Conclusion of Civil Law Contracts With Employees Is Prohibited

The RF Labor Code was amended in late December 2013 to include provisions that directly prohibit employers from concluding civil law contracts (e.g. services contracts, work contracts, etc.) – as opposed to employment contracts – for the purpose of establishing employment relations with their employees. Furthermore, employers engaging in this practice are now subject to administrative liability.

These provisions were introduced as part of an effort to curb the practice in which employers conclude civil law contracts with their employees in order to avoid the responsibility of providing them with federally-mandated employment requirements such as paid sick leave, paid vacations, redundancy payments, work safety rules, etc. In cases where this practice may occur, an employee is now entitled to demand that his employer recognize the employee’s rightful legal status in the company through means of an employment contract. Moreover, recognition of employment status may also be obtained by an authorized state employment body and/or through the court. Although the courts have been active in recognizing employment status in relations established under civil law contracts, these provisions mark the first time in which an actual prohibition of the practice is established by law.

The Federal Law that introduced these provisions entered into force on January 1, 2014, save for the provisions on administrative liability, which will enter into force on January 1, 2015.

Special Assessment of Labor Conditions

In an effort to improve worksite safety conditions, a new procedure for assessing labor conditions has been established by law. The aim of this new procedure is to identify hazardous and dangerous elements in the working environment, and the risks that they pose to the employees. Employees working from remote locations are not subject to workplace safety assessments.

Furthermore, the RF Administrative Code and the RF Criminal Code have been amended to include increased liability for non-compliance with Russian labor law. In particular, provisions for a fine of up to RUB 70,000 (approximately US$2,000) with respect to repeated administrative offenses in the area of employment have been established, as well as entirely new provisions on administrative liability for non-compliance with work safety requirements and/or the procedure for assessing labor conditions have been introduced. Moreover, company officers held criminally liable for non-compliance with work safety requirements are subject to an increased (double of what it used to be in the past) fine of up to RUB 400,000 (approximately US$12,000) or imprisonment of up to 5 years (up from 4 years previously).

The Federal Laws that introduced these provisions came into force on January 1, 2014, with the provisions on administrative liabilities to enter into force on January 1, 2015.

Employment of Foreign Citizens

Provisions introducing new, stricter rules on entry of foreign citizens into Russia for the purposes of mitigating illegal immigration came into force during summer 2013. Among the new rules include those providing for peremptory denial of entry to foreign citizens who have been repeatedly held liable for administrative offences and who have a record of public order offenses or of violating residency and employment requirements for foreign citizens in Russia. In addition, the time period for which entry may be denied has been increased. Foreign citizens who are evicted, deported or readmitted to their original country from Russia will be denied new entry for a period of 5 years. Denial of entry for 10 years will be applied to foreign citizens who are repeatedly evicted, deported, or readmitted (up from the previous 5 years).

In addition, other related provisions established that foreign citizens are only eligible for engaging in labor activity in Russia after their 18th birthday. While this rule was previously upheld by the regulations and procedures of the state authorities that grant work permits to foreign citizens, it is now formally cemented in Russian law.

Liability for Discriminatory Job Advertisements

In an effort to curb the widespread practice of placing discriminatory job advertisements, new provisions were implemented in summer 2013 establishing liability for employers who place job advertisements containing discriminatory conditions, e.g. indicating preferences of gender, race, nationality, age, etc. Employers placing such job advertisements are subject to administrative liability and may be fined an amount of up to RUB 5,000 (approximately US$150) for company officials and up to RUB 15,000 (approximately US$450) for companies themselves.

Although the provisions are currently in force, the courts are still interpreting the extent of the rules and their application. On September 4, 2013, for example, the Moscow City Court ruled in a case that it did not consider indicating a preferred gender in a job advertisement as a form of discrimination.

Draft Law – Rules for Agency Work (Secondment/Outstaffing)

A law regulating the agency work (secondment/outstaffing) in Russia is still in draft status and has yet to be passed, despite the fact that the Russian State Duma has been considering it for a long period of time. Although not addressed by Russian law, agency work – such as secondment/outstaffing arrangements – is widely used by employers and recognized by the courts. For example, in considering a case with respect to outstaffing arrangements for a foreign citizen, the Russian Supreme Arbitrazh Court ruled that the company that receives the outstaffed employee is obliged to notify the appropriate Russian migration authorities when engaging an employee by means of an outstaffing agreement, rather than the company with which the employee has an employment agreement.

Notifications Regarding Foreigners – Highly Qualified Specialists

Beginning on January 1, 2014, an employer is now required to notify the migration authorities within three business days after dismissing a foreign citizen who occupies position of a highly qualified specialist (HQS) or providing him/her with unpaid vacation for more than one month in a year. Although such obligation of notifying migration authorities existed prior to January 1, 2014, the term in which the employer must notify the migration authority had never been envisaged until now.

Furthermore, it has now been established that the notification may be submitted to the migration authority in person, by post or via the internet. Failure to submit the notification within the 3-day window may result in the employer of the HQS incurring a fine of up to RUB 1 million (approximately US$30,000) and/or its manager in the amount of up to RUB 70,000 (approximately US$2,000).

Other Draft Laws – Current Status

  • Draft Law No. 265590-6, which provides for an increase of the statute of limitations for employment disputes (from one to three months for disputes related to employee’s dismissal, from three to six months for other disputes), is still at the initial stage in the Russian State Duma committee.
  • Draft Law No. 284365-6, which is supposed to oblige all employers to index the salaries of their employees, was returned to its authors at the end of June 2013. There are still no further developments on this draft.