In Russia, Fire With Care

As foreign firms in Russia increasingly turn to local hiring, they are also growing better acquainted with the difficulties of firing Russian employees.


A number of disputes this year -- most notably the successful appeal of two cleaners at the Radisson-Slavjanskaya Hotel against their dismissal in February -- have highlighted the pitfalls that await employers if they ignore Russia's largely Soviet-era labor legislation.


"The labor law was written when there was a command economy, when the state was the employer and it didn't matter what kind of benefits were required to be paid by the enterprise, because it all came out of the state budget," William Atkin, a partner with Baker & McKenzie, told a recent business seminar.


Despite extensive amendments to the Labor Code in 1992, no fundamental changes have been made. A new draft Labor Code is currently waiting to be heard by the State Duma, but its impact is not yet clear.


According to Jean Brough, a lawyer with Baker & McKenzie, employees in Russia can only be dismissed for cause and not simply on notice as in many Western countries.


Articles 29 and 333 of the Labor Code list the grounds on which employees can be dismissed, which include:


?if the employee and employer mutually agree to end their relationship;


?upon expiration of a limited term of employment;


?if the employee's performance is unsatisfactory during a three-month probationary period;


?for cause, in the case of liquidation or reduction of staff, or if the employee lacks the skills or qualifications necessary to perform duties stipulated in his or her job description, or if the employee is guilty of breach of contract.


If a company takes disciplinary action against an employee, the employer should be careful to first issue a written reprimand which the employee should sign and the document should be lodged in the employee's work file, Brough said.


This meticulous approach should also be applied to the documentation of contracts, job descriptions and regular performance reviews in the event of the case ever coming to court.


"File all the documents you can, be as bureaucratic as you can," said Marina Drel, a Russian attorney with Baker & McKenzie. "Even if you are in strict compliance with every detail of the law, it still may not prevent an employee going to court."


The Labor Code also applies to foreign employees, although a court may choose to apply a foreign law if this is stipulated in the foreigner's contract.Recent Legislation





The Price of Land (Government Order No. 1204, Nov. 3) Orders that the price of land be set at 200 times the rate of land tax. Federal bodies and local authorities can alter this price, but by no more than 25 percent.





Taxing Foreign Builders (Russian Federation Law No. 37-F3, Nov. 11) Provides for some exemption from tax for foreign companies and individuals in a variety of construction-related circumstances.





Importing Machinery (State Customs Committee Order No. 548, Oct. 28) Exempts from import duty a range of engineering tools and components for machinery with power exceeding 300 kilowatts.





Importing Cooking Oils (State Customs Committee Order No. 514, Oct. 4) Exempts soy, sunflower, rapeseed and mustard oils from payment of import duties.





Paying Pension Contributions (Russian Federation Law No. 35-FZ, Nov. 5) Establishes procedure by which companies should pay monthly contributions to the state pension fund in 1994.





Supervising Insurers (Government Order No. 1196, Oct. 24) Defines the rights and responsibilities of the Federal Supervisory Service for Insurance Activity, the body that oversees the insurance industry.