The Russian President recently signed a new law (Law No: 116-FZ) that will make major changes to secondment arrangements in Russia. Although the legislation is not due to come into force until 1 January 2016, employers operating in Russia should be taking the proposed changes into account now when considering putting secondments in place.
First and foremost, the new legislation introduces the concept of a secondment into Russian Labour Law. Although secondment arrangements are common in Russia, especially with international employers, the concept of a secondment is usually seen as a purely commercial law transaction and is not currently recognised for labour law purposes.
Broadly put, the new legislation places a total ban on agency work, i.e. work undertaken by an employee at the employer’s order but under the control and supervision of an individual or a legal entity that is not the employee’s actual employer. Some entities will, however, be given the right to carry out secondments:
(a) privately-owned employment agencies, i.e. legal entities which are registered in the Russian Federation and have obtained the necessary accreditation to carry out this type of activity; and
(b) other legal entities (including foreign companies) and their affiliates in circumstances where the employees are temporarily seconded from one group company to another .
The new legislation also sets out certain new rights for secondees, including the right to be paid the same as comparable employees of the customer or host organisation.
As these changes do not come into force until 1 January 2016, employers will have to continue to operate in a climate of some uncertainty until then. Unfortunately the current position regarding secondments in Russia is unclear and the risk remains that any staff on “secondment” may be deemed to be employees of the host. The host will therefore be subject to mandatory labour requirements, including the need to execute a written contract of employment. It would seem sensible in the meantime to keep secondments as short as possible and to make very visible (both in contract and reality) the degree of control and management which the actual employer retained over the individual secondee.
If you would like further information on how these changes may affect your business, please contact Irina Golovanova in our Moscow office.