Russia: Compliance with local laws is increasingly important for multi-nationals

Compliance with local employment and immigration laws is an area of increasing interest to Russian regulatory authorities. Multi-national companies operating in Russia may be surprised by many aspects of Russian law, and should take particular note of the requirements given that non-compliance can have serious consequences.

Some of the key points to note are set out below.

• There are strict requirements for employment documentation. Employers must keep and update a “labour book” for each employee recording their full employment history.
• Fixed term contracts can only be used in limited circumstances specified by law eg, for a period of temporary absence or seasonal or contingent work (up to two months).
• An employee can resign at any time by providing two weeks’ written notice, regardless of any contractual agreement to the contrary. The employer can terminate only on the exhaustive list of grounds specified by law. (Note the employment of the company head, his deputies and the chief accountant may be terminated in the event of a change of ownership.) Failure to comply with the legal requirements for termination may lead to the termination being held invalid by a court.
• Post-termination non-competition, non-solicitation and non-dealing restrictive covenants are likely to be unenforceable, as is garden leave. Employers can gain some protection by using confidentiality agreements to protect information relating to the company’s employees and clients and by establishing a proper trade secret regime to protect trade secrets.

Action for employers

Multi-national employers should ensure their operations in Russia comply with the employment and immigration rules. There are many administrative duties regarding employment documentation that need to be observed by any human resources department in Russia.

Read more details in our Legal guide to investing in Russia.

Article written by Sergey Sorokin, Associate.