12.08.2015 — Russian Government Sets Requirements For State Support To Industrial Parks

Russia is willing to support development of industrial parks showing high investment and socioeconomic performance, which is particularly important in times of crisis. In order to select such industrial parks, the Government of the Russian Federation has adopted Regulation No. 794 as of August 4th, 2015 “On industrial parks and management companies of industrial parks” (“Regulation on industrial parks”).

The Regulation on industrial parks sets out compliance requirements and rules for industrial parks and their management companies aiming to receive state support and financial aid. It will enter into force on January 1st, 2016, so 120 industrial parks currently existing in Russia should have enough time to prepare for compliance assessment held by the Ministry of Industry and Trade of the Russian Federation (“Minpromtorg”).

The underlying principle of the Regulation on industrial parks is to create a “one-stop shop” meaning that once an industrial park has undergone compliance assessment (by filing certain documents with Minpromtorg), it will not have to repeat it to get additional state support from Minpromtorg and expectedly other state agencies. The compliance review is going to be free of charge and valid for three years following its completion. The same will apply to the next assessments of an industrial park and its management company when the preceding one expires.

However, the new compliance requirements are broader than the national industrial parks' standards, in particular, in terms of an industrial parks’ socioeconomic performance. For example, to qualify under these requirements and receive state support, an industrial park has to show that its labor efficiency in the preceding reported period is higher than the average labor efficiency in the manufacturing sector of the territorial entity of Russia where the industrial park is based.

Another benefit to industrial parks is that the Regulation will apply to both operating and developing industrial parks, which provides for supporting newly established industrial parks and the existing ones that are being maintained and expanded at the moment. The compliance requirements also define such terms as an “industrial park resident”, “industrial park territory”, “utilities and transportation infrastructure”, “industrial park maintenance” and others, thus clarifying conditions for receiving financial aid by prospective applicants.

All the above mentioned developments are aimed primarily at simplifying the procedure for getting financial support by those industrial parks that are in line with state policy on industrial and spatial development of Russia and its territories. Nonetheless, the compliance requirements are likely to be revised in case their application proves to be complicated for industrial parks and their management companies.

11.08.2015 — Labour Law Update: Important Changes Employers Have To Consider To Avoid Liability

Recent amendments to labour legislation that came into effect in 2015 will 

  • render employer’s liability more stringent in a number of cases, and
  • provide employees with a wide range of rights and freedoms. 

These amendments are in line with the general trend of Russian labour law – provision of high-level legal protection of employees.

1. Liability for failure to conclude an employment contract/ replacement of an employment contract with a civil one has become more stringent

Should a company employ an individual without concluding an employment contract or instead conclude a civil contract with the said individual, the following consequences may follow: 

  • the company may have to pay a fine of up to RUB 100 000, and 
  • its General director – a fine of up to RUB 20 000 (part 3, Article 5.27 of the Russian Administrative Code (KoAP).

A repeat violation may result in 

  • a fine of up to RUB 200 000 for the company, and
  • disqualification for up to three years for the General director (part 5, Article 5.27 KoAP).

2. Liability for failure to comply with the procedure of special assessment of labour conditions has become more stringent

Since 2014 employers are obliged to assess labour conditions of their employees (Federal Law “On special assessment of labour conditions”). This procedure has replaced the process of evaluating an employee's work place for labour safety purposes. Should the company fail to carry out the special assessment of labour conditions, the following consequences may follow: 

  • the company may have to pay a fine of up to RUB 80 000, whereas
  • its General director – a fine of up to RUB 10 000.

Importantly, however, the company may carry out the said special assessment gradually (but in any case it shall be completed by December 31, 2018) if the procedure is implemented with regard to two types of employees: 

  • those who have no right to an early old age pension;
  • those who do not work in hazardous working conditions (part 6 Article 10, part 6 Article 27 of the Federal Law “On special assessment of labour conditions”). 

Notably the company no longer faces the risk of suspension of its activity for the said violation (it was provided under the previous legal regulation).

3. New sanctions in the sphere of occupational health and safety have been imposed 

Should a company permit its employees to start working without having (i) informed the said employees of labour protection requirements, (ii) ensured that the said employees have undergone obligatory medical examination or obligatory psychiatric assessment, 

  • the company may have to pay a fine of up to RUB 130 000, whereas
  • its General director – a fine of up to RUB 25 000 (part 3, Article 5.27.1 KoAP). 

If the company fails to provide its employees with personal protection equipment, 

  • it may have to pay a fine of up to RUB 150 000, and
  • its General director – a fine of up to RUB 30 000 (part 4, Article 5.27.1 KoAP).

4. The limitation period for violation of labour legislation has been increased

State authorities may issue a Resolution on imposition of sanctions for violation of labour legislation within a year as of the moment the said violation was committed (part 1, Article 4.5 KoAP). In case of a continuing offence, i.e. when the company fails to comply with the law within a lengthy time period, the limitation period is calculated from the moment the relevant offence is revealed. Previously state officials had only two months to reveal the violation, as opposed to the current one-year period.

5. Fines for failure to fulfill the state official’s instructions have become more stringent

Should a state official reveal a labour law violation, he or she can instruct the company to eliminate it. 

Failure to fulfill the said instruction may result in

  • a fine of up to RUB 200 000 for the company, and
  • a fine of up to RUB 50 000 or disqualification for up to three years for its General director (part 23, Article 19.5 KoAP). 

6. Employees may change their bank for salary payment purposes 

It has been clarified that employees may independently choose a bank and open a bank account for the purposes of salary payment. Employees may also change the said bank. In order to do that a relevant application shall be made by the employee. Notably, previous legal regulation was rather ambiguous, and employers often used to insist that employees are not entitled to choose a bank for salary payment purposes.

7. Employees can ask employers to provide them with their labour books to get insured

Employers are obliged to provide their employees with their labour books (originals) in the following two cases: 

  • upon termination of employment relations (as was provided by previous legal regulation), and
  • for the purposes of compulsory social insurance (Article 62 of the Russian Labour Code). 

The employee shall return the labour book to the employer within three working days as of receipt thereof from the state authority in the sphere of social insurance.

8. Labour of foreign employees has become regulated in more detail 

The Russian Labour Code (Part 50.1) provides for detailed legal regulation of foreign employees’ labour. Among other things, an employment contract with a foreign employee shall include information on the work permit or patent, temporary residence permit, residence permit, details of the voluntary health insurance policy or a contract providing for paid medical services (Articles 57 and 327.2 of the Russian Labour Code). The employee shall provide the relevant documents to the employer so that the above information can be included into the employment contract.Moreover, since 2015 only a certain number of foreigners can be employed in relevant spheres (RF Government Regulation dated 19.12.2014 Nr. 1420). For example, the percentage of foreigners cannot exceed 50% of the total number of employees in the following spheres: road freight transport, other land transport, other land passenger transport.