Awara Russian Labor Law Guide: Disciplinary issues, liability issues, disputes (Chapters 15-17)

Awara Russian Labor Law Guide: Disciplinary issues, liability issues, disputes (Chapters 15-17)

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This article is an excerpt from Awara Russian Labor Law Guide written by our leading labor law lawyers. It gives a description and analysis of major legal issues that may affect those who want to conduct a business in Russia. This Guide will certainly serve as a reliable aid in going through this maze of regulative acts and decisions and help the reader to avoid gross mistakes that might result in significant but quite unnecessary losses.

 

Disciplinary Sanctions

The Labor Code expressly imposes an obligation on the employer to ensure the necessary conditions for discipline at work (Art 189 Labor Code). This includes the duty to have a separate written discipline policy or provisions regarding disciplinary issues in the internal working rules.

The disciplinary system should provide for both rewards and penalties in accordance with the law. They range from written announcement of gratitude to warning, reprimand or dismissal.

By law, the employer shall have the right to apply the following disciplinary sanctions (Art 192 Labor Code):

• Warning;
• Reprimand (or reproof);
• Dismissal.

Withholding of salary or a part of it (deductions) as a form of disciplinary sanction is not allowed. However, it is possible to make payment of incentives and bonuses dependent on the employee’s proper behavior.

The application of any disciplinary measures is strictly monitored in regard to the labor contract, job description and other relevant documents. Before imposing a disciplinary measure, the employer has to show that the employee has violated his duties.

Before adopting a decision to impose a disciplinary sanction, a written explanation must be demanded from the employee. If the employee refuses to give an explanation within 2 days, a corresponding written document is drawn up (Art 193 Labor Code).

The previous version of the Labor Code made it difficult to dismiss an employee who did not answer an employer’s request for written explanation, because without such explanation (or the worker’s refusal to give it) the dismissal would not be valid. However, the new version of the Code has facilitated the procedure because it enables the employer to dismiss those absentees who ignore its requests.

Taking disciplinary actions is further restricted in time. In general, the time of reaction is limited to 6 months from the date of when the employee committed the violation and 1 month after discovery of the violation (periods of employee’s absence are not counted). When the violation has been detected as a result of an audit, the time for reacting is extended to 2 years (Art 193 Labor Code).

Only one disciplinary sanction may be applied for each violation.

Disciplinary actions are also restricted to form. They have to be made in writing (formalized by an order of dismissal) and presented to the employee against acknowledgement of receipt within three days from their issuance.

Although the Labor Code no longer requires that the employer, when deciding whether to apply a disciplinary sanction or not, take into account the gravity of the violation and concomitant circumstances as well as his previous behavior and “attitude to work”, the Supreme Court insists that these requirements are still applicable (Decree dated March 17, 2004, item 53). Therefore, the employer is expected to prove that these facts have been actually considered in making the decision.

The employee may appeal against disciplinary measures to the State Labor Inspection, the Labor Dispute Commission or the courts for consideration of individual labor disputes.

The validity of the imposed disciplinary sanctions is restricted to one year. If, within a year from the date of imposing a disciplinary sanction, the employee is not subjected to a new disciplinary sanction, it is considered that his records are free of any such sanctions.

The employer may also voluntarily remove the disciplinary sanction from the employee earlier (Art 194 Labor Code).

Non-Admission to Work

The employer has not only a right, but an obligation to refuse admission to the place of work for an employee in certain cases of misbehavior, omissions and similar circumstances (Art 76 Labor Code).

Suspension from work may be imposed under the following circumstances:

• Employee arrives at work in a state of alcoholic, narcotic or other intoxication.
• Employee has not undergone required job safety training and tests.
• Employee has not undergone compulsory medical check and mandatory psychiatric evaluation.
• Employee is not fit for the work due to health reasons according to a doctor’s certificate.
• Employee loses (for a period of two months or less) a special right (driving license, etc.) which is essential for performance of his job duties.
• Upon request of relevant labor protection authorities

No salary is paid to the employee during the period of suspension from work (with some exceptions).

Liability Issues

The general provisions regarding liability for property damage of the parties under a labor contract, as well as for moral damages caused to employee, are set out in the Labor Code. Within the limits set by the law the parties may further detail the provisions regarding liability in the labor contract. Relevant company policies may also contain rules regarding liability issues.

Liability of the parties to the labor contract can arise for damage caused through guilty and unlawful behavior (including actions and inactions).

Each party has the obligation to prove the amount of the damage incurred (Art 233 Labor Code).

In addition to the general provisions regarding liability, the Labor Code contains specific sanctions for certain types of omissions. The Labor Code introduces a principally new type of liability for delay of salary payment. In case of delays of salary payments the employer may be liable to pay a penalty interest on the delayed payments regardless of his guilt (Art 236 Labor Code). When the delay has continued for 15 days, the employee also receives the right to temporarily postpone performance of work until the date salary is paid (Art 142 Labor Code). The Supreme Court has emphasized that the employee may use this right even if the delay is not the fault of the employer^[1]. In addition to the liability provided for by labor law, an employer is also subject to administrative liability for violation of terms of payment of wages (Art 5.27 Code of Administrative Offences) and, under certain conditions, to criminal responsibility (Art 145.1 Criminal Code).

Limits on Material Liability of the Employee

The extent of an employee’s liability is restricted in the law. The limits of the full material liability of employees are established by the Labor Code. Certain clarifications are also present in the Decree of the Plenum of the Supreme Court of the Russian Federation dated November 16, 2006 No. 52^[2].

An employee’s liability is, as a rule, restricted to the limits of his average monthly salary (Art 241 Labor Code).

Full material liability may arise under the circumstances specified in the law (Art 243 Labor Code).

Cases when full material liability may arise:

1. When an employee is imposed liability in full for the damage caused to the employer in the exercise of his employment duties:
   1. Under an employment contract with the head of the organization (Art 277 Labor Code); under labor contracts with communications employees for loss or late delivery of all types of post and telegraph dispatches, damage to postal enclosures that occurred due to their fault (Art 68 of the Federal Law on Communications^[3]);
   2. Other cases provided for by the Labor Code and special laws.
2. Upon causing intentional damage to inventory or assets;
3. Upon causing damage in a state of alcoholic or narcotic or other intoxicated state;
4. Damage caused in connection with an administrative or criminal offence;
5. Upon violation of provisions on confidentiality;
6. Upon causing damage to employer’s inventory or assets outside work time;
7. Upon shortage of valuables entrusted to the employee on the basis of a special written agreement or received by him under a one-off document;
8. Under an agreement of full material liability
   1. with an employee of a religious organization (Art 346 Labor Code);
   2. with a deputy head of an organization, or the chief accountant (Art 243 Labor Code);
   3. with employees directly servicing or using money, goods or other property (Art 244 Labor Code).
9. In other cases set by special provisions of the Labor Code or other laws.

A special written agreement on full material liability is allowed by law for certain categories of workers. Such categories have been specially defined in the law and they include employees in charge of cash and other valuables (e.g., cashiers, stock-keepers). The list of employees with whom an agreement of full material liability may be entered into is determined on the basis of a Resolution of the Russian Government^[4], the Ministry of Labor of Russia^[5] (Art 244 Labor Code).

The decree of the Supreme Court dated March 14, 2004 (clause 36)^[6] distinguishes between 2 cases: 1) when the employee knew when hired about the duty to enter into the agreement on full liability, and 2) when such duty was introduced by law after he was already hired. In the first case the employee can be dismissed for the failure to fulfill his duties, whereas in the second case the employer must offer him another job. Only if the employee refuses to take such job can he be dismissed. But the cause of dismissal will be different, namely, the refusal to continue with the job as a result of change in certain conditions of the labor contract.

There is also the possibility to enter into an agreement on collective material liability with a group of employees entrusted jointly with the performance of certain functions (Art 245 Labor Code).

Employees under 18 years of age will carry full material liability only in exceptional cases (for intentional damage, damage caused in the state of alcoholic, narcotic or other intoxication, and as a result of committing a crime or an administrative offence) (Art 242 Labor Code).

Before deciding on damages compensation by a particular employee the employer is obliged to conduct a verification to determine the amount of damage and its causes. A demand that the employee provide a written explanation to determine the cause of damage is required. In case of refusal or failure of the employee to provide an explanation a written statement to that effect is made (Art 247 Labor Code).

The collection of damages within the limits of an average monthly salary can be executed by a decision of the employer. The decision has to be taken no later than one month from the date of the final determination by the employer of the amount of damage caused by the employee.

If the employee does not consent to reimbursement of the caused damage voluntarily, and the amount of the caused damage to be collected from the employee exceeds his average monthly salary, or the above-mentioned one-month period has expired, then collection may be executed only upon a court ruling (Art 248 Labor Code).

The court (or the Labor Dispute Commission – Art 250 Labor Code) may reduce the amount of damage subject to collection by reason of the circumstances at hand (including the financial position of the employee).

There can be no material liability of the employee if losses were caused as a result of force majeure, normal economic risk, absolute necessity or necessary defense or as a result of the employer’s failure to ensure the necessary conditions for preservation of the property entrusted to the employee (Art 239 Labor Code). In the opinion of the Supreme Court, the concept of normal economic risk may cover the actions of the employee which accord with his current state of knowledge and experience, when the aim could not be achieved in a different way, the employee has fulfilled his duties in a proper way and evinced certain degree of care and caution, has taken measures in order to prevent losses, and the subject of risk was property, not human life and health. Failure of the employer to ensure the conditions mentioned above may justify the dismissal of his claims in court, if it was the cause of harm^[7].

A head of an entity bears full material liability for any direct actual damage caused to the entity (Art 277 Labor Code). The Supreme Court has decreed^[8] that, since full material liability of the CEO for losses caused to the organization is established by law (Art 277 Labor Code), the employer may demand the compensation of damage in full irrespective of whether there is a clause concerning such liability in the contract between the CEO and the entity (employer). In so doing, the court shall decide on the amount of damage (direct real damages, or losses) on the grounds of the federal law which provided for the liability of the CEO (for instance, on the grounds of Art 277 of the Labor Code, of Art 25(2) of the Federal Law “On State and Municipal Unitary Enterprises”^[9]). Furthermore, the Court emphasized that in Russia full material responsibility can be imposed upon the deputies of the CEO or upon chief accountant only if it is provided by labor contract (Art 243(2) Labor Code).If it is not set out in the contract and there is no other legal ground for imposing full material liability upon these persons, they can bear liability only within the limits of their monthly salary.

Disputes

On Collective Labor Disputes (i.e., Industrial or Trade Disputes) see more above in “Trade Unions and Industrial Conflicts (‘Collective Labor Disputes’)”.

Individual labor disputes, which are not resolved through negotiations between the parties, may be referred to the Labor Dispute Commission or courts. Employees, former and present, have the right to be claimants in such cases; job seekers who have been denied employment also have the right to file a case.

Labor Disputes Commission

A labor dispute commission is set up individually for each company by the representatives of the employees and the employer. It is not a mandatory requirement of the law to create a labor dispute commission, but if the employer has received a proposal from his employees (or vice versa) to set up the commission, it cannot be refused (Art 384 Labor Code). If such a commission does not exist for a particular company, then the disputes will be taken directly to the courts.

The commission on labor disputes may take up cases of labor disputes which are not assigned to the exclusive jurisdiction of the courts within a particular entity (Art 391 Labor Code).

The employee or employer may appeal for a transfer of the labor dispute to a regular court within 10 days from the date of delivery of the copy of the decision of the commission. If the deadline is missed for valid reasons, it can be restored by the court. If the dispute has not been resolved by the commission within 10 days the employee has the right to transfer it for consideration by the court (Art 390 Labor Code).

A commission’s decision which has entered into force shall be executed within 3 days. If it has not been enforced on a voluntary basis, the commission shall issue a certificate to the employee, which is an execution document. The employee may apply for a certificate within one month from the date of the decision of the labor dispute commission. The certificate is submitted for execution to the bailiffs within 3 months from the date of its receipt (Art 389 Labor Code).

Courts

The courts consider individual labor disputes on petitions of the employee, employer or trade union when they disagree with the decision of the labor disputes commission, or when the employee appeals directly to the court without referring the matter to the labor dispute commission, as well as on application by the prosecutor, if the decision of the commission is not in accord with legislation (Art 391 Labor Code). The duty to consider all kinds of labor disputes is assigned to the courts of general jurisdiction, not commercial (arbitration) courts.

Only a court may solve disputes upon application of:

Employee:

• for reinstatement;
• to change the date and the wording of the reasons for dismissal;
• for a transfer to another job;
• for payment for a period of forced absence, or the payment of the difference in wages during the execution of lower-paid work;
• regarding misconduct by the employer in the processing and protection of personal data of the employee;
• regarding refusal to hire.

Employer:

• for compensation by the employee for damage caused to the employer;
• by persons working under an employment contract with employers – individuals who are not individual entrepreneurs;
• by employees of religious organizations;
• by persons who believe that they have been discriminated against.

All labor lawsuits beginning after July 30, 2008 are within the domain of district courts. Formerly, some labor disputes could be considered by magistrates (justices of the peace)^[10].

Employees do not have to pay the court duties and expenses on court cases relating to labor disputes (Art 333.36 Tax Code). On the whole, court practice (or at least the published decisions) seems to be heavily biased in favor of the employee. It therefore also seems that the threshold for taking labor disputes to courts seems to be quite low.

The employer should take into account that the violation of employee’s “labor rights” may trigger liability for “moral damages” (Art 237, 394 Labor Code; see also Decree of the Plenum of the Supreme Court of the Russian Federation dated December 20, 1994, No. 10, ‘Some Questions of Application of Legislation on Contributory Compensation for Moral Damages^[11]). It should be noted that the Supreme Court proceeds from the “presumption of moral damages”, i.e., in Court’s view the violation of employee’s rights inevitably leads to his moral and/or physical sufferings which entitle him to contributory compensation for moral damages. So, the only thing which can be contested in such cases is the degree of sufferings which may entitle him to a larger or lesser amount of contributory compensation but not the causation of moral damages as such^[12].

 

[1] Item 57 of the Decree of the Plenum of the Supreme Court of the Russian Federation dated 17.03.2004 No. 2 “On Application by the Courts of the Russian Federation of the Labor Code of the Russian Federation” // Rossiiskaya Gazeta. No. 297. 31.12.2006.

[2] Resolution of the Plenum of the Supreme Court dated 16.11.2006 No. 52 “On the Application of Legislation Regulating the Material Liability of Employees for Damages Caused to the Employer” // Rossiiskaya Gazeta. No. 268, 29.11.2006.

[3] Federal Law dated 07.07.2003 No. 126-FZ “On Communications” // Collected Legislation of the Russian Federation.2003, No. 28, Art 2895.

[4] Decree dated 14 November 2002 No. 823 // Collected Legislation of the Russian Federation.2002, No. 47, Art 4678.

[5] Resolution of Ministry of Labor dated 31.12.2002 N 85 // Rossiyskaya Gazeta, No. 25, 08.02.2003.

[6] Resolution of Plenum of the Supreme Court of the Russian Federation dated 17.03.2004 No. 2 “On Application of the Labor Code of the Russian Federation by the Courts of the Russian Federation” // Rossiyskaya Gazeta. No. 297. 2006.

[7] Item 5 of Resolution of the Plenum of the Supreme Court of the Russian Federation dated 16.11.2006 No. 52 “On the Application by Courts of Legislation Governing the Material Liability of Employees for Damages Caused to the Employer” // Rossiyskaya Gazeta, No. 268, 29.11.2006.

[8] Item 9-10 of Resolution of the Plenum of the Supreme Court of the Russian Federation dated 16.11.2006 No. 52 “On the Application by Courts of Legislation Governing the Material Liability of Employees for Damage Caused to the Employer” // Rossiyskaya Gazeta, No. 268, 29.11.2006.

[9] Federal Law dated 14.11.2002 No. 161-FZ “On State and Municipal Unitary Enterprises” // Collected Legislation of the Russian Federation.2002, No. 48, Art 4746.

[10] Federal Law dated 22.07.2008 No. 147-FZ // Collected Legislation of the Russian Federation. 2008, No. 30 (Part 1), Art 3603.

“On Amendments to Art 3 of the Federal Law “On the Magistrates in the Russian Federation”, and Art 23 of the Civil Procedure Code of the Russian Federation” // Collected Legislation of the Russian Federation. 2008, No. 30 (Part 1), Art 3603.

[11] Decree of the Plenum of the Supreme Court of the Russian Federation dated December 20, 1994, No. 10, “Some Questions of Application of Legislation on Contributory Compensation of Moral Damages” // Rossiyskaya Gazeta, No. 29, 08.02.1995.

[12] The ruling of the Supreme Court Civil Division dated 28 November 2000 No. 5-В00-227 // Bulletin of the Supreme Court of the Russian Federation. No. 3, 2003.