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. Last Updated: 07/27/2016

Specifics of Labor Law Application in Foreign Firms

At present, a great number of foreign companies are operating in our country. As a rule, they operate within Russia through a representative office and later register as a Russian legal entity. In any case, a company complies with the rules established by its foreign parent company. The most common problems and mistakes that we face in our experience are as follows.

First of all, foreign companies tend to follow the labor laws of the country it comes from. However, Article 11 of the Labor Code expressly states the necessity of following Russian labor legislation.

As far as salary is concerned, foreign companies often adhere to the practice of paying it once a month, which is a direct violation of Article 136 of the Labor Code.

It's worth mentioning that far from all companies pay attention to what is written in their registration documents. Nevertheless, the name of the company as it appears in all documents and on the company seal must be in strict compliance with its registration documents.

A similar problem occurs while identifying who has the authority to sign various documents. Many times, if you take a closer look at powers of attorney, articles of association, it appears that, for example, the head of the representative office has no power to approve the staff schedule, which is a prerogative of an officer in the head office.

Pursuant to the Constitution, Russian is the official language of the country. Foreign companies expect the majority of their employees to know English perfectly.

But the employees' knowledge of the English language doesn't grant a company the right to make all documents in English only. It is advisable to make the documents bilingual, so that they are clear to both parties.

Foreigners find Russia's system of vacation entitlement difficult to comprehend, especially how it is possible to consider weekends as a vacation or how the length of service that entitles an employee to vacation days is accrued.

Employees usually dislike the fact that a vacation is estimated on the basis of their average earnings and sometimes they receive an amount less than their salary.

And it's when companies begin to maintain their internal vacation record-keeping in accordance with their own system and do not make vacation postings that problems may occur. If a company does not issue orders on vacation provisions and does not make vacation postings, then an employee, even if they have used all the vacation they are entitled to, may have the right to claim upon their dismissal a reimbursement of unused vacations for all the years worked and will be justified in doing so.

A company will never be able to prove that the employee has been granted vacations.

Liability for violating labor laws and labor protection laws is set forth in Article 5.27 of the Administrative Offense Code:

• Violating labor laws and labor protection laws shall entail the imposition of an administrative fine on officials in the amount of five hundred to five thousand rubles; upon the persons engaged in business activity without creating a legal entity -- from 500 to 5,000 rubles or an administrative suspension of the activity for a term of up to ninety days; upon legal entities -- from 30,000 to 50,000 rubles or an administrative suspension of the activity for a term of up to 90 days.

• Violating labor laws and labor protection by the official laws by a person who has been administratively penalized for a similar administrative offense before shall entail disqualification for a term of one to three years.

Although the system and flow of documents adopted in Russia may appear complicated to representatives of foreign countries, they've got to respect the laws of the country in which they are working.

Despite the fact that the scope of the flow of documents is substantial, it represents quite an articulate and logical system developed throughout years of practice.