HR Policies Required for All Employers by Law

Alexei Dingin
PricewaterhouseCoopers CIS Law Offices B.V.

Employers conclude employment contracts with employees for different reasons. For some it is a question of compliance since the law requires written employment contracts with each employee to be concluded, and doing so avoids penalties for noncompliance with employment law. Other employers conclude contracts to regulate employment conditions with their employees: to establish job duties, salary level, benefits and so on. My professional experience shows that, in many cases, this first step in documenting employment relations is also the last one — many employers forget that employment relations in Russia are regulated not only by law and employment contracts but also by the employer’s internal policies.

These are special policies adopted by an employer under the procedure prescribed by law, which establishes the rules of behavior for the employer and the employee. The Employment Code establishes requirements both for the types of internal policies and their content. For example, it is common practice to establish a system of open-ended working hours for senior managers in their individual employment contracts. However, not all employers are aware that, in addition to such a provision, they should also have a respective provision in their internal policy that establishes a list of positions with this system of open-ended working hours.

Upon being hired (but before signing a contract), all employees must sign a document stating that they are familiar with all internal policies related to their work. Employees must also sign a document stating that they are familiar with any polices that have been amended or replaced during their employment. Failure to comply with these requirements is considered a violation of employment law and punishable by the imposition of administrative fines on both the employer and its executives.

It is worth mentioning that the detailed regulation of employment relations through internal policies is advantageous for the employer, since if any dispute arises regarding the improper performance or nonperformance of duties by an employee, it will be easier to resolve if the respective issues are covered by internal policies. In addition, it is advantageous for the employer to regulate employment relations through internal policies since it is easier to amend internal policies than employment contracts. The latter may generally only be amended by mutual agreement between the employer and the employee. In contrast, the employer is not obliged to seek employees’ consent for any internal policy amendments that are made.

Among other internal policies of the employer, the following are worth mentioning:

(i) Internal Labor Regulations or Staff Handbook

This internal policy usually covers the following aspects of employer/employee relations:

• rules of employment and dismissal of employees;

• basic rights, obligations and liabilities of the parties to employment relations;

• working hours and rest periods;

• incentives and disciplinary procedures and others.

The main purpose of this internal policy is to establish the major rules of employee behavior in relation to the work and procedures of the company.

(ii) Internal Policy on Processing Personal Data

This internal policy establishes procedures for the processing (collecting, organizing, using, storing and distributing) of personal data within the company and with third parties. In the latter case, it is important to establish specific procedures for disclosing employees’ personal data to third parties. Under Russian personal data law, other companies belonging to the same group as the employer are considered to be third parties; therefore, the disclosure of personal data will require employees’ consent.

(iii) Internal Policy on Payment for Work Performed

The procedure for paying salaries and other incentives is usually governed by this internal policy. However, employers are free to regulate other payments made to employees in this document, for example, the payment of per diems and reimbursing business trip expenses. In terms of incentive payments (bonuses), it is important to think through all the elements of a bonus policy beforehand, such as entitlement criteria, the procedure for calculating and paying bonuses, key performance indicators and so on.

In conclusion, I recommend that employers adopt and implement internal policies — not only for the reasons outlined above, but also because it is required by law.