Hire in Russia

Employment contracts may be concluded for either an indefinite or a fixed term.

On January 1, 2021, new rules on remote work were set out, mainly including flexibility for an employee to perform the work in the office or remotely. Remote work can be set for up to six months. Prior to the rules on remote work being established, an employee had to choose between the office or remote work. The contracts for each were considered differently

Other aspects of the remote work regulations include:

• If employers announce remote work due to an epidemic or a force majeure event, employees who are unable to work remotely will have downtime on reduced pay.
• Employees who work remotely will be entitled to compensation for related expenses. 
• Electronic signing is required only for important documents (e.g. employment contract amendments and terminations).

Background checks are not officially recognized in Russia but Article 3 of the Labor Code generally prohibits discrimination when hiring employees. Russian law only allows hiring decisions based on potential employees’ professional skills.

An employer cannot impose medical tests as a condition of employment if the practice is not expressly provided for in federal laws. A medical examination as a condition of employment is mandatory only in certain limited instances (e.g. for work in hazardous conditions).

The employer retains the right to set a three-month probationary period. The employer can establish a six-month probationary period for managerial and executive positions.

Some categories of employees are exempt from probationary periods, including pregnant women, women with children under 18 months old and employees who are starting a job within one year of graduation.

During the probationary period, an employer can dismiss an employee without severance by giving three days’ written notice specifying the reasons for dismissal. An employee is entitled to resign during the probationary period, without any reason, by giving three days’ written notice to the employer.

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The regular working week in Russia is 40 hours (or less for certain categories of employees and under certain working conditions).

The length of a weekend time off must not be less than 42 hours.

Any time worked in excess of 40 hours per week is classified as overtime, unless an employee has an open-ended working day as per his or her employment contract. 

Generally, an employer may only have an employee work overtime with the employee’s consent in writing.

Compensation for overtime is as follows:

• For the first two hours of overtime: 150% of the usual hourly rate
• For subsequent hours of overtime: at 200% of the usual hourly rate

In accordance with an employee’s wishes, overtime work may be compensated by additional rest periods or time off work. However, the rest period or time off given may not be for less time than the overtime the employee worked.

An employee’s overtime work cannot exceed four hours within two consecutive days or 120 hours per year.

Limitations on overtime apply to certain categories of employees, including employees under the age of 18, pregnant women, women with children under the age of three and disabled employees.

Three additional days of annual leave must be given to employees working under employment contracts where hours of work are stated to be flexible or irregular or if there is no monetary compensation for occasional overtime.

In January 2020, electronic labor books were introduced in Russia. Employers use this now to file electronic reports of hiring, the transfer of an employee to another role and the termination of an employee with the state database. This is done together with the hard copy labor book (by employee request).

For employees who started their career in 2021 and beyond, there will only be the electronic labor book. The employer must maintain workbooks for any employee who has worked for the employer for more than five days.

Documents related to payroll are stored from five to 75 years. Documentation of statutory reporting to the authorities should be stored for five years.

Bonuses are commonly paid in Russia. There are sector-specific guidelines on the payment of bonuses such as in the banking sector and for certain state-owned companies. For example, bonuses may depend on the employer reaching certain key performance indicators, a bonus can be deferred, etc.

Employment termination in Russia is heavily regulated by employment law. An employee may be dismissed only on the grounds stipulated by Russian law.

There are six types of termination:

1. Mutual agreement by the parties for separation

2. Expiration of fixed term contract

3. Resignation by employee by giving notice

4. Termination with cause by employer (e.g. due to transfers, redundancy, unsuitability of employee, repeated breach of job duties, criminal acts, etc.)

5. Forced termination, due to circumstances beyond control of employer or the employee

6. Illegal signing of a contract

There is a specific process of formalities for each type of termination. The general requirements are that the corresponding dismissal ground must be specified in the order of dismissal, with the employee’s signature as acknowledgement.

The required notice period in Russia ranges from zero to two months, depending on the grounds for termination.

Immediate termination is possible if the employer has breached labor laws, regulations or the employment contract. Immediate termination for cause by the employer is also possible, although two business days’ notice should be given to the employee to justify the misconduct.

Within the probation period, the notice period is three days.

For fixed-term contracts, the notice period is three days although this is not required if the employee was acting as a replacement.

For redundancy and liquidation, the notice period is two months. Payment in lieu of notice is also possible.

For termination initiated by the employee, the notice period is generally two weeks. For an employee who is a CEO or member of the management, he or she must give at least one month’s notice.

Irrespective of the grounds for dismissal, the employee is entitled to his or her salary. This includes the compensation of expenses, incentive payments and encashment for unused leave over the period of employment (if any). Other additional payments upon termination depend on the grounds for dismissal and the terms of the employment contract.

No severance is required in cases of termination:

• for cause
• due to the expiry of a contract’s term
• through an employee’s resignation

For termination due to company liquidation or redundancy, the required severance payment is between one and three times the average monthly wage. This is paid in installments and is subject to certain conditions.

The severance pay is two weeks’ average wages for termination due to an employee’s health condition, military service, company relocation, or change in conditions of contract.

Non-compete clauses in employment contracts are not enforceable in Russia. One of the main labor principles protected by law is that each employee has the freedom of labor, including the right to work. Any individual in Russia is free to choose his or her profession or type of activity.

Only heads of companies (e.g. directors or CEOs) can be restricted. The employer must give its consent for the employee to work for another employer.

A fixed-term contract can be entered into only on grounds provided by law or if employment cannot be established for an unlimited period. This includes:

• temporary replacement of an absent employee (e.g. due to maternity or childcare leave)
• seasonal work
• temporary increase in production
• performance of work that is beyond the normal activity of the employer

A fixed-term contract may also be entered into with certain categories of employees, such as CEOs, chief accountants, creative employees, students or part-time employees.

The contract must specifically list the applicable grounds for allowing a fixed-term employment. There is a minimum term of two months and the contract cannot exceed five years.

A fixed-term contract does not terminate automatically on its end date. The employer should serve three days written notice of termination and follow the standard termination process. If the employee is acting as a replacement, no notice is required. This contract will terminate when the replaced employee returns to his or her job.

Extending, renewing or continuing work after expiration of a fixed-term contract may entail the risk that the employment will be classified as open-ended.