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. Last Updated: 07/27/2016

Firing Suits Vex Western Firms

Expatriate executives had hiring and firing on their minds at a recent briefing on labor law, where attorneys said a growing number of Russian employees are bringing lawsuits against their foreign bosses.


"There haven't been a lot of legislative changes, but there has been an increasing number of lawsuits by employees against Western employers," said Jean Brough, an associate with the law firm Baker & McKenzie, which organized the briefing and holds monthly gatherings on legal topics.


While Brough and her colleague Marina Drel, also an associate at the firm, stressed there was no cause for alarm, the theme drew some 150 guests to the Radisson Slavjanskaya last Thursday, a sell-out crowd.


Most of the cases brought to court concern wrongful dismissal, Drel said later in a telephone interview.


Under the Russian Labor Code -- in fact the much-revised Soviet Labor Code of 1971 -- an employee has the right to challenge in court his or her termination.


"Most of these [cases] refer to situations of dismissal, what we call wrongful dismissal. Even if it's right and legal, the employee has the right to appeal to the courts," she said. "The basic presumption is that anything can be challenged."


With foreign employers steadily growing in number, it is not surprising that the number of labor disputes is also rising, Drel said, remarking that the tide probably turned after two housekeepers at the Radisson Slavjanskaya won a landmark 1993 case and returned to their jobs at the hotel.


If a court upholds a wrongful dismissal charge, its judgement is often reinstatement of the employee and payment of back salary from the time he or she was fired, Drel said.


The court also has some latitude in granting ex-employees' requests to be transferred to their firms' offices in other cities or countries.


That option doesn't come up so often in Russia, Brough said, with only Moscow and St. Petersburg being significant business centers, but the idea could catch on following counterpart court decisions across Europe.


"It isn't really being enforced or explored, but it may come given the trend in Western Europe," Brough said.


Compensation can be complicated when sacked employees claim moral damages, which the labor code vaguely defines as "sufferings." These, too, are on the rise.


"We note an increasing number of lawsuits which go together with claims of moral damages," Drel said.


In that instance, employees must claim moral sufferings, damage to their reputations, employer rudeness and so on.


Brough said employers were vulnerable when it comes to overtime pay and consultancy agreements, as well as job termination, areas in which they "seem to have the most difficulty complying with the law."


Russia's Labor Code falls on the side of employees, granting special protection to women and particularly those with children under the age of three.


Article 170 stipulates that the employment of a woman who has children under the age of three may not be terminated unless the firm is liquidated.


The same article states that if an employer refuses to hire a woman with such young children, he must provide a written reason for not doing so, which she may then challenge in the courts. And the same woman cannot be required to work overtime, Article 54 says.


Maternity leave is also liberal, allowing for 70 days on either side of the birth, and unpaid leave is granted for up to three years, with the woman's position held for that time.


Foreigners working for foreign legal entities are not subject to Russian labor law, but amendments to the Labor Code passed in their first reading by the old State Duma in December of last year could change that, Brough said.


But she stressed that the new government could significantly change the contents of the draft, and in any case a first reading often bears little resemblance to the final law.


Drel said she knew of only one case of a foreign employee bringing a case against a foreign employer, and it ended in settlement.