Irina Anyukhina

Please be informed that Federal Law No. 316-FZ dated 10 July 2023 (the “Law”) made changes to legislation regulating the legal status of foreign nationals in the Russian Federation, including highly qualified specialists (“HQS”). The amendments will come into force starting from 2024.

Numerous foreign companies have recently decided to exit the Russian market or restructure or suspend their operations. The rapid implementation of these business decisions within constrained timeframes not only entailed legal risks for companies, but also led to practical difficulties in cooperation between global and local management. The unique legal status and significant scope of powers that Russian law grants to a company’s general director may further complicate communication processes and adversely affect the company’s future outlook. This situation has led to increased demand for full-scope legal services that aim to establish and ensure a framework of control over local management and a procedure for it to cooperate with the foreign owner of the business. This document provides a list of the practical issues that most clients of ALRUD Labour and Employment Law Practice face in crises arising from confrontations involving the local management of companies and the services we provide to resolve them.

The International Bar Association Global Employment Institute (IBA) published its 11th annual global report on general international trends in human resources law with examples from 55 countries. Irina Anyukhina, Partner of ALRUD Labour Practice, and Elena Chershintseva, Senior Associate of ALRUD Labour Practice, PhD, covered a block of issues related to current regulatory trends and developments in Russian labour and migration law, including flexible working, alternative workforce, unions, labour disputes. The global report can be found here.

Business reorganization is a commonly utilized strategy to enhance efficiency and reduce costs within a business. Reorganization not only impacts corporate changes, but also has an effect on labour relations, which can pose certain risks. We have summarized the key labour issues that illustrate the red flags associated with corporate transactions, along with practical issues that should be taken into consideration.

ALRUD experts have prepared this material for HR directors, compliance officers and heads of legal departments, detailing the obligatory and recommended actions that should be taken in the event of an occupational accident. The purpose of this step-by-step plan is to provide high-level guidance on how to protect the interests of affected employees, investigate occupational accidents and thus mitigate risks of administrative and criminal liability for the employer and its officers.

ALRUD specialists provided comprehensive support in all aspects of sanctions compliance for the Russian division of a major international welding materials and tools manufacturing company. ALRUD developed and implemented effective solutions to preserve the client's business in Russia under sanctions pressure, in particular: structured large-scale HR solutions for production employees and office staff, represented the client in communications with state authorities and counterparties, conducted claims work on commercial contracts and provided legal assistance on corporate issues, including the possibility of dividend distribution. Thanks to ALRUD's comprehensive support, the client was able to retain its business and minimise its risks under the current sanctions regime. Leading Partner - Irina Anyukhina, Head of Labour Practice. The project was run by Margarita Egiazarova, Senior Associate, PhD. The ALRUD team included Dmitry Kuptsov, Dispute Resolution Partner, Sergey Khanaev, Corporate and M&A Practice Partner, and lawyers from the Labour Law, Dispute Resolution, Tax, Corporate, Commercial law, Crisis Management, Economic sanctions and Compliance practices.

Dear Ladies and Gentlemen, When terminating employees and senior executives, including in case of a conflict, the main focus should be on negotiating separation terms and concluding a mutual termination agreement (“MTA”). However, protecting the company’s interests and ensuring that any related processes are legally compliant and unhindered, entails a much wider range of issues and actions that need to be considered prior to and once the agreement with an employee has been reached. We have created a checklist that will guide you through such issues making your separation process smooth and safe for the company. --table-- --table-border-- --table-header-- Issue What to consider Choosing a termination date (i) Termination on a day-off or holiday is permitted but entails numerous complexities (final settlement when banks are not working, payment for the work of an HR team outside of normal working hours, etc.)(ii) Check if it is required to notify the employment center on termination upon mutual consent (subject to regional regulations and simultaneous staff redundancy of other employees)(iii) Check employment-related documents for special conditions on the date of employment termination Isolation of potentially “malicious” employee before separation (i) No concept of “garden leave” in Russian law (ii) Downtime (paid partially or in full), paid/unpaid leave and remote work (subject to an employee’s consent) may be used as alternatives Processing employee’s personal data (PD) in a due way (i) Separate consent on former employee’s PD processing is required for saving data in corporate resources and assuring continuity of its processing (ii) Deal with cross-border transfer of employee’s PD if it is transferred to any company within the group abroad, including a head company Protecting company’s IP rights and confidential data (i) Ensure that the proper secrecy policy is in place, check employees’ due familiarization with its most recent version(ii) Obtain separate NDA(iii) Establish non-disclosure obligations in the MTA(iv) Consider possibility to include non-compete and non-solicit clauses (v) Consider limiting access to corporate resources and databases to mitigate data stealing risks before separation. However, note that a complete restriction of an employee’s access to corporate systems and company premises may be considered as labour law violation Transfer of properties (i) Prepare inventory list along with transfer & acceptance act for retrieving properties from the employee (ii) Prepare documents formalizing sale (in some cases cash register equipment is required) or free transfer of company’s properties to the employee (iii) Estimate terms and processes necessary for transferring properties to/from and exchanging documents with remote employee Payment issues (i) Incentives due to the employee and deferred bonuses: decide how much to pay and when(ii) Shareholders’ approval of compensation upon one or few MTAs (in aggregate) as major transaction: check whether the amount exceeds the criteria(iii) Loans provided to or by the employee: the parties may agree on their return before the separation or discuss how the respective relations will be continued or ended after it(iv) Parachutes and termination conditions in the contract, side letters and other agreements: assess applicability and influence on the process Specifics of top executives’ termination (i) Termination of the CEO and other members of the executive body require adopting shareholders’ resolution and registration within Russian tax authorities (ii) Separation with the CEO and other managers (including the Chief Accountant) may be subject to further precautions as finding the substitute in advance, PoA withdrawal, notification of the bank and proper transfer to the substitute of documents, logins, etc. The last day of work (i) Complete the transfer of properties (ii) Carry out HR formalities (iii) Remember to notify the Social Fund We hope you find this checklist useful! ALRUD specialists have extensive expertise and will be glad to provide any legal support on issues related to mutual separation processes. For more information on this and other frequently faced issues listen to our podcasts “Be Aware and Share”. Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the author of this letter, bear any liability for consequences of any decisions made in reliance upon this information. If you have any questions, please, do not hesitate to contact ALRUD team.

Dear Ladies and Gentlemen, On 1 January 2023, Federal Law No. 237-FZ dated 14 July 2022 (the “Law”) came into force. The Law changed the way companies cooperate in terms of the engagement of individuals under civil law contracts. The text of the Law is available in Russian here. Considering the latest recommendations from the Russian Ministry of Labour, companies also need to consider these changes in relation to contractors who live abroad. The Ministry of Labour explained that it is recommended to conclude civil law contracts when formalizing relations with such individuals (Letter of the Ministry of Labour No. 14-2/OOG-5755 dated 9 September 2022). Follow the link to learn more. Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the author of this letter, bear any liability for consequences of any decisions made in reliance upon this information.

On December 1st the Labour Practice team successfully proved the success of a 9 month complicated redundancy case involving the dismissal of a protected election commissioner employee in the Fourth Court of Cassation of General Jurisdiction. ALRUD team working on the project included labour dispute experts Margarita Egiazarova, Senior Associate, PhD and Ekaterina Bronitsyna, Associate, as well as Anastasia Petrova, Labour and Employment Practice Of Counsel of ALRUD. The project was led by ALRUD Labour and Employment Practice Partner Irina Anyukhina. The details of the case are provided here.

Dear Ladies and Gentlemen, On 7 October 2022, Federal Law No. 377-FZ (the “Law”) came into force. The Law granted mobilized citizens and their family members the right to receive preferential payment holidays on loans (including mortgages). Follow the link for more information. Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the author of this letter bear any liability for consequences of any decisions made in reliance upon this information.