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Labor Relationships with Foreign Employees

The principal legislation governing labor relationships in the Russian Federation is the Labor Code of the Russian Federation. All organizations must adhere to the Russian Labor Code and other applicable legislative acts on the territory of the Russian Federation.

Russian labor legislation is biased strongly towards protecting employees. As a result, the Russian Labor Code sets forth detailed mandatory regulations on concluding employment contracts, amending contracts and terminating employment.

Labor Contracts

There are several factors that may be relevant to your company regarding general procedures for hiring employees and complying with the Russian Labor Code. Employment agreements shall contain a number of mandatory (or so-called substantial) contractual terms. At a minimum:

Place of work of the employee (including the organization department) Work start date Position or a detailed description of the labor function of the employee Rights and obligations of the employee Rights and obligations of the employer Description of labor conditions and compensations granted to the employee Work and vacation regimes Remuneration Conditions for social insurance related to employment Probation period

Work Permits

Russian legislation requires an expatriates working in Russia to hold Russian work permits and valid Russian work visas. Therefore, if an employer decides to invite a foreign employee, it has to obtain a permission to hire foreign employees and ensure the employee obtains a work permit. It is not enough for the employer just to have the right to engage foreign employees, but also the employer has to obtain a work permit for every foreign employee. The work permit must be obtained before the potential foreign employee comes to the Russian Federation. The permission to hire foreign nationals and individual work permits are issued for the employment entity for a period of one year. Failure to fulfill this requirement may result in sanctions on the employee.

Civil Contracts

The same procedure can be applied to a person working under a civil contract for a company. Such persons, considered as self-employed, have to be registered as individual entrepreneurs (self-employed individuals) in Russia and are responsible for declaring taxable worldwide income.

Even so, the Labor Code and other normative legal acts containing labor legislation do not apply to persons working under civil contracts, a term which refers to provision of service agreements not regulated by the Labor Code but by the RF Civil Code of the Russian Federation. However, Russian authorities may try to impose employment contract rules to civil contracts. Therefore, the employment contract should be carefully drafted and followed according to the RF Civil Code.

Travel Compensation

According to the Labor Code, there are obligatory reimbursements to employees by the employer. These are referred to as guarantees. One of the guarantees is related to official business travel by employees. According to Article 167 of the Labor Code, when an employee is on official business travel, he shall be guaranteed the reimbursements of expenses associated with the official business travel. Such reimbursement shall include: travel expenses, housing expenses, additional expenses associated with the living away from the place of permanent residence, and other expenses incurred by an employee with the employer’s permission or knowledge.





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