Introduction to Russia industrial relation

Labour rights in the Constitution

According to Article 7 of the CRF, the Russian Federation is a social state, whose policies shall be aimed at creating conditions, which ensure a dignified life and the free development of man. It shall protect the work and health of its people, establish a guaranteed minimum wage, provide state support for family, motherhood, fatherhood and childhood, and also for the disabled and for elderly citizens, develop a system of social services and establish government pensions, benefits and other social security guarantees.

Article 37 of the CRF enumerates basic labour rights, including free choice of type of activity and profession, prohibition of forced labour, working conditions which meet safety and hygiene requirements, remuneration without any discrimination, minimum wage established by federal law, protection against unemployment, right to individual and collective labour disputes, right to strike, guaranteed statutory duration of work time, days off and holidays, and paid annual vacation. Article 30 of the CRF envisages that everyone shall have the right to association, including the right to create trade unions in order to protect one's interests.

According to Article 55 of the CRF, the listing of the basic rights and liberties in the CRF shall not be interpreted as the denial or belittlement of the other commonly recognized human and citizens' rights and liberties. No laws denying or belittling human and civil rights and liberties may be issued in the Russian Federation. Human and civil rights and liberties may be restricted by the federal law only to the extent required for the protection of the fundamentals of the constitutional system, morality, health, rights and lawful interests of other persons, for ensuring the defence of the country and the security of the state.

Labour legislation

From its structural point of view, the system of labour legislation in the Russian Federation can be characterized as “codified-plus”. Alongside the Labour Code which brings together in a systematic manner a significant number of statutory provisions concerning both the individual employment relationship and industrial relations, there are some other pieces of labour legislation which supplement and further develop the provisions contained in the Labour Code.

Labour Code

The history of Labour Codes in Russia goes back to the Labour Codes of 1918, 1922 and 1971. The later had been introduced on the basis of the USSR Fundamentals of Labour Legislation dated 15 July 1970, which had been created as a legislative framework for the entire Soviet Union. The current Labour Code of the Russian Federation of 30 December 2001 (hereafter “the LC”) is in force from 1 February 2002. It consists of 6 parts, 62 chapters and 422 articles which deal, inter alia, with the following major labour law issues:

fundamentals of labour legislation (purposes of labour legislation; basic principles of regulation; non-discrimination; prohibition of forced labour; the system of labour legislation);

the respective competencies in labour law making of the Russian Federation and of its constituents;

labour relations, their parties and grounds for establishment, including employee’s and employer’s basic rights and responsibilities;

social partnership, including tripartite co-operation, collective bargaining and workers’ participation;

contract of employment; protection of workers' personal data; conditions of work, including work time; rest time, including leave; remuneration; labour discipline; health and safety; women’s labour, including maternity protection; youth (under 18 years of age) labour; seasonal work, home work, domestic work, etc.; work in a number of specific sectors, including education and transportation; protection of workers’ rights by the trade unions; Labour disputes settlement.

Contract of Employment

Article 56 of the LC defines “contract of employment” as an agreement between an employer and employee, according to which the employer undertakes:

to provide the employee with the assigned work; to ensure conditions of work envisaged by labour law regulations or contained in

collective agreements and agreed upon in the contract of employment; and to pay employees' wages timely and in full; and the employee undertakes:

to perform personally the assigned work; and to follow the work rules existing at the enterprise.

Duration and form of contract of employment

According to Article 58 of the LC, contracts of employment can be concluded either without limit of time or for a specified period of time (hereafter “fixed-term contracts of employment”). If a contract of employment contains no provision on its validity period, this contract is deemed to be executed for an indefinite time period.

Fixed-term contracts of employment are concluded when an employment relationship may not be established for an indefinite duration due to the character of the anticipated work (e.g. seasonal work) or the conditions of its performance, unless otherwise envisaged by law. If none of the parties demands the termination of a fixed-term contract of employment due to its expiration and the employee continues to perform the same work, this contract of employment is deemed to be executed without limit of time.

Article 59 of the LC (i) limits the use of fixed-term contracts to the reasons specifically provided for in federal legislation and (ii) gives a non-exhaustive list of such reasons.

A fixed-term contract of employment concluded in the absence of satisfying reasons to do so is deemed to be executed without limit of time. It is also prohibited to conclude fixed-term

contracts of employment with the aim of unwillingness to grant rights and guarantees envisaged by law for the employees being a party to a contract of employment concluded without limit of time (Article 58 of the LC).

All contracts of employment are required to be in writing (Article 67 of the RFLC).

Hours of Work

According to Article 91 of the LC, the normal duration of the work time may not exceed 40 hours per week.

The normal working hours shall be reduced by:

16 hours per week for workers under sixteen years of age; 5 hours per week for workers qualified as invalids of categories I and II; 4 hours per week for workers from sixteen to eighteen years of age; 4 and more hours per week for workers who work under hazardous, unhealthy or

dangerous conditions (Article 92 of the LC).

In the event of night work, the established duration of work is to be reduced by one hour (Article 96 of the LC).

According to Article 99, overtime work is permitted upon the worker’s written consent. In the following cases, it is permitted without the worker’s written consent:

to perform work essential for the defense of the Russian Federation, as well as to prevent production accidents or to eliminate their consequences;

to perform work necessary to the public good in the remedying of any unforeseen disruptions in the functioning of water and gas supply, heating and lighting, sewerage, transport and communications systems;

to complete work which was not possible to finish for technical reasons within the normal working hours due to unforeseen delay, whereas incompleteness of this work may entail technological damage or loss of property;

to carry out temporary work towards the repair or restoration of machinery or facilities, the inoperative state of which may lead to the loss of work for a large number of workers;

to continue uninterruptible work, if the worker who has to perform this work during the next shift fails to report to work.

Overtime shall not exceed four hours during two consecutive working days and 120 hours per year. Overtime work is not allowed for workers under eighteen years of age (Article 286 of the LC) and pregnant women (Article 259 of the LC).

Paid Leave

Article 115 of the LC provides for 28 work days annual paid leave

According to Article 117 of the LC, additional paid annual leave is granted to workers performing work with hazardous or dangerous conditions such as:

underground and open pit mining; work in zones of radioactive contamination; other work entailing unavoidable and unfavourable effects for human health or

harmful physical, biological, and other factors.

Lists of industries, works, professions, and posts where additional paid leave is mandated as well as minimum length and the terms of that leave are established by the Government of the Russian Federation in consultation with the Russian Tripartite Commission on Regulation of Socio-Labour Relations (Article 117 of the LC).

Maternity protection and maternity leave

According to Article 64 of the LC, it is prohibited to refuse to hire women for reasons connected with pregnancy or the existence of children. Such a refusal may be appealed in a court of law. Termination of a contract of employment with pregnant women workers and women workers with children of up to three years of age, as well as with single mothers having children of up to 14 years of age (crippled children - up to 16 years of age) at the initiative of the employer is not allowed (Article 261 of the LC).

Article 253 of the LC limits the work of women workers in difficult, hazardous or dangerous conditions, as well as underground work (except for non-physical work or work involving sanitary and consumer servicing) to the production cycles, jobs and professions approved by the Government of the Russian Federation. This article also prohibits women workers from being made to lift and manual carry loads exceeding the maximum limit allowable for them.

Upon medical prescription and her own request, production quotas and servicing rates for a pregnant woman worker have to be reduced or she has to be transferred to another job to preclude the possibility of harm arising from her conditions of work, while retaining the average remuneration paid for her previous job (Article 254 of the LC).

According to Article 255 of the LC, women workers are granted seventy calendar days pre natal leave (in the event of the birth of two or more children – eighty-four) and seventy calendar days post natal leave (or in the event of a complicated delivery - eighty-six, and in the event of the birth of two or more children - one hundred ten).

At the woman worker’s request, paid leave is granted for the care of a child until it reaches three years of age. This leave may also be taken by the father of the child, grandmother, grandfather, or by other relatives who actually care for the child (Article 256 of the LC). While on child-care, a woman worker retains her job (Article 256 of the LC).

Women with children up to one and a half years of age are entitled to take additional breaks to feed their child. These breaks are granted every three hours and must not be less than thirty

minutes in duration. In the event of two or more children up to the age of 18 months, the child feeding interval shall be no less than one hour (Article 258 of the LC).

Other leave entitlements

In cases of temporary incapacity to work due to illness or work-related or other injury, a benefit from the State social insurance is granted (Articles 183 and 184 of the LC).

For family-related circumstances and other justifiable reasons, a worker may, on applying, and with the authorization of the employer, be granted unpaid leave the length of which shall be determined by an agreement between the worker and the employer (Article 128 of the LC).

According to Article 173 of the LC, workers, successfully studying in the state accredited institutions of higher education by correspondence or at evening courses, are entitled to additional paid leave in order to:

pass tests and exams (forty calendar days each for the first and second courses; fifty calendar days for each course that follows);

prepare and defend diploma thesis (project) - four months; pass graduate exams - one month.

Workers are also entitles to leave without pay in order to:

pass entry exams to institutions of higher education - ten calendar days; take preparatory courses for entry exams to institutions of higher education – fifteen

calendar days; study in institutions of higher education on day course basis, combining studies with

work (for passing tests and exams - ten calendar days per academic year; for preparing and defending diploma thesis (project)  - two-months, and for passing graduate exams - one-month.

Minimum age and protection of young workers

Work of persons under eighteen years of age in hazardous or dangerous conditions, in the underground, as well as at jobs that harm their moral development and health (gambling business, cabarets and night clubs, in production cycles, transportation and sale of alcoholic beverages, tobacco goods, narcotic and toxic compounds) is prohibited. It is prohibited for minors to carry or move workloads in excess of the limits set for them. The list of jobs at which work of persons under eighteen years of age is prohibited, as well as allowable workload norms for them, is established by the Government of the Russian Federation with due account for consultations with All-Russia trade union associations and All-Russia associations of employers (Article 265 of the LC).

Workers under the age of 18 years are entitled to annual paid leave of 31 calendar days (Article 267 of the LC).

It is prohibited to send workers under eighteen years of age on business trips, to engage them in overtime work, night work, work on weekends and during holidays (Article 268 of the LC).

According to Article 269 of the LC, termination of a contract of employment with workers under eighteen years of age at the initiative of the employer (except in the case of liquidation of the enterprise), besides observance of the general procedures set forth in the LC, is permitted only with the consent of the respective labour inspection body and municipal commission on protection of the rights of minors.

Equality

The principle of equal treatment is laid down as a basic right in Article 19 of the CRF, according to which the state guarantees equality of rights and freedoms regardless of sex, race, nationality, language, origin, property and official position, place of residence, attitude to religion, convictions, membership in public associations, as well as of other circumstances. This basic constitutional right is also set forth in Article 3 of the LC: “Everyone has equal opportunities in exercising labour rights. No one shall be restricted in labour rights and freedoms or receive any privileges while exercising these rights and freedoms due to sex, race, colour, nationality, language, origin, propertied or official status, age, place of residence, attitude to religion, political convictions, affiliation or non-affiliation to public associations, as well as other circumstances which are not associated with work qualities."

Pay issues

The right to be paid wages timely and in full in accordance with qualification, complexity of work and its quantity and quality is one of the basic rights of workers envisaged in Article 21 of the LC.

Wages are to be paid in the monetary form in the currency of the Russian Federation (rubles). Collective agreements or contracts of employment can envisage other forms of wage payments, if this does not contradict federal law or international treaties entered into by the Russian Federation. The amount of non-monetary wage payments cannot exceed twenty per cent of the total amount of wages (Article 131 of the LC).

According to Article 133 of the LC, the monthly wage of a worker having worked out the norm of working time and having fulfilled the labour standards (labour duties) for the given period of time, can not be lower than minimum wage established by federal law.

Article 134 of the LC provides for wage indexation. For budget financed enterprises the procedure of indexation is established by law; for profit financed enterprises this procedure is established in collective agreements and other enterprise level documents.

The wage systems, tariff rates, salaries, and various types of payments are set for:

employees of budget financed enterprises – by laws and other legal instruments; employees of enterprises with combined (budget and profit) financing – by laws,

other legal instruments, as well as by collective agreements and other enterprise level instruments;

employees of other enterprises – by collective agreements , collective contracts, local normative instruments of organizations, and other enterprise level instruments (Article 135 of the LC).

Wages are to be paid at least once every two weeks (Article 136 of the LC).

Deductions from wages can be made only in the cases envisaged in the LC and other federal laws. According to Article 137 of the LC, wage deductions with a view to setting off workers’ indebtedness against the employer may be effectuated in the following cases:

to be paid back for an advance payment on work that the worker failed to perform; to pay off an advance payment made to the worker going on a business trip or being

transferred to another location, or for any economic expenses associated therewith, that was not spent or not returned in due time;

to return any extra amounts paid to the worker as a result of accounting mistakes; to compensate for days taken as vacation, if worker is dismissal prior to the end of the

working year and he or she has already used up his or her annual vacation leave.

With each payment of wages the total of all deductions shall not exceed 20 percent, while in the cases specifically envisaged by federal law the latter may amount to 50 percent. If wage deduction is made according to several executive documents, the worker by all means retains 50 percent of his or her wage (Article 138 of the LC).

Trade union regulation

Freedom of association is guaranteed by the CRF, according to which “everyone has the right to association, including the right to establish trade unions in order to protect one's interests" (Article 30(1)).

Trade union activities are regulated by the Trade Union Act, 1996 (hereafter “the TUA”) and by the LC. All workers (of at least fourteen years of age) have the right to freely and independently establish trade unions to protect their rights, to join trade unions, to become involved in trade union activities and withdraw from trade unions without prior authorization. Trade unions have the right to set up their own associations at industry, territory or other levels. They have the right to cooperate with trade unions of other states, to enter into international trade unions and other associations and organizations, and to conclude treaties and agreements with them (Article 2 of the TUA).

Trade unions are independent in their activity from the organs of executive power, the organs of local self-government, employers and their amalgamations (unions, associations), political parties and other public entities, and shall not be accountable to them or subject to their control. Any interference by organs of state power, organs of local self-government and their officials in the activity of trade unions which may entail a restriction of trade union rights or hinder the legitimate exercise of their legitimate activity, is prohibited (Article 5 of the TUA).

Workers participation

According to Article 52 of the LC, the workers’ right to participate in the management of the enterprise directly or through their representative bodies is ensured in the LC, other federal laws, collective agreements and enterprise level regulations. Main forms of workers' participation are the following:

taking account by the employer of the opinion of the workers’ representative body in the cases specifically envisaged in the LC or collective agreements;

employer’s consultations with the workers’ representatives on the matters concerning the adoption of the enterprise level normative regulations;

informaing the workers’ representatives on questions directly affecting workers' interests;

discussions with the employer on matters concerning the functioning of the enterprise; participation of the workers’ representatives in collective bargaining; other forms provided for by the LC, collective agreements or enterprise level

regulations Article 53 of the LC).

Collective bargaining and agreements

The legislative framework for collective bargaining in the Russian Federation is established by the LC and the Collective Agreements and Accords Act, 1992 (hereafter “the CAAA”). Article 40 of the LC defines collective agreement as a legal act, which regulates socio-economic relations between the employer and workers in an enterprise. While the term “collective agreements” refers to the enterprise level bipartite collective agreements, the term “accords” means agreements (bipartite or tripartite) concluded at federal, industry, territorial or occupational level (Article 45 of the LC and Articles 2, 18 of the CAAA) for a minimum period of one year and a maximum period of three years (Articles 43 and 48 of the LC and Articles 14 and 22 of the CAAA).

According to Articles 36 of the LC, both employers and workers’ representatives are entitled to initiate collective bargaining. On receipt of a written proposal to start collective bargaining the other party must within seven calendar days enter into the negotiations.

Disputes settlement

Labour Law of the Russian Federation provides for different settlement procedures depending on whether the dispute is individual or collective. For individual disputes procedural distinctions have been made depending on whether the dispute is over the application of already existing standards governing conditions of work (the so-called “dispute of rights”) or over the new conditions of work or a change in existing conditions (the so-called “interest dispute”).

Individual disputes settlement

Article 381 of the LC defines an individual labour dispute as a disagreements between a worker and an employer concerning the application of labour legislation and other normative acts, collective agreements and other agreements on labour, and also the conditions of the contract of employment. According to 382 of the LC, such disputes are considered by the labour disputes settlement commissions (hereafter “the LDSC”) and by the courts of law of general jurisdiction.

In some cases an individual dispute of rights can be submitted directly (i.e., without its consideration by the LDSC) to a court of law. These cases include,inter alia, the following situations:

the worker’s appeal for: o reinstatement, irrespective of the grounds for the termination of the labour

contract,

o changes in the date and wording of the grounds for termination; o payment for the time of involuntary absence at the work place;

the employer’s appeal for compensation by the worker of damages inflicted by this worker to the enterprise;

the person’s appeal in the case of: o the employer’s refusal to hire; and o discrimination.

As a general rule, an individual dispute of rights can be submitted to the court within a three-month period; in the case of termination at the employer’s initiative – within a one-month period. The employer can appeal for compensation of damages inflicted by the worker within a one-year period (Article 329 of the LC).

Collective disputes settlement

Article 398 of the LC defines collective labour disputes as unresolved differences between workers and employers concerning:

the establishment of new or a change in the existing conditions of work (including wages);

the conclusion, change and implementation of collective agreements and accords; and the employer’s refusal to take into account the view of the workers’ representative,

while making decisions of a normative nature at the enterprise.

Conciliation procedures mean consideration of a collective labour dispute by:

the conciliation commission; the parties themselves with the participation of amediator; or the labour arbitration.

Conciliationis a mandatory stage in the collective labour disputes settlement procedure. To this end, a conciliation commission consisting of an equal number of representatives of the parties to the dispute has to be established within three working days from the beginning of the dispute. The employer does not have the right to refuse to create a conciliation commission or participate in its work. The conciliation commission has five working days to consider the dispute. The decision taken by the conciliation commission has binding force on the parties to the dispute

Mediation procedure follows unsuccessful conciliation. For this purpose the parties to the dispute may invite within three working days a mediator. If necessary, they parties may ask the Collective Labour Disputes Settlement Service (hereafter “the CLDSS”), which is a state agency, to recommend the candidature of such a mediator. The mediator has seven working days to resolve the dispute. If within 3 working days the parties fail to reach an agreement regarding the candidature of a mediator, they shall initiate labour arbitration procedure (Article 403 of the LC).

Labour arbitrationis a provisional body (ad hoc) established by the parties to the dispute and the CLDSS within three days from completion of the consideration of the dispute by the conciliation commission or a mediator, provided that the parties to the dispute agreed in writing to respect the decision(s) taken by this body. The composition, procedures and

powers of labour arbitration are defined by the joint decision taken by the employer, workers’ representative and the CLDSS. Labour arbitration considers a dispute with the participation of its parties within five working days (Article 404 of the LC).

Strikes and lockouts

The right to strike is a constitutional right in the Russian Federation (Article 37 of the CRF). Article 398 of the LC defines a strike as worker’s temporary and voluntary refusal of a worker to fulfill their work duties, (entirely or in part) with the intention being the settlement of a collective labour dispute. Participation in a strike is voluntary. Nobody can be forced to participate or to refuse participation in a strike (Article 409 of the LC).

During the strike, minimum essential services the stoppage of which may create an immediate threat to life and health of the population have to be ensured. The lists of such services are defined by the respective federal state bodies in consultation with the respective nation-wide trade union (con) federations. In the case of failure to ensure minimum essential services, the strike may be recognized illegal (Article 412 of the LC).

In accordance with Article 55 of the CRF, a strike may also be considered illegal in the following cases:

during war or a state of emergency; in the armed forces; in law enforcement agencies; in security service; in the essential services, if the strike would endanger the country’s defense or national

security, as well as the lives or health of the population.

Decisions to declare a strike unlawful may be taken by a respective court of law. In the  case of an immediate threat to lives and health of the population, the court may postpone the strike, not yet started, for the term maximum 30 days, while the strike which already started, - to suspend it for the same period of time (Article 413).

Health and Social Security in Russia

Social tax in Russia combines separate contributions to pension fund, social security fund and medical insurance. Mandatory workplace accident insurance, enacted later, is not part of social tax. 

Social tax is accrued on all employer – to – employee payments which are deductible fro profit tax purposes, non-deductible payments like dividends or charity are not subject to social tax.

Tax rate Social tax rate is highly regressive. The tax is paid only from employer. • income up to 280 000 rubles is taxed at 26 %• income from 280 001 to 600 000 is taxed at 10 %• marginal rate income above 600 000 rubles is only 2 %Rates in agriculture and in special high technology parks are lower.