1. How are secondment arrangements regulated?
Secondment arrangements have been widely used for many years in Russia and recognized by the RF Tax Code, however, the Labor Code and migration legislation have remained silent in this respect. In the absence of proper legislation, secondment arrangements were sometimes used to circumvent the employer's obligation to make contributions to Russian social funds and provide guarantees to the employees. To address this problem, in May 2014, the Labor Code was supplemented with a chapter 53.1 which:
- As of January 1, 2016, prohibited so-called "loaned labor" (in Russian: заемный труд) – i.e., work performed by an employee at the instruction of his/her employer and for the benefit of, and under the supervision and control of a third party (a receiving company/individual).
- Introduced a concept of "provision of personnel by accredited agencies" (Article 341.2 of the Labor Code) and secondment.4
2. In what circumstances are provision of personnel and secondments allowed?
As of January 1, 2016, provision of personnel and secondments are allowed for the following companies only:
- (i) duly accredited private employment agencies (PEA). To be accredited, a PEA must satisfy a number of requirements established by the RF Government (a charter capital of at least RUB 1 million, no outstanding tax debt, subject to the general tax regime, etc.); and
- (ii) any other legal entities, including foreign legal entities
and their affiliates (i.e. the seconding entity) that second their
- An affiliate.
- A joint-stock company, if the seconding entity is party to a shareholders agreement on the exercise of rights to shares in the joint-stock company.
- A legal entity that is a party to a shareholders agreement with the seconding entity.
3. What are the general terms and conditions of provision of personnel?
Provision of personnel is possible under the following conditions:
- The employee agrees with the upcoming transfer to the receiving party.
- The relevant civil law contract between the client (the receiving party) and the seconding party is executed.
- The employee works on behalf of and under management and supervision of the receiving party.
- The receiving party ensures labor safety for the employee.
- The employee's payment conditions are similar to those of employees of the receiving party.
4. Are there any restrictions on provision of personnel by a PEA?
Yes. A PEA can provide personnel to the receiving party for the following purposes only:
- To fill positions left open by employees who are absent temporarily.
- To assist with an increased workload related to an expansion of production or of the scope of services, which is known to be temporary (for a period of up to nine months).
- To provide temporary employment to certain categories of persons (full-time students, single parents, those raising multiple minors, etc.).
5. When are provision of personnel and secondment not allowed?
Provision of personnel and secondment, inter alia, are not allowed for the following purposes:
- To replace employees engaged in a strike.
- To perform work at an idle time or during bankruptcy proceedings, the introduction of a part-time employment regime to deal with the possible collective resignation of the workforce.
- To replace employees who refuse to perform work in cases set forth by labor law.
- To perform certain types of work at sites classified as hazardous facilities (hazard class I and II).
- To perform work at workplaces with harmful (hazard level 3 or 4) or hazardous labor conditions.
4 A separate federal law regulating secondment between legal entities will be adopted soon. The RF Ministry of Economic Development has prepared a draft law on secondment between legal entities and has presented it to the RF Government for its consideration.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.