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.
The Code defines overtime work as being work beyond the duration of the work time “established for the worker”, that is, the duration of his shift or (if there is summarizing of work time mode in place) beyond the normal number of hours during the “accounting period” (which can be up to one year) (Art 99 Labor Code). The “normal” duration of work time cannot exceed and is usually equal to 40 hours per week (Art 91 Labor Code), although there are reduced weeks for some categories of employees. Therefore, if one works during a week more than the number of hours which is applicable to him (40 hours or otherwise), it is to be considered overtime.
The provisions regarding overtime work affect the length of the workday and also the sum total of hours that is allowed during a certain period of time.
The order to work overtime is only permitted under circumstances envisaged by the law; sometimes with the written consent of the employee and sometimes without it. Circumstances under which overtime is admissible are:
Employees belonging to certain social groups may not be ordered to work overtime. These social groups having greater protection under the law are pregnant women, youth and others in accordance with special legislation.
It is possible to require overtime of women with children under the age of 3 years old and the disabled, guardians, (trustees) of minors with their written consent, provided that it is not prohibited to them according to a medical report, and they were informed against signature of their right to refuse to work overtime (Art 99 Labor Code). This guarantee also applies to mothers and fathers without a spouse raising children under the age of 5 years, employees who have children with disabilities, employees who take care of sick family members, but only with their written consent, provided that it is not prohibited to them according to a medical report, and they were informed against signature of their right to refuse to work overtime (Art 259 Labor Code).
The right to order overtime work is limited to:
Ordering to work overtime should not be systematic; it should occur sporadically in special cases.
If an employee on his or her own comes to work early or stays late in the evening for a few hours, such work will not be considered overtime and, as a consequence, the hours will be neither paid nor taken into account in determining the number of hours worked.
Employees who have an irregular workday schedule are not paid for overtime (Arts 97, 101 Labor Code), and neither are those who combine jobs (Art 60.1 Labor Code).
If an employee has agreed to work overtime, was familiar with the corresponding Order, but did not show up and had no valid reason, he can be subject to disciplinary action.
In terms of payment, the law provides that the employer must:
There is more flexibility for the employer if the company practices summarizing calculations of working time. But such a system is a subsidiary one and it is allowed only if there is no possibility to observe “the daily or weekly duration of working time established for the given category of workers”. Such impossibility depends on the conditions of work. If there are grounds for the summarizing calculation, then it is possible to vary the daily duration of work time within longer periods such as a month, quarter of a year, half-year or a year (Art 104 Labor Code). The work fulfilled beyond the normal hours established for such an “accounting” period is overtime (Art 99 Labor Code). At the same time, Art 99 provides for a general rule that duration of overtime work cannot be more than 4 hours during 2 days in a row and 120 hours during a year. Here the law is self-contradictory, because the system of aggregate calculation makes it impossible to observe this limitation against continuous overtime. There is no way to speak of overtime and correctly assess its amount before the expiry of accounting period (let’s say, three months). Only then is it possible to establish the very fact of overtime, determine its scale and pay accordingly.
The concrete rate is to be established by collective contract, internal regulations of the company or labor contract. If the worker wants, there can be compensation in the form of additional time off (not shorter than overtime) instead of additional payments (Art 152 Labor Code).
The Russian Labor Code establishes strict and detailed rules and regulations for the management of staff and payroll issues (Human Resources Administration). Non-compliance with these rules may lead to unpleasant consequences, involving:
There exists a myriad of procedures to comply with as well as requirements for the form of human resources (HR) documents.
In Russian law and administrative practice, forms are still very important. Wrong forms or absence of forms may cause a range of adverse consequences, including the invalidity of the contract. The labor law makes no exception to this rule; on the contrary, form has a rather elevated position in matters regulating Russian human resources (HR) issues. The requirements of form call for a great deal of attention from management and suggest the advisability of securing the services of experienced HR managers or HR consultants. Any omissions in the correct drafting of documents or absence of documents can lead to the employer losing some of its rights, as well as increased taxation burden and potential liability for damages.
Various mandatory documents (sometimes optional) regulate the employment relationship through its life-cycle.
The necessary documents and records may be divided into the following categories:
Many of the decisions of the management of a Russian entity need to be set out in written form in order to enter into force. Such written decisions are called Prikaz in Russian. In this Guide we will refer to these written decisions as administrative orders.
All administrative orders concerning an individual employee have to be evidenced by the signature of the employee in question.
According to Russian law, employment is regulated by, along with the labor contract, compulsory and optional provisions of the law, other legislation and governmental instructions, as well as policies and instructions issued by the employer. The law frequently refers to such policies and instructions, and, therefore, in order to comply with the law and achieve legal protection of its rights, the employer must make sure to issue the appropriate policies and instructions (Art 8 Labor Code). Internal policies and instructions must be enacted by every employer except natural persons.
When such policies and instructions are not in place, the risk is that a situation would emerge where no rules would apply. This could render meaningless some provisions of the law or the labor contract.
Consider a situation where the employer would need to take disciplinary action towards an employee who is constantly late (See Disciplinary Issues). The law provides that the exact time for commencement, duration and end of the workday is set out in the labor contract or the internal working rules (Art 100 Labor Code). If such provisions are not to be found in those documents, then it may be impossible to take disciplinary actions. As long as there are no documented rules, there cannot be any breach of the rules either.
Policies and instructions properly issued by a company form a part of the labor contract and have to be referred to in it. The policies have to be presented to each employee against signature. This must be done at the time of hiring people and also each time a policy or instruction is changed.
The employer has an obligation to present to a new employee, against signature, the internal working rules and other policies and instructions, as well as any collective contracts in force in the company to the extent that they relate to the employee’s job functions.
When policies and instructions are subsequently changed, there may emerge a situation where consent of a representative body of workers is required (Art 29 Labor Code). It is advisable that the labor contract and all policies and instructions contain a provision allowing for their subsequent change.
The policies and instructions and changes to them have to be adopted in accordance with the set procedure for decision-making in the company. If this procedure is not followed, they do not apply (Art 8 Labor Code).
Applicable policies and instructions include (but are not restricted to):
The scope of the internal working rules may be extended to cover most of the mandatory issues and also any other issues that are important for the employer.
The main fact that should be taken into account in the formulation and adoption of local rules is that those which worsen the situation of workers in comparison with the established labor laws and other regulations, collective agreement, and contracts, shall not apply (Art 8 Labor Code).
The Contents of Internal Working Rules (for example, Article 189 Labor Code) may include provisions on:
In addition to the policies and instructions, certain other administrative records should be kept.
These administrative records concerning the whole organization are:
Expense reimbursement policy could contain details on treatment of, for example, the following types of expenses:
Travel expenses, including
Daily allowance (per diem);
The most common documents for standard use in a Russian organization concerning an individual employee are listed below.
Documents concerning an individual employee:
The above presents a list of the most typical recurring documents. Formal documents and administrative orders may have to be issued in many other situations in connection with deciding matters regarding the individual employee.
The labor book records the main points of the individual labor history of every employee in Russia (Art 66 Labor Code). It contains information on the employee’s places of work, positions and length of work.
Although the labor book is a primary document confirming seniority, it is not the only one.
The Labor Code establishes the keeping of labor books as an absolute requirement for all employees under Russian law. Natural persons are the only employers who are exempt from keeping labor books. In fact, no distinction is made between Russian and foreign employees, which means that in principle labor books must be kept for foreign employees as well.
The system of keeping a labor book dates back to the Soviet administrative practice, where each citizen was under an excessive militaristic control system. In its present form it was introduced by Stalin in 1939. Although the idea of keeping a labor book is both outdated and undemocratic, the new Labor Code has reinforced the rules regarding it. In accordance with the law further details as to the form, the procedures of keeping the labor book and other issues regarding it are set out by the Russian government. Nevertheless, the idea of abolishing labor books is currently under discussion in the government and the Duma.
Employers (their management) that do not comply with the requirements of keeping a labor book may be liable for fines and disqualification.
The requirement that the employer make entries in the labor book applies to every employee who works with the employer for a minimum period of 5 days (Art 66 Labor Code).
The following data is recorded in the Labor Book:
Other disciplinary issues, except for dismissal, are not noted in the labor book.
The labor book is deposited with the employer during the time of employment. At dismissal the employer is obligated to return the labor book on the last day of work (Art 80 Labor Code). If the employee does not come to pick up the labor book, the employer may fulfill his obligation to return it by sending a letter to the employee’s address requesting the employee collect the labor book or authorizing the employer to send it by mail (Art 84.1 Labor Code). We advise that such correspondence is done by means of registered mail.
If the employer is at fault for not turning over the labor book on the day of termination of the employment contract, then he must compensate the employee foregone earnings for the whole time of delay in handing over the labor book (Art 234 Labor Code).
Unclaimed labor books must be kept by the employer for 75 years. The employer is relieved of liability for late issuance of the labor book as of the date notification is sent to the employee of the need for employee to appear at the employer’s office to get it or to give consent to the sending of it to employee by mail. Upon the written request of an employee who has not received the labor book after his dismissal, the employer must give it no later than 3 workdays from the date of the employee’s request.
There is another important issue in the matter of handing over labor books. It is important when dismissing an employee. In accordance with Art 392 Labor Code, an employee has the right to apply to the court for resolution of an individual labor dispute about the dismissal within one month from the date of delivery of the copy of the dismissal order or the date of return of the labor book. If the employee has not been given the labor book, and he has not been given a copy of the dismissal order, the preclusive term for filing a claim does not begin to run.
In addition to the above-described documents the employer has an obligation to produce documents and records for accounting and statutory reporting purposes (reporting to social funds, for statistical purposes, etc.). Accounting and statutory reporting requirements do not fall within the scope of this Guide. We will therefore not deal here with the details of accounting and reporting issues.
Health and safety rules are found primarily in chapters 33-36 of the Labor Code. In addition, there are plenty of subordinate regulations which relate to particular questions (procedures, industries, categories of workers and the like). Here we discuss some general or main legal requirements in this area.
For every industrial organization (plant) with more than 50 employees, the employer is responsible for setting up a special unit in charge of labor protection (the labor protection unit). For organizations with fewer workers the decision to set up a labor protection unit depends on the nature of the work and remains at the discretion of the employer (Art 217 Labor Code).
Instead of forming such a labor protection unit, the employer can choose to hire a professional labor protection specialist. The employer also has the option of entering into an outsourcing agreement with a specialist or company rendering services in the field of labor protection.
A so-called labor protection committee may also be formed in the organization at the initiative of either the employer or the employees. Such a committee would comprise the representatives of the employer, trade unions or other representatives of the employees. The law says that such a committee shall organize “joint efforts” of the employer and employees towards prevention of industrial injuries, compliance with labor protection requirements, and so on (Art 218 Labor Code).
Every employee has the right to a workplace which conforms to the requirements of health and safety rules (Art 219 Labor Code). He may legally quit work if his life or health is jeopardized as a result of the employer’s failure to comply with those rules. The related costs (for training, protection measures and the like) are born by the employer. If the work in the organization is suspended by authorities as a result of violation of health and safety rules by the employer, the worker is entitled to receive the amount of his average earnings for the period of suspension.
As was mentioned above (see “Entering Into of the Labor Contract”), some employees are obliged to pass a medical examination before actually being hired. Additionally, the Labor Code envisages periodical medical tests for some of them (Arts 69, 213, 266 Labor Code). The employee’s refusal to undergo such mandatory tests will result in dismissal from work. No salary is paid in such a case (Art 76 Labor Code).
For some restrictions aimed at protecting the health of women, see “Women”.
The Labor Code introduces a set of rules regarding the protection of personal data concerning each employee (personal data protection) in Chapter 14 Labor Code. The Federal Law “On Personal Data” dated July 27, 2006 No. 152-FZ, which has been in effect since January 26, 2007, is also of significance.
The provisions on personal data protection regulate processing of personal data, which is defined as any act or set of acts carried out with personal data, including the collection, recording, classification, accumulation, storage, update (change), extraction, use, transfer (distribution, provision of access), depersonalization, blocking, deletion, or destruction of personal data. The provisions are very detailed and place a heavy administrative burden on the employer.
The employer may only process personal data that is connected with the statutory administration requirements, assistance in job search, training and career development, ensuring the safety of employees, protection of property, and for the purposes of quality control.
In the context of personal data protection the Labor Code further refers to the relevant provisions in the Russian Constitution and special legislation.
The employer does not have the right to process personal data in relation to race, ethnic origin, political opinions, religious or philosophical beliefs, health, or sexual life, except in cases specified by law.
All such data has to be received directly from the employee. In the event some information can only be received from a third party source, then the employer has the obligation to inform the employee in advance about the intention to approach such third party and receive his written consent. In the request for consent the employer shall indicate the reasons for collection and processing of the personal data, intended sources and means of its collection, as well as the nature of the data to be collected and the consequences of employee’s refusal to grant permission for its collection (Art 86 Labor Code).
As of September 1, 2016, a law, goes into effect which requires companies that collect and otherwise process personal data of Russian citizens, including in employment relations, to use databases on the territory of Russia. The new law applies even to foreign companies which are not registered in Russia and do not have representative offices (branches) in Russia.
As of the date the law goes into effect, any entities that carry out the processing of personal data of citizens of Russia, including employers who process personal data of employees, must use a server and its database that are located on the territory of Russia for processing personal data of citizens of Russia. Russian companies that process personal data of Russian citizens and use foreign servers for this also fall under the new law and are required to use a server in Russia. For example, if your company uses the services of a foreign parent company for the processing of personal data and gives it personal data of Russian employees, then as of January 1, 2016, you or your parent will need to resort to a server in Russia for processing such data, so as not to violate the requirements of the new law. At the same time, the law does not clarify the conditions of use of the servers in Russia. It follows that, until the issuance of official explanations and the formation of practice in implementation of the law, entities engaged in the processing of personal data of Russian citizens can choose the following options for utilization of a server:
The server in Russia can be used both as a separate and independent server and as a mirror server, where the server in Russia processes personal data of Russian citizens and also interacts with a second server located abroad, and between these servers a continuous exchange of information occurs.
There now also emerges a need to adopt a data protection policy or instruction. The employer has an obligation to notify the employee of all forms, methods and rules used in regard to the collection and processing of personal data, including the procedures for access to data within the processing entity. These provisions are best included in the data protection policy. The due notification has to be verified by the signature of each employee.
Personal data of the employee may not be disclosed for commercial purposes or otherwise to third parties without his written consent (Art 88 Labor Code).
The employee has to be granted access to the protected data and a right to demand correction of data and removal of unauthorized data (Art 89 Labor Code).
The rules of data protection are enforced by possible disciplinary, civil, administrative and criminal liability (Art 90 Labor Code).
The employer has the obligation to protect the personal data from unlawful use or loss. Within the entity only specially authorized people may have access to the protected data and only to the extent needed for fulfillment of their job duties (Art 88 Labor Code).
Employees receive the following rights in connection with the provisions on personal data protection (Art 89 Labor Code):
Most labor contracts entered into between companies and their employees provide for the latter’s duty not to divulge confidential information which became known to them in connection with performance of their labor functions. Some labor contracts provide also for employee’s liability for divulgence of confidential information. However, based on the Federal Law “On Commercial Secrets”, the employee can be made liable only if the company takes all steps to protect the information it has. Importantly, the company must take measures for preserving both its own data which has the confidentiality status, and that of its clients, contractors, etc.
Art 11 of the Federal Law “On Commercial Secrets” provides that, for the purposes of protection of commercial secrets, the company must take the following measures:
If the duties of the employee do not entail the necessity of dealing with commercial secrets, the company at its discretion may obtain his consent in writing regarding the regime of work with such information.
The special law on commercial secrets uses the term “commercial secret” and the Civil Code – “production secret” and “know-how”. Before October 1, 2014 these concepts were considered similar, which was confirmed by the jurisprudence. Currently, know-how (production secret) includes only information about the results of intellectual activities in science and technology and methods for performing professional activities. Information that constitutes a trade secret includes a larger amount of information. For an owner of know-how (production secret), it suffices to take reasonable steps to observe its confidentiality and it does not necessarily require implementing a trade secrets regime.
The Federal Law “On Commercial Secrets” (Art 11) imposes upon the employee the following duties with respect to data protection:
On October 1, 2014, a law came into force which makes the following changes to the law on commercial secrets:
1) Establishes the possibility of recovering damages from employees who received access to information that constitutes a commercial secret in connection with the performance of official duties, in the event of disclosure of such information in violation of the law. The law for the first time secured the possibility of recovering damages from a person with whom the employment relationship has terminated;
2) Establishes the possibility of recovering damages from the head of the organization in full (including actual damages and, most importantly, loss of profits).
As often happens, the company and the employee during the term of validity of the labor contract may enter into a confidentiality agreement regarding the data constituting a commercial secret, or there is a period indicated in the contract during which the employee must observe this requirement concerning non-divulgence.
Earlier, before the adoption of Part IV of the Civil Code of Russia (before January 1, 2008), the law provided that in the absence of such an agreement, an employee must not disclose the confidential information for three years after the termination of the labor contract (Art 11 (3) of the Law on Commercial Secrets).
Currently, according to the new version of Art 11 (3) of the Law on Commercial Secrets, which went into effect on October 1, 2014, the employer has the right to demand compensation for damages caused to it by the disclosure of information that constitutes a commercial secret by a former employee who obtained this information in connection with the performance of his job duties, but whose employment relationship with the employer has terminated, if the information was disclosed during the period the regime of commercial secrets was in effect.
Also, in Art 1470 of the Civil Code, a new rule has been established providing that an employee who became aware of a production secret (know-how) shall maintain the confidentiality of the information received until the termination of the exclusive right to the production secret (know-how). From this it follows that the obligation of the employee not to divulge production secret (know-how) is not a limited period, but follows from the law.
An employee, among other things, is liable for the disclosure of know-how (production secret) by civil law (Art 1472 Civil Code). The employee is exempt from liability if he had not been informed in advance that the information disclosed constituted a know-how (production secret).
In accordance with the 2004 Law on Commercial Secrects, the heads of companies bear additional responsibilities. For instance, the labor contract with the head of the entity (CEO) must provide for his obligation to ensure the protection of the confidential information belonging to the company, its business partners, clients and contractors, and that he bears responsibility for the failure to ensure this protection. This clause is mandatory, that is to say, it is an essential term of the labor contract.
Violation by an employee of a commercial secrets policy entails disciplinary, civil, administrative or criminal liability under the law.
 Rostrud letter dated 7.06.2008 No. 1316-6-1 // ATP ConsultantPlus. 2014.
 Rostrud letter dated 18.03.2008 No. 658-6-0 // ATP ConsultantPlus. 2014.
 Rostrud letter dated 07.06.2008 No. 1316-6-1 // ATP ConsultantPlus. 2014.
 Rostrud Letter dated 18.03.2008 No. 656-6-0 // ATP ConsultantPlus. 2014.
 Decree of the Government of the Russian Federation dated 16.04.2003 No. 225 “On Labor Books”, Ministry of Labor Decree dated 10.10.2003 No. 69 “On Approving the Instructions on How to Fill Out Labor Books” // ATP ConsultantPlus. 2014.
 For example, Ruling of the St. Petersburg City Court dated 02.09.2009 No. 12030 // ATP ConsultantPlus. 2014.
 Para. 43 Decree of Government of the Russian Federation dated 16.04.2003 No. 225 “On Labor Books”, Art 22 of Federal Law dated 22.10.2004 No. 125-FZ
“On Archives in the Russian Federation” // ATP ConsultantPlus. 2014.
 Art 3 of Federal Law dated 27.07.2006 No. 152-FZ “On Personal Data” // Collected Legislation of the Russian Federation. 2006, No. 31 (Part 1), Art 3451.
 Art 10 of Federal Law dated 27.07.2006 No. 152-FZ “On Personal Data” // Collected Legislation of the Russian Federation. 2006, No. 31 (Part 1), Art 3451.
 Federal Law dated 21.07.2014 No. 242-FZ “On Amendments to Certain Legislative Acts of the Russian Federation with Regard to the Clarification of the Processing of Personal Data in Information and Telecommunications Networks” // Collected Legislation of the Russian Federation. 2014. No. 30 (Part 1). Art 4243.
 Federal Law dated 29.07.2004 No. 98-FZ “On Commercial Secrets” // Collected Legislation of the Russian Federation. 2004. No. 32. Art 3283.
 See, e.g., Resolution of the Plenum of the Supreme Court of the Russian Federation No. 5, Plenum of the Russian Federation dated 26.03.2009 No. 29 “On Certain Issues That have Arisen in Connection with the Implementation of Part IV of the Civil Code of the Russian Federation” // Rossiyskaya Gazeta, No. 70.2009.
 Federal Law dated 12.03.2014 No. 35-FZ “On Amendments to the First, Second and Fourth Parts of the Civil Code of the Russian Federation and Certain Legislative Acts of the Russian Federation” // Collected Legislation of the Russian Federation. 2014. No. 11. Art 1100