The Firing of Employees: Russia Vs. America
“Hire and fire” and “Employment at-will” Vs. “Forbid everything that is not explicitly permitted by law or by the terms of the employment agreement”
The Russian legal concept for the dismissal of an employee is fundamentally different then the legal concept which exists and is practiced in the United States of America. The fundamental difference being that, in the United States there are no strict limitations placed on the employer for grounds for dismissal of an employee as there are in place in Russia. In the United States there exists the principle of “hire and fire” and “employmentat-will” whereby the hiring and firing of employees is at the relatively free discretion of the employer.
In turn, an employee in Russia can be dismissed only on grounds which are described in the Labor Code of the Russian Federation (LC RF) or by other federal laws.
The exception to this rule applies only to select categories of employees:
· Heads of organizations (Director, CEO), members of a collegiate executive body (board members and directors);
· Employees who perform their employment functions at home (home workers);
· Employees who work for an employer – physical person;
· Employees of religious organizations.
For the above listed categories grounds for dismissal are subject to not only the federal law, but also by the terms of the employment contract.
Thus, in Russia, as it relates to the dismissal of an employee, the principle is “forbid everything that is not explicitly allowed by law or in some cases by the terms of the employment contract”. In other words the freedom of employers in Russia to dismiss employees is severely limited. Meanwhile in the United States as it pertains to the dismissal of employees the opposite principle is generally accepted, “everything is permitted that is not strictly forbidden by law or by the terms of a collective agreement or court practice”. In the United States it is prohibited to dismiss an employee for reasons that may be perceived to be discriminatory.
As it relates to Russia, in addition to a strictly limited list of acceptable reasons to dismiss employees, the law also prohibits the dismissal of certain categories of employees under certain conditions. For example, an employer upon his initiative can not fire a female employee who is pregnant, employees who are on vacation leave, or those who are temporarily disabled. Because of some reasons employees who are parents cannot be fired.
In addition to that, Russian labor law requires that employers observe all prescribed procedures (procedure) for dismissal, including the execution of all mandatory documents (agreements, declarations, orders, notifications and others). Procedures may vary depending on the reason of the dismissal. Often the procedure of dismissal is complicated, as in the example of a staff reduction or of a dismissal for reasons of an offence committed which the employee was found to be guilty.
2. The main conditions which must be met in order for an employer to legally dismiss an employee in Russia:
In Russia the dismissal of an employee is recognized as valid only when the following conditions are met:
· There is a legitimate reason for the dismissal (which is provided by law or in some cases by the terms of the employment contract);
· There is no legislative prohibition to dismiss on the certain ground;
· The employer complied and observed with all the procedures governing dismissal.
3. Valid reasons for dismissal in accordance with Russian labor law:
3.1. Common grounds:
· By mutual agreement of the parties (on all conditions for dismissal including the date and paid compensation due to the employee and agreed upon between the employee and employer and concluded in writing);
· The expiration of the employment contract (as a rule employment contracts in Russia are for an indefinite period of time and term contracts are permitted only in certain instances and the list of which is limited by the federal law);
· The transfer of the employee upon his/her request or consent to work for another employer or the movement of the employee to an elected office;
· The refusal of the employee from a continuation of work in connection with a change in company ownership, or a change in jurisdiction (governance) of the organization (applies only under conditions of privatization, nationalization or in relation to state organizations) and or its reorganization;
· The refusal of the employee from a continuation of work in connection with a change in certain conditions of the employment contract (applies in cases where the employer in accordance with the labor code of the Russian Federation has the right to unilaterally alter the terms of the employment contract; a list of such cases is limited);
· The refusal of the employee to transfer to another job for medical reasons, or due to the employer’s lack of relevant work;
· The refusal of the employee to transfer to another workplace together with the employer (applies when an employer moves business operations to another location, city, town or jurisdiction);
· The violation of established federal law in the conclusion of an employment contract if that violation precludes the opportunity for the continuation of work (for example, an employer hired an employee for whom a court decision restricts fulfillment of the relevant work).
Russian law allows each party the right to terminate the employment contract unilaterally. The employee can do this at any time, notifying the employer with sufficient notice (from three days to one month, but more often two weeks notice is deemed as sufficient) and is provided in writing.
3.2. In connection with the termination of the employment contract on the initiative of either of the parties (employer or employee)
In turn, the right of the employer to terminate an employment contract unilaterally is limited to the following circumstances:
· The liquidation of the organization or termination of the individual ownership who are considered to be the employers;
· Staff reduction;
· Inadequate performance by the employee of his/her job duties due to the lack of qualifications which is supported by the results of qualifying evaluation (the employer must follow its own policies with regards to the evaluation, the employee must be familiar with such policies upon receipt; the employer must carry out the evaluation before it can dismiss an employee; the results of the evaluation which form the basis of dismissal must be documented);
· A change of ownership of the organization (applies to the CEO, his deputies and chief accountant in case of nationalization or privatization);
· Repeated misconduct of the employee without valid excuse in case the employee has a disciplinary action (applies in case an employee commits repeated offence within a year since previous disciplinary action against him);
· Absenteeism, that is being absent from the place of work without valid excuse during the course of a working day regardless of its duration, and also being absent from work for more than four hours in a row in the course of a working day;
· The appearance of an employee at the place of employment under the influence of alcohol, narcotics or other intoxicating substances;
· Disclosure of secrets (state, commercial, official or others), which became known to the employee through the performance of his/her work duties, and including disclosure of personal information of another employee;
· Committing at the place of employment theft of property, embezzlement, intentional destruction or damage of property which has been proven by a court verdict or determined by an order in the case of an administrative offence;
· Violations of worker safety requirement, if such violations resulted in serious consequences (mishap, workplace accident, accident, catastrophe) or knowingly created conditions where there is a threat of such instances occurring;
· An employee who directly serves in a financial or trading capacity committing wrongful acts whereby the commitment of these wrongful acts causes the employer to lose credibility;
· An employee performing an educational function committing an immoral act deemed incompatible with the continuation of this work;
· The taking of an unnecessary decision by the head of an organization (branch or representative office), as well as by his deputies or chief accountant resulting in a breach of security, unauthorized use or other damage to company’s property;
· A single and flagrant violation of job duties by the head of an organization (branch or representative office), as well as by his/her deputies.
· The submission of fraudulent documents to the employer by the employee at the time the employee was hired;
· Other cases established by the Labor Code of the Russian Federation and other federal laws.
If an employer dismisses an employee for violations (for example, absenteeism, drunkenness, disclosure of trade secrets, etc.), it is the employer who must prove the violations of the employee including his/her guilt.
For the dismissal for misconduct there is a specific procedure prescribed. An employer must document the misconduct committed by the employee and require from him/her a written explanation of the misconduct as well as fire an employee within period which is limited by the federal law.
3.3. In connection with the termination of the employment contract due to circumstances that are beyond the control of the parties of the employment contract:
· The calling up of an employee to active military duty or to alternative civilian service;
· The reinstatement of the employee who performed this work before according with the decision of the State Labor Inspectorate or by the decision of the court;
· Not elected to the position (applies when according to law the employment contract should be concluded only after a person is elected to an office);
· A conviction of the employee to penalty prohibiting the continuation of the previous work and in accordance with the court’s decision coming into force;
· The acceptance that the employee is absolutely not able to perform his/her work duties due to medical reasons;
· In the event of the death of the employee or employer – the actual individual, as well as the recognition by the court of the individual as being dead or missing;
· In the event of a force majéur whereby it is no longer possible to continue with the employment relationship (military action, catastrophe, natural disaster, serious accident, epidemic or other emergency) and if the given circumstances are admitted by decision of the Government of the Russian Federation or by decision of regional authorities;
· In the event of disqualification or other administrative sanction whereby it excludes the possibility of fulfillment of the employee’s duties by terms of the employment contract (applies with the appropriate decision of the relevant state authorities);
· The expiration or suspension for a period of more than two months, or revocation of a special right (license, a licence to operate a motorized vehicle, the right to carry a firearm, or any other special right), if it prevents the employee in the fulfillment of his/her employment duties according to the terms of the employment contract;
· The ceasing of security clearance to state secrets, if the fulfillment of one’s employment duties requires such security clearance;
· The cancellation of a court’s decision or the cancellation of a decision by the State Labor Inspectorate on the reinstating of the employee to his/her position;
· Bringing the total number of employees who are foreign citizens or stateless persons in accordance with federally mandated quotas for such employees.
4. Features governing the rules of dismissal for foreign citizens
who are employed in Russia.
For foreign citizens who are employed in Russia Federal Law of 25.07.2002 ¹ 115-FZ: “On the Legal Status of Foreign Citizens in the Russian” provides an additional ground for dismissal:
· In the event of the cancellation or expiration of his/her work permit, and if there were no grounds for its extension, or if the foreign citizen failed to undertake the necessary steps for the provision of such an extension in accordance with the federal law.
If the work permit’s validity was not extended due to the fault of the employer, then this is not deemed as sufficient grounds for dismissal.
In any event, the list of legitimate grounds for dismissal according with Russian law is rather narrow and the procedures that an employer must follow for proper dismissal of an employee is rather difficult.
In the event of an illegal dismissal, an employee has the right to apply to the State Labour Inspectorate. The practice of appealing grounds for dismissal is quite often utilized by employees in Russia. If the accusation by the employee against the employer is deemed to have sufficient merit, then the employer would be required to reimburse the employee for any lost wages and provide compensation for moral damage. Upon the declaration of the employee for insufficient grounds of dismissal, the relevant state authorities (the State Labour Inspectorate or the Prosecutors Office) can carry out an investigation into the employee’s claims of wrongful dismissal and to satisfy that the employer is in compliance with all federal labor laws, not only as it pertains to the employee’s claims, but in general to the employer. If as a result of the investigation it deemed that the employer is in violation of labor law, then the employer and its representatives can be held liable.
To summarize, we are suggesting to both employers and employees in Russia that they pay attention to the questions related to dismissal in order to avoid future legal problems associated with it.
*You can find this article at the web-site of AmCham too: http://www.amcham.ru/doingbusiness/employment