Quotas for 2010 and Other ""War Stories""

Recession is a hard time for any business, but this is also a time to bring the business into compliance with the law, as companies were short of hands when the economy was booming. Compliance with immigration laws is one of the issues foreign companies have had to deal with recently. It is hard to imagine a foreign company entering the Russian market and not bringing foreign employees to work here. However, employing expatriates at a foreign company in Russia is challenging, mostly because of the tough requirements for a work permit and work visa. Moreover, taking into account the current economic situation, the Russian government has hardened immigration policy regarding the employment of foreign employees in Russia, in order to protect their own, unemployed workers, thus pushing foreign companies to hire Russians instead of foreigners.

For an employer to obtain work authorization documents and hire foreign employees, he needs to "reserve" a place in the quota for foreign employees for a certain year. All employers, including foreign companies, must notify the relevant authorities of their particular region of Russia (e.g., the immigration authorities for the city of Moscow, if that's where the company is based) of the number of foreign employees the employer is going to employ during that year. This notification must be done before May 1 of the current year to employ foreign personnel during the coming year (i.e., applications for the 2009 quota had to be submitted before May 1, 2008). If the employer failed to apply for the quota on time, it is difficult or practically impossible to obtain work authorization documents during the current and coming years.

However, the Russian government recently published a list of professions that are excluded from the quota and for which a work authorization could be received without applying for the quota. The list includes expatriate general directors of Russian companies, who are excluded from the quota. The employer can apply for a work permit even if he did not submit an application for the quota. Unfortunately, those professions not included in this list will not be exempt from this rule and it will be applicable even to those companies who registered their business in Russia after May 1.

The only way for these companies to proceed is to apply for a change in the quota established by the government for that particular year. As a rule, the application to change the quota for 2009 should submitted by May 1, 2009. There is no information as to whether it will be possible to submit an application after the said date. Companies who managed to submit their applications before May 1, 2009, will have to wait for a decision from the Russian government. In our experience, applications are considered in the middle of summer while a decision can be expected in September. After this, if the 2009 quota is increased, it will be possible for foreign businesses to apply for work permits for its expatriates and legally employ them for work in Russia.

Some companies believe that work permits are not necessary for the foreign employees of representative offices or branches of foreign legal entities accredited by the State Registration Chamber or the Russian Chamber of Commerce and Industry, since they have accreditation cards certifying that the bearer is an employee of a duly accredited representative office or branch. Federal law No. 115-FZ "On the legal status of foreign citizens" provides that the employer should ensure that the necessary documents authorizing work in Russia are obtained, including a proper work visa for every expatriate working in Russia. The law does not provide any exceptions for the representative offices or branch offices of foreign companies. It is true that the accreditation bodies (e.g., the State Registration Chamber and the Chamber of Commerce) facilitate the receipt of work visas for those foreign employees who are officially accredited (e.g., those who have accreditation cards) through the Russian immigration authorities, even in the absence of work permits for the accredited employees.

However, receiving a work visa does not mean that a work permit should not be obtained. The absence of the work permit or any other work authorization documents may lead to a significant penalty for the employer. The employment of foreign citizens without work authorization documents constitutes a breach of Russian immigration law, and if an immigration inspection is carried out, it may lead to penalties for both the employer and the employee. Penalties imposed on the employer can amount to 800,000 rubles (about $24,000). Penalties imposed on the employee responsible for the documents of foreign employees within the company may amount to 50,000 rubles (about $1,400). Penalties imposed on a foreign employee found to be in violation may amount to 5,000 rubles (about $140) and possibly deportation from Russia. To avoid a disruption in business activity, it is highly recommended that all businesses (including those working through representative offices or branches) review the status of their expatriates and bring it into compliance with Russian law.