I. GENERAL OVERVIEW

1. Introduction

Russia is a federative state, which consists of 85 constituent territories (cities of federal importance, republics, regions and other territorial administrative components) with certain legislative rights. Employment issues fall within the scope of the common competence of the Federation and its integral parts. In Russia, the principal act governing employment rights is the Labour Code of the Russian Federation, which is applicable throughout the whole country (all other regulatory acts adopted at a federal, regional or municipal level must not contradict the Labour Code).

2. Key Points

Russian employment laws are regularly reviewed, but are still considered to be archaic, excessively bureaucratic and not meeting the demands of business:

  • Bureaucracy – almost every interaction between the company and its employee needs to be formalised as a paper document with a "blue" signature (a significant step forward to ease these rules has been introduced as of 1 January 2021 for teleworkers).
  • Formalism – many procedures (e.g. redundancy) are highly formalised and any sidestep is likely to result in the employer's actions being classified as illegal.
  • Unregulated areas – Russia does not have analogues of many concepts of European law, e.g. severance does not depend on seniority, the transfer of an undertaking will not entail the obligation to onboard affected employees, and restrictive covenants are generally void.

Russian employment law protects the employee in various spheres; first of all, by setting complicated procedures for company-initiated dismissals; fixed term contracts are permissible only in limited cases and special protection is given to employees with dependents.

3. Legal Framework

The main statute that governs employment relations is the Labour Code of the Russian Federation.

Other key sources of employment law are federal laws (e.g. Federal Law No. 10- FZ on Trade Unions dated 12 January 1996), laws of constituent territories, presidential decrees, rulings of the RF government and governmental agencies at the federal and local levels, and acts of local authorities.

Specific employment rights and obligations are set by regional and industry agreements, and collective bargaining agreements signed at the company level.

The Labour Code has priority over federal laws and other acts.

Employers are free to set local rules contractually or by company policies; such regulations must provide at least a minimum level of the guarantees set by the law.

4. New Developments

The COVID-19 pandemic revealed that the Russian employment law lacks regulation for such force majeure cases. To bridge this gap, significant amendments have been made to the Russian Labour Code in the section regulating remote work. From 1 January 2021, there is flexibility as to whether an employee performs 'office work' or 'telework' (i.e. works remotely) which allows an employee to have both office and "home office" days during the week. In addition, remote work can be set for up to six months. Previously, an employee was only eligible for one or the other, either office work or work remotely, and these were regarded as separate types of contracts.

A special mechanism has been introduced for the employer to unilaterally announce remote work during an epidemic or another force majeure event. Employees who cannot work remotely will have downtime with reduced pay, and those who are working remotely will be entitled to compensation of related expenses.

The law significantly simplifies the procedure of exchanging documents during remote work – electronic signing has become required only in the most important cases (amendment of the employment contract, termination, and a few others), while another exchange of documents (notices, applications, etc.) can be handled as per a company's own rules, subject to certain conditions. Another important change concerns special grounds for separating from remote employees – previously these were negotiable and set contractually, but now they are regulated and limited to only two cases, which will not address all business needs.

Also from 1 January 2021, under the Russian Government's Decree No. 1848 dated 16 November 2020, employees who create specific IP items must be paid enhanced remuneration for such creations (2-3 times their monthly salary instead of 1).

Speaking about general trends in employment law, we would mention the gradual digitalisation of HR documentation (which has long been a market demand). An important milestone on this path is the introduction as of 1 January 2020 of so-called "electronic labour books" – employers now file special electronic reports with the state database in the events of hiring, a transfer to another role, termination and a small number of other events. This is done alongside or instead of making entries to the hard copy (paper copy) labour book (each employee chooses individually). For those who start their career in 2021, no paper labour book will be maintained, only electronic format.

II. HIRING PRACTICES

1. Requirement for Foreign Employees to Work

Equal protection of employment rights is guaranteed to all employees notwithstanding their nationality. However, Russian law does impose certain citizenship restrictions in specific sectors of the economy, for example construction and the retail trade.

The general rule for employing a foreign national requires a) that the foreign national must have a valid work permit and must comply with all visa requirements (if they require a visa to enter Russia); b) the employer must have a valid permit to employ foreign workers; and c) the profession of the foreign employee concerned must be included within the quota that is determined annually by the Russian state authorities. There are exceptions to this rule that provide for less strict regulation and fewer requirements to comply with for certain privileged categories of foreign employees, e.g. highly qualified foreign specialists and their family members, and nationals of those ex-Soviet republics who do not require a visa to enter Russia.

Employing a foreign national who does not have a valid work permit in Russia is an administrative offence. The employer company may have to pay a penalty of up to RUB 800 000 (up to RUB 1 million for certain regions) or face an injunction to suspend any economic activity for up to ninety days. The same penalties will apply to those companies that do not have a valid permit to hire foreign personnel (whenever such a permit is required).

Foreign employees who work in Russia without a valid work permit have to pay a monetary penalty. They may also be expelled from the country and receive an administrative ban on re-entering Russia for a certain period of time, if the migration authorities deem this necessary.

2. Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?

There is no formal prohibition on a foreign company hiring an employee in Russia without establishing a local entity. Still, there are many technical issues (payment of taxes and social charges, filing reports on hiring, dismissal, transfers, obtaining work permits, etc.) that can be resolved only via a local presence.

3. Limitations on Background Checks

Russian legislation rigidly limits the scope of a background check by the principles of:

  • obtaining all personal data from the employee directly (thus the company may either request the candidate to provide a reference from former employers, or obtain the employee's written consent to its requesting such references directly);
  • the right to demand only those documents that are listed by law (these are very few – the passport, education certificate, labour book or electronic record of employment, registration in the pension system and military registration, if relevant). Demanding a certificate of a clean criminal record is allowed only for specific professions;
  • basing the choice of a candidate solely on business qualities that are clearly job-related.

In view of this, background checks are often carried out informally (we have to admit that such practice is widespread). Recruiters also use available public information to check on the candidate (court websites, the bailiffs' database of enforcement proceedings, social networks).

4. Restrictions on Application/Interview Questions

A job advertisement must not contain discriminatory provisions unrelated to the business qualities of the future employee.

Interview questions should concern job-related qualities of the candidate (education, experience, skills, goals, etc.). Exploring other areas, such as time to commute to work, family status, trade union membership, religion, smoking or drinking habits, age, nationality, etc. may result in claims concerning the processing of excessive personal data or an ungrounded refusal to hire (though such claims are rare for Russia).

A refusal to hire must also be justified solely by the business qualities of the employee that are clearly related to the role.

Criminal liability exists in the event of a refusal to hire a woman for reasons associated with pregnancy or with her having children under 3 years of age. The same applies to a refusal to hire a candidate close to retirement (5 years or less) for reasons of his/her age.

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