In terms of labor rights, an employment relationship is defined as a relationship based on an agreement between the employee and the employer on the employee personally performing work for payment (employment in a particular specialty, qualification, or position), according to internal labor regulations, under the employer’s working conditions, as stipulated by labor laws, collective agreements, contracts, and labor contracts. The parties to the employment relationship are the employee and the employer. The employee is an individual who has entered into an employment relationship with the employer. The employer may be an individual or a legal entity that has entered into an employment relationship with the employee. Representative offices and branches cannot act as an employer.
The main document regulating the relationship between the employee and the employer is an employment contract. According to an employment contract, the employee undertakes the obligation to perform work within the framework of their duties in a certain specialty, according to their qualifications, and/or position and in conformity with the domestic labor regulations, while the employer is obligated to provide appropriate working conditions in accordance with labor laws, rules, internal work regulations, and collective or employment contracts. The employment contract shall be in writing in two copies (for the employer and employee) and must provide the following:
· Place of Work
If an employee is hired to work in a branch or a representative office of an organization that is located in different area, the employment contract specifies the location of the branch or representative office;
· Employment Functions
The functions of the position are indicated in accordance with the staffing structure, profession, or specialty, with an indication of the qualifications or particular type of task assigned to the employee;
· Employment Commencement Date
If a fixed-term employment contract is signed, its term and conditions (principles) are also specified, serving as the basis for signing such a fixed-term contract in accordance with applicable law;
· Wage conditions;
· Working hours and vacation time (if these differ for a particular employee from the general rules in effect with the employer). According to the general rules in accordance with current legislation:
- Normal working hours must not exceed 40 hours per week;
- The working day immediately preceding a holiday day is to be shortened by one hour.
- Subject to certain conditions, an employer may hire an employee (with the written consent of the employee) to work outside the working hours established for the employee for compensation stipulated by the abovementioned Code;
- The employer must keep records of working time for employees, including overtime;
· Probationary Period
The employer is not obligated to establish a probationary period. If there is not a condition in the employment contract about a probationary period, it is understood that the employee is hired without such a trial period. The probationary period shall not apply to certain categories of workers, such as: pregnant women and mothers with children under the age of 18 months; employees invited to work by way of a transfer from another employer by agreement between the employers; employees who have concluded fixed-term employment contracts for up to two months, etc. The probationary period may not exceed three months, and for leaders of organizations and their deputies, chief accountants and their deputies, heads of branches and representative offices - six months;
· Compensation for hard labor and work with harmful and/or dangerous working conditions;
· Conditions that determine, where necessary, the nature of the work
For example, mobile, travel-intensive, on-the-road type of work;
· Condition on compulsory social insurance for the employee in accordance with existing law;
· Other conditions in the cases outlined by labor legislation and other normative legal acts containing norms of labor law.
Special attention should be paid to the employment contract of the General Director of the Russian legal entity. When the contract between the employer and the employees is signed by the General Director, the contract between the employer and the Director General is signed by the Chairman of the company’s general shareholders meeting, at which the General Director is elected, or by a company shareholder empowered by a resolution of the general meeting of shareholders, or, if the solution to these issues relates to the authority of the Board of Directors, then it is to be signed by the Chairman of the Board of Directors or a person authorized by a resolution of the Board of Directors.
For the Director of the representative office or branch to be able to sign an employment contract on behalf of a foreign company, this function must be specified in the power of attorney.
Other documents regulating a legal entity, branch, or representative office’s personnel policies are local regulations such as:
· Regulation on working with personal data;
· Regulation on wages;
· Internal labor regulations;
· Vacation schedule;
· Staff register;
· Orders on approving the above-mentioned documents.
Regardless of the size and organizational form of the company, the employer is obliged to perform HR record keeping and document personnel procedures. Personnel documentation captures information about staff availability and rotation, namely:
· New hires;
· Transfers to other positions;
· Granting leave;
· Dismissals.
Liability for violating Russian labor laws
Violation of labor law entails the penalties specified in the table below:
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Violation
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Sanctions
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I. Responsibilities stipulated by Russia’s Code of Administrative Violations
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1
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Violation of labor laws and/or laws on occupational safety, including:
ü Failure to comply with written employment contracts;
ü Signing fixed-term employment contracts in cases where contracts should be concluded for an indefinite period;
ü Failure to pay wages no less often than every two weeks;
ü Delayed payment of wages;
ü Denial of annual vacation time, or giving employees less time than the amount established by law;
Violations committed when hiring or dismissing workers, etc.
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ü Fine for officials from 1,000 to 5,000 rubles;
ü Penalty on persons engaged in entrepreneurial activities without forming a legal entity - from 1,000 to 5,000 rubles or administrative suspension of business activities for up to 90 days;
ü Fines for legal entities - from 30,000 to 50,000 rubles or administrative suspension of business activities for up to 90 days.
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2
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Violation of labor laws and occupational safety laws by an officer, who was previously subjected to administrative punishment for an analogous administrative offense
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Disqualification of official for 1 - 3 years.
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3
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Evasion of the employer in participating in negotiations on concluding, changing or supplementing a collective agreement or contract, or violation of the negotiation period established by law, as well as failure to guarantee the commission’s work upon signing a collective agreement or contract in the time period determined by the parties (violation of Part 2 of Article 36, Part 9 of Article 37, and Part 2 of Article 40 of the Labor Code)
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ü Warning or fine on the employer from 1,000 to 3,000 rubles.
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4
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Employer’s failure to present information necessary for carrying out collective negotiations and monitoring of compliance with the collective agreement within the time period established by law (violation of Part 7, Article 37 of the Labor Code)
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ü Warning or fine on the employer from 1,000 to 3,000 rubles.
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5
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Employer’s unjustified refusal to sign collective bargaining agreements or contracts (violation of Part 2, Article 40 of the Labor Code)
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ü Warning or fine on the employer from 3,000 to 5,000 rubles.
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6
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Employer’s violation or failure to comply with employer obligations under the collective agreement or contract
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ü Warning or fine on the employer from 3,000 to 5,000 rubles.
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7
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Employer’s refusal to accept workers' claims and to participate in the conciliation proceedings, including failure to provide premises for a meeting (conference) of employees for the paying of claims or the obstruction of such meeting (conference). This is a violation of Articles 399 and 400 of the Labor Code
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ü Fine on the employer at a rate of 1,000 to 3,000 rubles.
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8
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Failure of the employer to comply with obligations under the agreement reached through the conciliation procedures (violation of Article 408 of the Labor Code)
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ü Fine on the employer at a rate of 2,000 to 4,000 rubles.
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9
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Dismissal of employees in connection with a collective labor dispute or strike (a violation of Part 2 of Article 405, Part 3 of Article 414, and Article 415 of the Labor Code)
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ü Fine on the employer at a rate of 4,000 to 5,000 rubles.
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10
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Coercion against participating in a strike by force or threats of violence or by taking advantage of the dependent position of the coerced (violation of Part 3, Article 409 of the Labor Code)
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ü Fine on citizens from 500 to 1,000 rubles;
ü Fine on officials from 1000 to 2000 rubles.
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11
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Employer refusal to hire a disabled person within the established quota (violation of Articles 21 and 24 of the Federal Law ¹ 181-FZ "On Social Protection of Invalids in the Russian Federation" dated November 24, 1995)
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ü Fine on officials from 2,000 to 3,000 rubles.
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12
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Concealment by the insured of an event insurable under the compulsory social insurance against industrial accidents and occupational illness (violation of Article 17 of Federal Law ¹ 125-FZ "On Compulsory Social Insurance Against Industrial Accidents and Occupational Illness," dated July 24, 1998)
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ü Fine on citizens from 300 to 5,000 rubles;
ü Fine on officials from 500 to 1,000 rubles;
ü Fines on legal entities from 5,000 to 10,000 rubles.
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13
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Employer interfering with a juror’s appearance in court to participate in legal proceedings (violation of Part 1 of Article 170 of the Labor Code)
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ü Fine on the employer from 500 to 1,000 rubles.
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14
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Hiring a state or municipal employee (or a former state or municipal employee), who holds (or held) a position that is included in the list established by Russian law, in violation of the Federal Law "On Combating Corruption"
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ü Fine for officials from 20,000 to 50,000 rubles;
ü Fine on persons engaged in entrepreneurial activities without forming a legal entity - from 20,000 to 50,000 rubles;
ü Fine for legal entities - from 100,000 to 500,000 rubles.
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II. Responsibilities stipulated by Russia’s Criminal Code
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1
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Violation of occupational safety rules or other such rules by a person who was responsible for complying with these rules if it resulted in infliction of serious harm to human health due to negligence
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ü Fine of up to 200,000 rubles or the amount of the salary or other income for a period of up to 18 months, or
ü Compulsory community service for a period of 180 - 240 hours, or
ü Correctional labor for up to 2 years, or
ü Imprisonment for up to 1 year.
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2
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Violation of occupational safety rules or other such rules by a person who was responsible for complying with these rules if it resulted in death due to negligence
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Imprisonment for up to 3 years, with possible disqualification from holding certain posts or practicing certain activities for up to three years.
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3
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Unjustified refusal to hire a woman or unfair dismissal of a woman due to pregnancy, as well as the unjustified refusal to hire or unfair dismissal of a woman with children under the age of three years on these grounds
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ü Fine of up to 200,000 rubles or the amount of the salary or other income for a period of up to 18 months, or
ü Compulsory community service for 120 - 180 hours.
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4
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Partial failure to pay out more than three months of wages, pensions, stipends, allowances and other payments established by law, committed for selfish or other personal interests by the head of the organization, the employer – an individual, the head of the branch, representative office, or other autonomous subdivision of the organization.
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ü Fine of up to 120,000 rubles or the amount of the salary or other income for up to one year, or
ü Losing the right to hold certain positions or practice certain activities for up to one year, or
ü Imprisonment for up to one year.
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5
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Complete failure to pay out more than two months of wages, pensions, stipends, allowances and other payments established by law or payment of wages over two months at a rate below the legally established minimum wage, committed for selfish or other personal interests by the head of the organization, the employer - an individual, the head of the branch, representative office, or other autonomous subdivision of the organization.
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ü Fine of 100,000 – 500,000 rubles or the amount of the salary or other income for a period of up to 3 years;
ü Imprisonment for up to 3 years, with possible disqualification from holding certain posts or practicing certain activities for up to 3 years.
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6
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Non-payment of wages, if it resulted in severe consequences, -
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ü Fine of 200,000 - 500,000 rubles or the amount of the salary or other income for a period of 1 - 3 years
ü Imprisonment for 2 - 5 years, with possible disqualification from holding certain posts or practicing certain activities for up to 5 years.
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Article 19.29. of the Russian Code of Administrative Violations - illegal hiring of a civil servant (or former civil servant) - violation of Article 64.1. of the Labor Code
Hiring a state or municipal employee (or a former state or municipal employee), who holds (or held) a position that is included in the list established by Russian law, in violation of the Federal Law "On Combating Corruption” punishable by an administrative fine on officials from 20,000 – 50,000 rubles; for individuals engaged in entrepreneurial activities without forming a legal entity - from 20,000 – 50,000 rubles; for legal entities – from 100,000 – 500,000 rubles.
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Aside from regulating labor relations, Russian legislation provides the possibility of concluding civil law contracts with individuals (services contracts, supply contracts, agency agreement, etc.)
The employer’s advantage is that the citizen in this case may not be provided those rights and guarantees which existing legislation provides for persons employed under labor contracts, for example:
· Guarantees on payment of wages (at least 2 times a month);
· Guarantees on leaves of absence (securing position while away, vacation pay);
· Guarantees when making a business trip (securing position while away, payment of expenses);
· Guarantees for those who combine work and training (securing position, providing leave);
· Guarantees when terminating a labor contract (severance pay, a preferential right to remain at the enterprise);
· Guarantees for temporary disability (securing position while away, payment of sick leave).
Reimbursement for use of personal property
At the same time, judicial practice suggests that when entering into such an agreement, there is a very high risk that the civil law contract will be recognized as an employment contract. Therefore, it is important to take into account all the characteristics of the contracts while closely following existing Russian legislation pertaining to this issue. If the labor inspectorate identifies a violation, it has the right to require the employer to restore the violated rights of the employee (for example, to pay out vacation pay, business travel expenses, sick pay, etc.) Also, arrears and late fees on industrial accident and occupational illness insurance premiums will be collected from the organization. Finally, if a civil law contract is recognized as an employment contract, the head of the organization faces a fine of 500 to 5,000 rubles.
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