(ii) leaves Russia in due time.

If the inviting company fails to ensure the above, it may be held liable for an administrative fine in the amount of RUB 400,000 to RUB 500,000, and the company’s responsible officer up to RUB 50,000.

The exact list and order of measures that each inviting party is obliged to comply with will be specified by the Russian government. Up to now, a relevant draft is still being developed by the Ministry of Internal Affairs of the Russian Federation.

2.2 Residential registration address

From July 2018, new rules for immigration registration of foreign citizens have been in effect. Foreign employees can be registered for immigration purposes by an inviting party only at the address of their actual residence in Russia. The inviting party is a natural or legal person who provides housing to a foreigner. It should submit a notice of registration.

Registration at the address of the Russian employer is now only possible in cases where the employee actually lives at the employer’s premises. The amendments have created problems for the business. This is above all due to the reluctance of individuals (landlords) to engage in registration of foreigners. Now most companies have found a way out. Sometimes the company itself concludes a lease agreement with the owner under which it provides the premises to the employee and then arranges for the registration.

3. Court practice

3.1 Payment for working at weekends and holidays

In June 2018, the Constitutional Court explained how work on public holidays and at weekends should be paid. As a general rule, a premium of no less than double the normal rate is paid on such work. Some employers have interpreted this rule as meaning that only twice the normal fixed rate can be paid for work at weekends excluding any regional compensatory and incentive payments. As a result, workers could receive less for work at weekends than for similar work on regular business days.

The Constitutional Court came to the conclusion that in addition to a higher salary employees should receive the additional payments for work at the weekend or a public holiday that would be due to them for a similar job on a regular day — for example, additional payments for harm, for working in the Far North regions or for night work, etc.

3.2 Compensation for unused holiday leave

Another important position of the Constitutional Court concerns payment of compensation for accrued but unused annual leave. In October 2018, the Constitutional Court[6] recognised the right of employees to receive monetary compensation for all days of unused annual leave in full upon dismissal, i.e. for the entire period of work at the company. Prior to this ruling, some courts held the position that the employee is entitled to compensation for unused holidays for the 18 months preceding the dismissal date.

3.3 Development of the distinction between employment and self-employment

In 2018, the Supreme Court of the Russian Federation considered several cases[7] regarding differences between an employment agreement and a contract for services under civil law. There is much less freedom of contract in employment agreements than in civil law contracts because of extensive statutory prescription of terms (working hours, minimum wages and terms of dismissal, etc.). These limitations are purposely designed to protect employees.

While considering the cases on establishment of employment relations in cases when a contract for services is entered into, the courts should not only proceed from the presence or absence of written contracts, but also establish whether there were signs of an employment relationship.

In these particular cases, the Supreme Court pointed out the following proof of employment: repeated renewal and extension of the service contract, the employee’s compliance with the employees’ handbook and other internal rules and regulations, guaranteed remuneration to a certain value which is paid monthly regardless of the amount of services rendered.

The Supreme Court indicated several general rules based on which a contract for services should be distinguished from an employment agreement:

  • the subject of the contract, in accordance with which the employee performs not a specific one-off job, but a certain job function;
  • employee position: under the service contract, the contractor is economically independent, while under the employment agreement the employee is included in the employer’s staff structure, works under its control and leadership, and is subject to employment rules;
  • distribution of risks: the employee does not bear the entrepreneurial risk associated with the fulfilment of job functions.