Aspects of Labor Regulation for Employees Working in the Far North and Equivalent Areas

Aleksandra Bludyan
Associate
Salans

Practical experience advising on labor law issues shows that issues concerning labor regulations for people working in the Far North and similar areas have not lost their importance. Russian law establishes mandatory guarantees and benefits for people working in these areas, and a thorough understanding of the scope of and procedure for applying these guarantees and benefits is required both for companies operating in Russia’s northern territories and for companies based elsewhere in Russia that have individual employees working and residing in such areas.

The category of the area in question determines the special guarantees and benefits for which an employee working in a designated geographical area is eligible. The current version of Russian Law No. 4520-1 on state guarantees and benefits for persons working and residing in the Far North and equivalent areas, dated Feb. 19, 1993, provides that the government will establish a list of Far North and equivalent areas for the purpose of providing guarantees and benefits. The government has yet to approve such a list, however, and therefore the list approved by Resolution No. 1029 of the U.S.S.R. Council of Ministers dated Nov. 10, 1967, continues to apply.

This list sets forth the geographical areas, cities and other population centers qualifying as the Far North and equivalent areas, and it is revised from time to time by the decision of the government.

Legislation provides for a range of guarantees and benefits that employers must provide to “northern” workers. Failure to provide the statutory guarantees and benefits may have serious adverse consequences for employers, including significant costs.

Many employers fail to consider that a regional multiplier must be applied when calculating salaries for employees working in these geographical areas. The employer also must pay employees working in the Far North a percentage premium on their salary for time worked in remote areas or regions. All employers are required to apply the regional multiplier, regardless of the nature of ownership — that is, both Russian and foreign companies are required to pay.

Employers often state in an employment contract that the employee’s salary is indicated inclusive of the regional multiplier and percentage premium. However, applicable law and court practice make this approach highly risky: In most cases, the authorities, including the courts, believe that the regional multiplier and percentage premium must be stated separately.

There have been cases in which employees who have not been paid their regional multiplier or percentage premium over a number of years have gone to the state labor inspectorate or to court to recover unpaid benefits for the entire period of employment. Despite ambiguous court practice in this area, employees have a very strong chance in this kind of situation of winning their claims for the entire period under consideration.

The Labor Code also establishes that people working in the Far North are entitled to 24 calendar days of additional paid vacation, and people working in areas equivalent to the Far North are entitled to 16 additional calendar days.

Applicable law provides other benefits for people working in the areas in question. In particular, women working full time in the Far North or equivalent areas must have a work week of no more than 36 hours, while being paid for a full work week. Employees also are entitled to compensation for the return cost of travel and baggage when going on vacation, as well as other benefits.