Legal Line

Daniel Klein’s Legal Line

In a new column, Passport’s legal correspondent Daniel Klein fields legal questions posed by our readers. Do you have a businessrelated legal question pertaining to Russia you’d like Daniel to address? Tell him all about it at dklein@passportmagazine.ru.

Dear Daniel:
I am an American citizen. When my American employer sent me to Russia, the company told me to sign two work contracts: The first is a limited term contractor agreement with the company; the second is a labor contract with their Russian subsidiary. I was told the second was a mere formality needed to process my Russian work papers, and from the getgo my company has insisted that the contractor agreement is the only one that “really matters.” Neither contract provides for severance.

Now the one-year project I was transferred here for is ending, and my company wants to dismiss me without severance. Do I have any rights?

Dear Dismissed:
I hope that you have not accepted in writing their proposal not to give you severance pay. Whether your American employer acknowledges it or not, you work for a Russian company. So like it or not, Russian rules apply.

They are able to fire you for a rather limited list of reasons set out by Russian law. (The list includes proven absence from work, proven drunkenness or hangover in the office, proven instances of theft, and other “gross violations.”) To prove any violation, they must formally serve you an official notice within 30 days of the violation.

In the U.S., the U.K., and a few other European countries, labor laws are based upon an “employment at will” concept. This means that an employer can dismiss a worker at any time for no given reason without severance.

In contrast, Russia’s labor legislation gives employers less flexibility. Here labor laws endow a citizen with the right to a job in much the same way as he or she has the right an education or a place to live. This translates into a nightmare for companies that want to shed staff.

Even though you have a contract with the foreign parent, your work contract is with the Russian subsidiary. Only they can hire you in Russia, and only they can fire you. To do this, the Russian subsidiary must negotiate a “mutual settlement” with you. Such settlements typically require employers to fork over between three and six months of salary. Barring proven cause for dismissal, an employee cannot be dismissed without his agreement to this mutual settlement document.

Frequently, foreign companies with Russian operations will attempt to dismiss an employee and just hope that he or she goes away. They may offer a few weeks’ salary as severance and feel they are being generous. However, in such a case, you have 30 days to file an action in Russian labor court and try to get reinstated. If the case drags on for a year or more, the court can rule that the employer must pay compensation to the improperly dismissed employee from the date of improper dismissal until the decision of the court. That could mean an award of a year’s salary!

And that’s not all: If the court orders your reinstatement, then you retain the right to your job. That means that your employer has to convince you not to show up to the office as per your right, a negotiation that could translate into another four or five months of salary.