Practice Area Articles


February 05, 2024

By Paul Hastings Professional

Back to International Employment Law



Reform of the Labour Code in view of new positions of the Constitutional Court

During 2023, the Constitutional Court, following the ongoing trend of resolving labour disputes in favour of employees, issued a number of significant rulings and repeatedly declared several provisions of the Russian Labour Code and the respective existing law enforcement practice unconstitutional. Consequently, important amendments to the Labour Code regarding remuneration issues are expected in 2024. In particular, according to the rulings of the Constitutional Court, it is not permitted to deprive employees of bonuses, which are part of the salary, for the entire duration of the disciplinary action. Non-payment or reduction of bonuses must not result in a reduction of monthly salary by more than 20%. As for overtime, companies shall take into account not only the tariff rate or salary but also compensatory and incentive payments. In addition, the list of cases when companies have to pay compensation will be broadened: employees will also be entitled to claim compensation if the payments due to them were not wrongfully accrued. (Currently, employees receive compensation only in case of late payment of amounts due.) The relevant bills have already been drafted and are at the stage of public discussion or are already awaiting first reading and consideration in the State Duma. In light of this, it is recommended to double-check the company's labour remuneration regulations to avoid disputes with employees.

Taxation of remote employees

Unified rules on taxation of remote employees were adopted as a follow-up to initiatives to regulate remote work from abroad. From 1 January 2024, the personal income tax rate of 13% (15% on income over 5 million roubles per year) is set for remote employees working under employment contracts with a Russian organization or a subdivision of a foreign company registered in Russia, regardless of their tax residency. Since it has been complicated for companies to monitor whether their remote employee was a resident of Russia or not, amendments to the Russian Tax Code would not allow employers now to check the employees’ tax status depending on the length of their stay abroad anymore. In addition, a similar approach will apply from 2025 to independent contractors' fees for work and services performed using domain names and network addresses in the Russian national domain zone and hardware and information systems located in Russia. It is, therefore, recommended to double-check if all appropriate internal procedures for withholding taxes based on new tax regulations have been put into operation. It is also advisable to elaborate on the position of the employer with respect to terms of employment/contracting the new hires from competitive offer perspective given the current market practices.

Introduction of new fines for personal data leaks

Major personal data reforms, having commenced in 2022, are still ongoing. New cross-border data transfer rules and requirements for compliance with the procedure in the case of data breach came into force in 2023. However, the problem of personal data leaks is currently becoming particularly acute since the number of leaks has increased significantly in 2023. In March 2023, the Russian Ministry of Digital Development, Communications and Mass Media drafted a bill concerning liability for personal data leaks. This bill proposes significant fines depending on the number of personal data subjects affected: in particular, a fine of up to 15 million Roubles if the leak affected more than 100,000 users and a fine of up to 20 million Roubles) in case of leaks of users' biometric data. Currently, the Government is finalizing proposals for revocable fines in case of repeated leaks and compensation to people affected by personal data leaks. In this case, monetary compensation for the damage caused to the user by the company that allowed the leak will be recognized as a mitigating circumstance. Today, fines for leaks of personal data of users are much lower: a company can be fined up to 300,000 Roubles, while there is no separate offense for data leaks. We recommend monitoring the adoption of such initiatives in 2024 and reconsidering IT security decisions (e.g., an independent legal and tech audit of the security systems, an assessment of risks of leakages, and elaborating on legal and technical means of protecting security of personal data against leakages).

With thanks to Irina Anyukhina and Elena Chershintseva of Alrud for their invaluable collaboration on this update.




Remote work from abroad

Despite the widespread use of remote work in Russia, there is still no specific regulation of remote work from abroad in Russian labour law. Due to the lack of uniform rules, state authorities continue expressing different views on the possibility of remote work from abroad and its proper formalization and documentation. For example, the Russian Ministry of Labour emphasizes the impossibility of concluding an employment contract on remote work with individuals staying abroad.

At the moment there are certain initiatives that aim to regulate the practical aspects of working from abroad. Among other things, they clarify the tax status of remote employees. The Ministry of Finance has prepared the amendments to the Russian Tax Code, and since the relevant bill has not yet been passed, we recommend employers monitor its adoption in 2023, and check the employees’ tax status depending on the length of their stay abroad.


Major reform of Russian data protection laws

On 01 September 2022, major amendments to the Federal Law on Personal Data came into force. These amendments significantly affected data processing activities. A part of new requirements, including new cross-border data transfer rules, will come into force on 01 March 2023.

The new regulations provide that a data controller and a foreign data processor both bear equal liability for violation of the Federal Law on Personal Data, establish new requirements for consent forms, privacy policy and data processing agreements. Also, data controllers are obliged to notify Russian data protection authority (“Roskomnadzor”) on data breach within 24 and 72 hours, statutory terms for response to Roskomnadzor and data subjects’ requests have been shortened from 30 days to 10 days. Additionally, data controllers who process only employees’ personal data are also obliged to submit processing notification to Roskomnadzor.

As for new cross-border transfers rules, starting from 01 March 2023 data controller shall notify and, in some cases, secure permission of the Roskomnadzor. If personal data is transferred to so-called “adequate” jurisdictions, personal data may be transferred upon the notification of Roskomnadzor, and while the notification is being considered, transfer is not prohibited. However, if personal data is transferred to “inadequate” jurisdictions, personal data may be transferred upon receipt of the permission of Roskomnadzor, and transfer of personal data abroad is restricted, until the permission is obtained (with some exceptions).

Amendments to the Federal Law on Personal Data entail the need for employers to examine the data processing activities, update most of the data processing documents, as well as to implement new cross-border data transfers by completing a data mapping exercise with respect to cross-border data flows, to adopt internal guidance on measures, procedures and responsibilities aimed at compliance with cross-border data transfer rules, data breach procedures and monitoring and compliance measures, to implement policies establishing procedures for handling each new data subject’s rights and guarantees, responsibilities of controllers and processors, etc.

Furthermore, data controller shall submit a cross-border transfer notification by 01 March 2023. Before this date, an employer is recommended to ensure that DPO is appointed in the company, a notification on data processing activities is filed to Roskomnadzor, and legal data protection framework of data recipient’s jurisdiction together with individual data protection measures of a foreign data recipient are assessed.


Upcoming ambitious migration reform

The Ministry of Internal Affairs is preparing the comprehensive draft law in the field of migration. The main goals of the reform are to abolish excessive norms of migration legislation, simplify and transfer procedures into electronic format. It is planned to submit the draft law for consideration in 2023.

The draft law will affect many areas of migration legislation. In particular, one of the key innovations is the abolition of a temporary residence permit, instead of which it is proposed to establish three different unified migration regimes (the short-term, the long-term and the permanent residence regime). The authorities intend to allow foreign nationals to change the purpose of their stay without leaving Russia (which is not possible yet). It is also planned to introduce unified electronic information platform for providing public services for foreigners electronically and single digital identity document (ID card).

The regulation of labour migration will be carried out based on two information resources – the electronic register of employers hiring foreign employees and the electronic register of foreign employees. Only those who are included in this registers will be able to hire or work in Russia. At the same time, the possibility of retaining the category of highly qualified foreign specialists is still being actively discussed. The migration authorities agreed that this category should be kept. However, the minimum salary threshold will be significantly raised.

In this regard, all those who are interested in hiring foreign nationals in Russia or entering Russia for business (or other) purposes, need to track the status of the draft law and relevant changes. Currently, there is no information on the date of the introducing the anticipated changes, however, it is already clear that they will affect all categories of foreign nationals.

With thanks to Elena Chershintseva of Alrud for her invaluable collaboration on this update.




Legislative changes regarding health and safety in the workplace

Since COVID-19 vaccinations are now commonplace in many Russian regions, it has triggered the formalization of the measures in the field of workplace safety. As a result, federal legislation on occupational health and safety is on the move. New obligations and mechanisms, such as self-checking health and safety compliance, preventing microtraumas, etc. will come into force.

Companies will therefore need to re-consider existing health and safety procedures and policies accurately, to ensure compliance with new rules.


Adoption of the Law on Electronic Document Flow

The Law on Electronic Document Flow was adopted and the respective amendments were introduced to the Russian Labour Code on 22 November 2021. On 1 March 2023, the unified requirements on the format and content of e-documents, will come into force. These rules, which applied only to remote employees, now entitle companies to avoid written formalization of most HR documents for all of their employees.

The advance of digitalization will also affect employees' sick leave certificates that will cease to be issued on paper and have become electronic as of 2022. To digitalize the document workflow, employers should implement several mandatory measures: adopt a local policy compliant with the new requirements, notify employees in due form and obtain their written consent.

Introduction of the digital workflow implies developing a local IT system or using "Work in Russia" state unified system. Another important digital aspect is organizing the establishment of e-signatures for the company and its employees and archiving documents in an electronic format (the latter has recently become possible but subject to strict requirements).




New rules on remote work

During the year 2020, employers were forced to transfer most of employees to the remote working regime an thus remote working have been spreading instantly all over the world. But at the same time, COVID‑19 identified the problems and necessity to search for most effective solutions. For instance, currently it is not possible in Russia to combine remote work and work in the office in one employment contract. In this regard, the law introducing the new rules of the remote working regime was signed by the President of the Russian Federation and came into force starting from 1 January 2021.

The law establishes two types of remote work: (i) permanent and (ii) temporary remote work. Employees can work remotely on a temporary basis either continuously (for the maximum period of six months), or periodically (which implies alternation of remote work and office work). Besides, in exceptional cases (such as natural or industrial disaster, workplace accident, the decision of federal or local authorities, etc.) an employer can temporarily transfer employees to the remote work regime without their consent. At this point, the employer is obliged to approve local normative act including ground and duration of the transfer, list of employees, the order of work (working time regime, ways of communication), and other issues. The law implies, that several aspects of remote work shall be regulated either by employment contracts with employees (or addenda to them) or local normative acts of the company. In light of this, it is advisable to revise current employment agreements and local normative acts and amend them, if necessary, to comply with new rules.


New rules on remuneration for use of employee's inventions

As technological progress has been evolving rapidly, the amount of intellectual property, created as a result of employee's work, is rising accordingly. In this regard, it is crucial to regulate all aspects of relationships between an employer and an employee‑inventor in a proper way. As of 1 January 2021, new rules regarding employees' remuneration for creation and use of inventions, utility models, industrial designs came into force. One of the most important changes is the increased amount of employee's remuneration for the employer's use of such objects—three average salaries for work‑related inventions, and two average salaries for utility model or industrial design for each year of use. It is important to mention that new rules apply unless otherwise is agreed by the employer and the employee by a written agreement between them. In light of this, it is recommended to revise current agreements with employees and adjust them, if necessary.


HR and migration digitalization

The digitalization is rapidly spreading in many spheres, including employment and migration relations. For instance, in Russian migration law new type of e‑visa (unified electronic visa) was introduced on 1 January 2021. With this e‑visa it will be possible to enter Russia on a single basis for certain purposes, including business and stay in Russia up to 16 days starting from the day of entry.

In the sphere of employment relations several digital changes were due to come into force in 2021. As of 1 January 2021, labour books are maintained only in electronic form (without hard copy) for all employees, who are employed for the first time after 31 December 2020. Current employees have a right to transfer to electronic labour books, it they want to.

In addition, a nationwide experiment on the electronic HR document management is being carried out in Russia. Based on the results of this experiment it is planned to introduce respective amendments in the Labour Code of Russia. Currently, the only possibility to use electronic documents in HR management is employment relations with remote employees. But even for remote employees specific rules regarding types of electronic signatures and documents apply. These rules will also continue changing and evolving in the coming year.

With thanks to Irina Anyukhina and Elena Chershintseva of Alrud for their invaluable collaboration on this update.




HR digitalisation

The digitalisation of HR procedures is one of the most dynamic and perspective trends both in companies' practice and employment legislation. As of 1 January 2020, employers have started to record information about employees' labour activities and report this to the State Pension Fund in electronic form. COVID-19 also triggered electronic interaction between employers and employees, as well as between employers and state authorities. During the nationwide "non-working" period in Russia, parties to an employment contract were allowed to formalise transfers to remote work by exchanging scanned copies of the signed documents, and employers were obliged to register and submit information on forthcoming redundancies through official websites. These are just some examples of how HR digitalization has proven its necessity and indispensability in the face of new challenges, which indicates that this trend will be common on the agenda of state legislative and intracompany HR committees in Russia.


Changes to legislation in relation to the types of employment

New regulations on the types of employment are expected in 2020. Under the current regulations, there is no feasible legal framework for combining remote work and work from the office - an employer can establish either office work or remote work. Russian lawmakers are considering the Draft Law which will amend the Labour Code with a temporary work away from the office (telework). If the new work regime is adopted, it will be established in the employment contract and employees will be allowed to work from the office and from home. The Draft Law also provides for the abolition of enhanced qualified digital signature in cooperation with remote employees. A simplified transfer of employees to temporary remote work will also be provided for in exceptional cases (e.g., disaster, epidemic).


New regulation of personal data

New sanctions for failure to localise personal data in Russia have recently been introduced by the Code of Administrative Offences of the Russian Federation. Pursuant to the data localization requirement, once the personal data of Russian citizens has been collected, a data controller must ensure that certain operations performed on personal data are carried out with the use of databases located in Russia. The fine for non-compliance with the localization requirement may be up to RUB 6,000,000 for the first localization offence, and up to RUB 18,000,000 for subsequent offences.

The spread of the coronavirus infection has also made companies change their daily practices and led to new procedures. In particular, companies must now take steps to identify employees and visitors who have a temperature. In light of this, the Russian data protection authority ("Roscomnadzor") has issued new recommendations relating to the use of thermovision cameras in the workplace. Roscomnadzor confirmed that body temperature measurements and information about health conditions constitute sensitive personal data, and their processing is permissible where it is prescribed by labour law, or upon written consent of the data subject. Russian employment law provides that employees' health data may be processed without special permission if it relates to the employee's capacity to perform his/her employment duties. In relation to the measurement of a visitor's body temperature, Roskomnadzor has clarified that such individuals provide their consent by affirmative actions but it is important to note that individuals must be notified of the data processing (e.g., by placing signs) and the data must be deleted in a timely manner.




New restrictions imposed on employers of foreign citizens

New rules in immigration legislation will come into force in 2019. In particular, the sponsoring party of foreign citizens (e.g. the employing entity of a foreign employee, or an entity that issued an invitation letter for a business visa for its foreign guest) will be obliged to control the sponsored foreign citizens’ compliance with Russian immigration rules. For example, an employer will need to ensure that its foreign employees depart from Russia in a timely manner after termination of their employment.

There are also limitations on employers to arrange migration registration of their foreign employees. Foreign citizens will need to be registered at the place of residence in Russia and the widespread practice of registering foreign employees at the legal address of the employing entity is no longer allowed. Violation of the new rules may entail criminal liability for the company’s officers.


Forthcoming fundamental changes of the Russian data protection legislation

Privacy and data protection remains a priority for lawmakers and enforcement authorities. In October 2018, Russia signed the Protocol amending the Convention for the Protection of Individuals with regard to Automated Processing of Personal Data. Incorporation of the Protocol’s provisions into national legislation will be a step forward for the harmonization of Russian data protection legislation with GDPR. Officials of the Russian data protection authority have already announced that they are working on a draft bill to amend the current legislation. Data processing in the HR context has always been on the radar of the Russian regulator, so employers should monitor developments and be ready to comply with the new standards in the near future.


HR digitalization

New regulations in the area of HR digital processing are expected in 2019. Under the current regulations, employment related documents must be executed in hardcopies and signed with wet-ink signatures as the use of digital signatures or scanned signatures is problematic. Russian lawmakers are working on creating an appropriate legal framework so that employers can embrace available IT solutions. As of July 2018 sick leave certificates can be processed electronically. HR digital issues are on the agenda of lawmakers in 2019 and there is a draft bill that proposes eliminating current restraints on digital signatures in the HR context. These new regulations will allow basic HR documents such as employees' labour books to be in electronic form.

With thanks to Irina Anyukhina, ALRUD’s Partner and Head of Labour & Employment practice, and Elena Chershintseva, Associate for their invaluable collaboration on this update.




Minimum Wage in the Russian Federation Increased

From 1 July 2017, the minimum monthly salary is RUB 7,800 (approx. USD 130). Regional authorities are authorized to set their own minimum salary as long as it exceeds the prescribed threshold. For example, the minimum salary in Moscow is RUB 18,742 (approx. USD 320) and RUB 17,000 (approx. USD 290) in St Petersburg.


Working Time Regime Amended in the Russian Labour Code

Employees with shortened working time shall be entitled to work irregular working hours only if their working schedule provides for at least 1 full working day (where regular working schedule in Russia is considered to be 40 hours per week, 8 hours per day). If an employee works a shortened working week (e.g. 35 hours per week), he/she can set out irregular work only if he/she works at least one 8-hour working day a week. If he/she works 7 hours daily, no irregular regime of work can be set.

This is an important change for both employees and employers, because almost all women with children under 18 months of age work under a shortened working regime to keep the state childcare allowance, but in fact stay at work outside working hours. The irregular regime allows employee to work after hours and have at least 3 paid additional days off a year, while the employer has no obligations to provide a monetary compensation for the overtime work in this case. Before the change, employees with a shortened working week were not allowed to have an irregular working regime.


Russian Supreme Court Solves Disputes on Contractual Jurisdiction

The Russian Civil Procedural Code provided that an individual was allowed to resolve an employment dispute not only at the employer’s location but at the place of their residence as well. Many employers decided to get around the law and include wording in their employment agreements with a view to ensuring that all disputes were to be resolved at the company’s location. However, the Russian Supreme Court held that such agreements are unenforceable, and pointed out that employees had irrevocable rights for concurrent jurisdiction.




Electronic document management in labour disputes

From 1 January 2017 new changes in the law allow courts dealing with labour disputes to deal with documents in electronic form. An official court website will also mean that statement of claims can be submitted electronically.


Independent assessment of employee qualifications

From 1 January 2017 an independent qualification evaluation procedure shall verify certain types of professional qualifications required by employers. This may be by a professional examination administered by the special qualifications assessment centres. Employers will determine the need for employees to pass the exam, and will have to comply with certain criteria (including setting conditions for the assessment, meeting the costs and obtaining the employee’s written consent).


Deregulation for microenterprises

From 1 January 2017, new rules shall apply to microenterprise companies. These will extend to companies with not more than:

  • 15 employees;
  • 120,000,000 rubles of annual income (approximately 1,714,285 Euro);
  • 25% of its shares owned by the Russian Federation; and
  • 49% of its shares owned by foreign legal entities not more than 49%

Where the legislation applies, certain pieces of legislation will not apply to these microenterprise employers, and there will be a standard form employment contract for these employers to use.




Ban on agency labour

On 1 January 2016, amendments to Russian employment laws were introduced which restrict the ability to outsource staff, and which impose a set of requirements for staff providers. Labour performed by an employee under instruction of an employer but for the benefit of and under the control of another person (not being the employee’s employer), is now therefore prohibited except in limited circumstances (such as temporary arrangement via private recruitment agencies).


Application of professional standards

From 1 July 2016, professional standards (or qualifications) are obligatory in certain roles/professions where the law sets out mandatory minimum requirements.


Employee right to salary during temporary suspension of work

Under Russian law, where an employer delays payment of salary for more than 15 days, employees are entitled to suspend work (i.e. stop working and leave his/her work place) for the whole period of delay. Legislation introduced in January 2016 provides that during the period of suspension, employees reserve the right to receive their average salary.


Changes in the limitation period for certain labour disputes and choice of jurisdiction; increased liability of employers for salary payment delays

An employee with a claim in relation to the payment of salary, compensation, and benefits now has one year from the day when he/she has learned about a violation to bring a claim. The limitation period for other claims is still one month. A special one month limitation period applies to contesting dismissals.

An employee can choose to file a claim at the place of his/her residence or at the location of the employer.

Fines for employers who fail to make salary payments increased to 1/150 of the Central Bank of Russia’s key rate for the unpaid amount for each day of delay.

With thanks to Elena Agaeva and Anna Ivanova of Egorov Puginsky Afanasiev & Partners for their invaluable collaboration on this update.

For More Information

Image: Suzanne Horne
Suzanne Horne

Partner, Employment Law Department

Image: Aashna Parekh
Aashna Parekh

Associate, Employment Law Department

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