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. Last Updated: 07/27/2016

Hiring and Firing Laws: Russia's Labor Labyrinth

The rules for the engagement employees survive largely intact from the Soviet era, and contain complexities and benefits for employees that foreign businesses might find daunting.

It is not necessary to hire Russians as employees. They can work as independent consultants with rights and obligations defined in contracts and the Civil Code. However, this alternative becomes difficult if the consultants perform traditional jobs and become numerous.

To hire Russians, any employer must register with the local tax inspector. For the foreign company, this is an added step from the registration with the central inspector that is part of accreditation or branch registration. Then, the employer must register with the local office of the pension fund, the social insurance fund and the employment fund.

Registering with the funds means having to make contributions on behalf of each employee. For the first quarter of 1993, these contributions total 39 percent of the compensation paid and this appears to include bonuses. In addition, the employer must withhold taxes owed by employees and pay withholdings to the tax inspector.

The laws governing employment number in the dozens, but the Labor Code provides the basic rules. There must be a written contract and a workbook and employees may not be required to do anything that is not in their contracts. The law sets a maximum work week of 40 hours and permits overtime only in exceptional cases. For working on a day off, employees are entitled to another day off or at least double pay. The minimum wage for state employees now is 2, 250 rubles per month.

Russia continues to have an official union which is supposed to have a branch at every workplace, although employees do not have to join. The union must agree in advance to terminating employment based on staff reduction, poor job performance or inability to work for more than four months except due to pregnancy.

Employees must give at least two weeks notice before quitting, unless they are sick or the employer has committed a violation. The employer must pay three month's average wages after terminating employment based on staff reduction and two week's average wages as severance pay in other circumstances.

Russian law also offers attractive maternity leave for employees. Women are entitled to stop working 70 days before the birth is expected and are required to return to work no less than 70 days thereafter. Multiple births entitle women to 110 days off.

Alexander Papachristou of White & Case has practiced law in Moscow for four years.