1. What are the grounds for termination of employment?

Under Russian employment law, an employment agreement may be terminated on specific grounds, including:

  • Mutual agreement.
  • Employee's or employer's initiative.
  • Expiration of fixed-term employment agreement.
  • Other specific grounds listed in Article 77 of the Labor Code.

2. What is the procedure for termination of employment at the initiative of an employee?

An employee may terminate an employment agreement at any time by providing two weeks' written notice (or one month for an employee, who is head (a general director) of a company, branch or representative office of a foreign company). The agreement may be terminated prior to the expiration of the aforementioned notice period with the mutual consent of the employee and employer.

The Labor Code stipulates detailed procedures for terminating employment. Such procedures differ depending on the grounds for termination. On the day of termination, the employer must return the labor book to the employee. Salary, compensation for unused vacation (and other compensation, if any is applicable) must also be paid out on the last working day.

3. What are the grounds for dismissal of an employee at the employer's initiative?

The employment agreement can be terminated by the employer on the basis of an exhaustive list of grounds specified in Article 81 of the Labor Code only. This list applies to all employees (including the heads of companies and similar categories of employees provided that their employment agreements contain additional contractual termination grounds not specified by the Labor Code).

In particular, the employer may terminate the employment:

  • Pursuant to a redundancy procedure or in the event of the company's liquidation.
  • For incapacity/incompetence due to the employee's bad health or insufficient qualifications.
  • For repeated non-performance of employment obligations without valid cause when one disciplinary sanction has already been in effect against the employee.
  • For a single gross violation of an employment agreement by an employee (e.g. absence from work without valid cause for a period of four consecutive hours during one business day, appearance at work in a state of intoxication, etc.).
  • During the probation period upon providing three days' notice in writing specifying the reasons for the employee failing to pass the probation period.
  • For other rarely invoked grounds.

4. What categories of employees cannot be dismissed?

It is generally prohibited to dismiss:

  • An employee who is on sick leave or on vacation.
  • A pregnant woman except in the event of a company's liquidation (or termination of the activity of the employer who is an individual entrepreneur).
  • A woman with children under three years of age, except in the event of the employer's liquidation.
  • Single mothers who have a child under 14 (fourteen) years (or disabled children under 18 years) and single fathers (save for certain exceptions), except in the event of the employer's liquidation.

5. What rights do employees have when their employment agreement is terminated?

Liquidation and redundancy

The Labor Code requires that the employee should be notified of his/her redundancy at least two months prior to the termination date. During this period, the employee should perform his/her duties as usual (please note that the two-month period can be replaced with two months' salary upon the written request of the employee). On the termination date, the employee will be entitled to receive the outstanding salary, as well as compensation for unused vacation days, other outstanding amounts (if any) and a severance payment in the amount of one month's salary. If the employee is not employed one month after the date of termination, the employee will be entitled to another severance payment in the amount of one month's salary. If the employee is still unemployed two months after the date of termination, he/she would be entitled to receive one more severance payment in the amount of one month's salary (provided, however, that the employee registered with the Employment Services within two weeks of the date of termination). Thus, the maximum severance payment is three months' salary.

"Golden" Parachutes

Severance payments in state-owned companies (companies in which the government holds a 50%+ share) and state agencies are limited to a sum equal to three months of the average salary for CEOs, deputy CEOs, chief accountants and members of collegiate executive bodies. Furthermore, all categories of employee may no longer receive severance packages in instances where his/her employment agreement was terminated due to misconduct or the imposition of disciplinary sanctions.

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.