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. Last Updated: 07/27/2016

Former Cleaners Fight Radisson for $20 Million

Western companies in Moscow are watching carefully as a bizarre multi-million dollar court case unfolds between the four-star Radisson Slavjanskaya hotel and two elderly cleaning ladies claiming wrongful dismissal.

The extraordinary case of the Radisson-Slavjanskaya Hotel versus Larisa Gubareva and Tamara Yashchina goes to the heart of the tangled labor laws Russia inherited from the Soviet Union and is being viewed as a test-case.

The two elderly sisters, Gubareva and Yashchina, lost their jobs at the Radisson last February when their contracts ran out and their supervisor decided their work was not up to standard.

But the two women challenged their dismissal in court under a Soviet law that virtually guarantees employment security; a Russian court hearing the case has frozen the hotel's bank accounts; and the two women have raised their claims to $10 million each.

The manager of a competitor hotel, who asked to remain anonymous, said he was worried by the implications of the case. Asked if he had had any similar trouble he replied, "Not yet." Explaining why the Radisson had refused to renew the two women's one-year contracts Vladimir Draitser, the hotel's general director, said in an interview Monday that: "We run a more or less Western-style operation."

However, Russian labor law still retains many of the provisions of the Soviet legal code which defend the employee from dismissal and usually take precedence over individual contracts. The two women applied to the Moscow's Kievsky District People's Court, claiming they had been unfairly sacked.

The court applied to the hotel for documents, which Draitser refused to hand over, saying they were "internal information." In response -- just as the hotel was playing host to U.S. President Bill Clinton and his entourage last December -- the court froze several of the hotel's bank accounts, causing the company awkward cash flow problems.

The accounts are gradually being unfrozen after Draitser wrote a letter to the court, pledging to abide by their judgement. But the women are now suing for $10 million each plus an additional 25 million rubles.

Soviet labor laws are still in force and do severely limit the right of employers to fire their workers.

But the reverse side to the coin, according to Leonid Rozhetskin of the New York based law-firm White and Case, is that there also exists a strong Soviet disciplinary code meaning that Russian labor law "looks in two directions."

"On the one hand it has the ambition to implement a constitutional mandate for full employment," Rozhetskin said of Soviet labor law. "On the other hand there is a wish to bolster what Communists call workers' discipline."

As a result, it is possible to fire workers, but only after completing a complicated procedure of disciplinary warnings. In the Radisson case, the two women appear to be relying on the fact that the old dismissal procedure was not followed in full.

For Draitser that law is now an absurd anomaly, when the whole labor market has changed and a contract system is being introduced.

"The mentality of the sovok is alive and well and it's protected by the labor legislation," he said using the disparaging term for a narrow-minded and conformist Soviet citizen.

Other hotel managers contacted said they were watching the case but hoped they could avoid a repetition of it.

"There are plenty of gray areas, but we try to respect Soviet labor laws," said Paul Dalrymple, assistant manager of the Olympic Penta Hotel.

Another hotel manager, who chose not to be named, said that his hotel warned employees if they might expect to be sacked, so as to avoid the trap into which the Radisson has fallen.

Draitser said he was now trying to employ younger staff, who understood better the American style of the hotel. But one young cleaner at the Radisson, who asked foranonymity, said she and others were unhappy with management.

"People are leaving. They don't stay here long," she said, adding that she earned $130 a month.

Hearings in the Radisson case are continuing, with the next one scheduled for next week.