Law on Unions Broad, Untested

With thousands of workers across the country striking for back wages, one would think that trade unions are playing a significant role in the Russian economy.

For the Russian government, which is having trouble paying its employees, and for Russian factories on the brink of bankruptcy, trade unions are a serious matter. But for Western companies doing business here, trade unions are a thing of the past.

"People can see strikes on Russian companies on TV. But at most Western companies, employees are happy and getting paid, so now it's not an issue," said Dmitry Pentsov, a lawyer with Baker & Botts. "But in the future when the economic conditions improve, it will be an issue."

On Jan. 12, 1996, President Boris Yeltsin signed the Russian Federation law, "On Trade Unions: Rights and Guarantees," which guarantees workers the right to form trade unions. Those rights, Pentsov said, are extensive enough to mandate both Western and Russian employers to enter into collective agreements with employees and even provide facilities for a trade union to operate.

The old Soviet trade union law had to be amended when privatization began, Pentsov said, because management often took the position that employee-shareholders were no longer employees, but rather were owners and as such not entitled to protection under the labor law, Pentsov and a colleague, Glenn Kolleeny, wrote in a recent article on the new trade union law.

"The old law was not clear and the management of privatized enterprises often took the position that co-owners were not employees so they couldn't form trade unions because it would be protection against themselves," Pentsov said. "But now it is very clear that a trade union may be formed at any enterprise, including joint-stock companies."

Under the new law, foreign citizens as well as residents of the Russian Federation can be members of Russian trade unions.

Among the most significant rights of trade unions in the area of labor relations are: the unions' right to participate in negotiations with management on wages and contract terms; their right to enter into collective bargaining agreements on the behalf of workers; and, the requirement that employers issue written notice to the trade union not less than three months prior to liquidation of an organization, total or partial shutdown of production followed by closure of working places or deterioration of the employment terms, Pentsov and Kolleeny wrote. Trade unions also have the right to advance and negotiate proposals for the delay of mass layoffs with local management bodies.

According to the new law, trade unions are also entitled to conduct labor inspections to enforce labor law, which may include investigating industrial accidents or demanding the employer immediately eliminate any violations found which are hazardous to the safety or health of the workers.

Pentsov said that to a certain extent, trade unions' rights and the guarantees of exercising these rights set forth in the Russian Trade Union Law are more extensive than would typically be found in similar Western legislation.

Even with these extensive new labor laws, workers are just beginning to feel out their rights. For now, Pentsov said, the first priority is simply getting paid.

So far there have been no legal cases concerning employees who have formed trade unions at Western firms, according to Western lawyers. In fact, most Western attorneys contacted for this article said the trade union law had not yet been an issue, and the text of the labor code has not even been included in the English version of one of the most widely used computer databases on Russian legislation.

But Western multinational companies here for the long term who buy into former Soviet factories will have to face the trade union law as soon as Russian workers realize how they can more effectively deal with management.

One attorney noted that Russian employees at Western firms may not be aware, for example, that under the Russian labor code, employers are required to pay them every two weeks or that they are entitled to overtime pay.

For now, lack of legal precedents mean trade unions are plying uncharted waters. But in two or three years, Pentsov said, this law may become an issue for Western companies.