All questions

Year in review

2018 produced quite a number of significant cases that have had a direct effect on law enforcement practice and procedures.

The Constitutional Court of Russia has issued a ruling resolving the long-standing uncertainty in court practice regarding the forfeiture of annual paid leave. Under Russian law, following dismissal, an employee should receive compensation for accrued but unused annual leave. According to the International Labour Organization's Holidays with Pay Convention (the ILO Convention), to which Russia is a party, the remaining days of annual leave shall be granted and taken no later than 18 months after the end of the year in which the holiday entitlement has arisen.

Some courts in Russia have interpreted the ILO Convention in such a manner that, following dismissal, an employee can only receive compensation for unused annual leave accrued during a period of not more than 21 months preceding dismissal (18 months according to the ILO Convention + three months of a general statute of limitations in employment disputes). However, the Constitutional Court has ruled that compensation for unused leave is not limited to 21 months. Leave days cannot be forfeited and an employee should receive compensation for all unused days. The Constitutional Court also noted that all courts considering disputes about the payment of such compensation should assess:

  1. the reasons for the employee not exercising his or her right to paid annual leave;
  2. whether the employer has violated the employee's right to paid annual leave;
  3. whether the employee has abused his or her right to leave; and
  4. actual leave use without documenting it as such.

The rulings of the Constitutional Court have a binding effect and should serve as guidance for other courts.

During 2018, the Supreme Court also addressed a number of important employment law issues. The Plenum of the Supreme Court issued clarifications on recognition of de facto employment when no employment agreement has been signed but an employee was actually admitted to work.

First, the court listed non-exhaustive examples of evidence that may show that there were de facto labour relations:

  1. a pass to the employer's territory;
  2. HR documents, such as shift schedules and vacation schedules;
  3. salary documents;
  4. correspondence between the parties, including emails;
  5. labour safety documents; and
  6. audio and video recordings, or witness testimonies.

In the absence of written evidence of the actual amount of an employee's salary, the court can determine it, taking into account how much an employee with the same qualifications in the area usually receives. If it is impossible to establish the amount of the remuneration, the court has the right to apply a regional minimum salary.

Importantly, the Supreme Court also clarified that the courts may extend the statute of limitation if it was missed because the employee:

  1. made a mistake with jurisdiction and initially filed a lawsuit with the wrong court but within the statute of limitation; or
  2. applied to the labour inspectorate or the prosecutor's office in a timely manner and expected that the dispute would be settled out of court.

According to previous court practice, these circumstances were not usually accepted by the courts as grounds for extending the missed statute of limitation.

Although the above clarifications were issued in relation to individual entrepreneurs and micro-enterprises, it is obvious that they show the current position of the Supreme Court in relation to the said issues and, thus, it is highly likely that the courts may apply these conclusions to all types of employers. The Supreme Court has already applied this position in a recent cases, considered after the above clarifications were given.

In another resolution, the Supreme Court found that an employee's childcare leave can be considered as due reason for missing a statute of limitation. The employee missed a deadline for filing an appeal because she was on childcare leave and her husband was away on business, working in another region of Russia. The court of appeals did not accept this explanation and found that those circumstances could not serve as a due reason for missing the statute of limitation. However, the Supreme Court took the employee's family circumstances into account and extended the missed statute of limitation.

The Plenum of the Supreme Court also issued clarifications on criminal liability of an employer's officers.

The Court clarified that authorised officers of an employer can be criminally liable for discriminatory refusal to hire or discriminatory dismissal of a pre-pensioner, a pregnant woman, or a woman with children under the age of three, only if the employer's officer was guided by an appropriate discriminatory motive. Employer's officers can also be held liable if an employee leaves the company on his or her initiative, but it is proven that the employee was forced to leave because of his or her 'special status'.

The Supreme Court also summarised court practice for recovering damages from employees. The Court again stressed that it is impossible to recover damages from an employee if an improper agreement on full financial liability was signed with the employee. The court can reduce the amount to be recovered from an employee not only at the request of an employee but also on its own initiative. Further, disputes regarding the financial liability of employees should be considered by the district courts, not by the magistrates' courts, irrespective of the amount of the claim.

Last, the Supreme Court issued a number of notable resolutions concerning dismissals of employees. In one of these, the Court noted that employers and the courts should not take a formal approach when considering cases of absenteeism. It is not enough for an employer simply to establish that the employee was absent and to observe the procedure for a dismissal. Before making a decision to dismiss an employee for absenteeism, it is necessary to pay heed to the following circumstances:

  1. whether the reason for the employee's absence is valid;
  2. the severity of the misconduct;
  3. the employee's attitude to work and prior behaviour;
  4. the length of time an employee has worked for the company; and
  5. the possibility of applying a less severe disciplinary sanction.

In another resolution, the Supreme Court considered a claim arising from an employee's dismissal for his absence from the workplace. The employee told his supervisor he was feeling ill and left work before the end of the working day without approval. He was dismissed because of his absenteeism. However, the employee was reinstated and the court indicated that the law does not define the list of valid reasons for absence from work and that an employee's sickness is a due reason. The absence of a sick leave certificate does not always show that an employee did not have a reason to be absent, because a sick leave certificate only confirms the fact of temporary disability and not the time (hour and minute) from which it starts. Thus, the sickness can be proven by other evidence.

Outlook and conclusions

i Developments to the procedure of consideration of employment disputes

In 2018, the Russian parliament (the State Duma) adopted two laws introducing substantial changes to the judicial system. Under these laws, new independent cassation and appellate courts will be created. As a result, the consideration of cases (including employment disputes) in appellate and cassation instances will change.

As regards complaints in appellate instance (i.e., complaints about court decisions that have not entered into force), currently they are considered by a court at a higher level than the court that issued the decision that is to be challenged. Russian legislation strictly regulates which particular court considers appellate claims against decisions by a particular lower court. Under the new law, decisions of first instance rendered by regional courts will have to be considered by the newly established appellate courts. The decisions of all other courts will be considered in appellate instance in the same courts as they are currently. Basically, the appellate instance reform will not be so substantial for employment disputes as they are rarely considered by regional courts in first instance (in particular, decisions to render a strike illegal).

As regards the cassation instance (i.e., complaints about court decisions that have entered into force), this reform will affect employment disputes. Under the new law, all cases of cassation instance will be considered by newly established cassation courts. The new law also sets out changes to the procedure for filing cassation claims. For instance, a complaint to a cassation court will need to be filed within three months of the date of entry into force of the contested judicial act (currently, the law establishes a six-month term); the complaint will need to be submitted to the cassation court through the court of first instance, whereas currently the complaint is submitted directly to the court considering the cassation claim.

With regard to both appellate and cassation instances, all Russian regions have been divided into relevant court districts, so that each court is assigned to a particular district, and the decisions of that court should be considered by the relevant appellate and cassation courts of that district, subject to the above rules. In most cases, the appellate and cassation courts will not be located in the same city as the court that rendered the contested decision. The aim of this is to ensure the impartiality of judicial decisions in appellate and cassation instances. Again, the division into the court districts will not apply to reconsideration of the majority of employment disputes (except for cases considering strikes, etc. – see above) in the appellate instance – these cases will be reconsidered in the same manner as they are now. However, reconsideration of employment cases in the cassation instance will follow the new procedure.

Under the law, the appellate and cassation courts will be considered as having been formed from the date of appointment of at least half the established number of judges for each court. The decision regarding the commencement of the activities of these courts will be rendered by the Supreme Court no later than 1 October 2019.

The State Duma is also considering a draft bill that will affect the resolution of employment disputes regarding payments due to employees. Under this draft bill, an employer's failure to pay a salary or other amounts (severance pay, bonuses, vacation allowance, etc.) to an employee on time will result in the employee being entitled to receive interest (monetary compensation) of at least 1/100th of the Russian Central Bank's key interest rate on the unpaid amount for each day of delay, starting from the day after the established payment date and up to the date of settlement (inclusive). Currently, the monetary compensation for this violation is 1/150th of the Russian Central Bank's key interest rate. So, if this draft bill is adopted in its current version, in the event of a dispute about the payment of salary or other amounts to an employee, the employee will be entitled to a higher amount of monetary compensation compared to the entitlement under current legislation. This draft bill is still only being considered by the State Duma and, if adopted, its final version may substantially change during consideration.

ii Foreseeable developments in resolving employment disputes

The current practice of considering employment disputes shows particular tendencies, some of which are favourable to employers and some to employees.

First, employees in Russia are currently actively applying recent legislative changes on resolving employment disputes that are more favourable to them (in particular, those related to the venue for hearing employment disputes and extension of the statute of limitations). We believe that the number of disputes regarding payment of salary and other sums due to employees might increase further because of the increased limitations period in such cases. In addition, employees have already been using their right to submit lawsuits at the place of their residence and will continue doing so, which might in turn increase the expenses incurred by employers for representation in courts (e.g., if an employee lives in a different, remote region).

Russian courts currently have a unified approach with regard to protection of employees in the 'protected categories', especially pregnant women. Following a ruling by the Russian Supreme Court in 2014, the courts of general jurisdiction often reinstate pregnant women at work even if they were dismissed by mutual consent or voluntary resignation.

There are also some positive tendencies for employers. Increasingly, the courts are not content merely to adopt a formal approach when resolving disputes, but are deeply analysing the circumstances. This is particularly evident in disputes involving white-collar employees, whose salaries are usually quite high, so claims that their labour rights have been violated by an employer (e.g., with regard to the provision of an additional, usually non-guaranteed, benefit or bonus) are most likely to be considered unfounded by courts. In the same way, courts are increasingly tending to take the employer's side when employees abuse their labour rights; for example, when employees try to use (and sometimes artificially create) a 'protected' status to impede a termination procedure against them (e.g., create trade unions when the dismissal procedure against them has been already launched, or take long-term sick leave).

We believe these tendencies will develop further in the near future.

Finally, Russia is in the process of implementing an 'electronic justice' system in courts of general jurisdiction, which is intended to reduce paperwork in overburdened courts by enabling court documents to be exchanged online. The system has not yet been fully implemented and we expect it might be several years before it becomes standard practice.