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International business vs coronavirus: how to solve the 7 main legal problems

International business vs coronavirus: how to solve the 7 main legal problems

PUBLICATIONS \ 06.04.2020

Restrictive measures associated with the epidemiological situation have dealt a severe blow to international companies.

Many people were not ready for the restriction on travel to other countries, switching to remote working, and the impossibility to make deliveries. This list can go on endlessly.

How to cope with legislative obstacles and minimize a company’s risks? Anna Khrustaleva, Head of Acsour’s Legal Department, tells us.

1. What to do with employees when borders are closed and the issuing of visas to foreign nationals is suspended?

Practice shows that expatriates often hold senior positions in international companies in Russia. The current global situation restricts the possibility to hire foreign specialists, as well as for them to move around the world.

Russia is no exception. On March 16, a temporary restriction on the entry of foreign citizens and persons without citizenship into the Russian Federation was introduced. The Ministry of Internal Affairs also suspended the formalizing and issuing of invitations to enter the country for the purpose of training and the undertaking of a job.

Here it is important to clarify that in the meantime (until new official explanations and legislative changes are received), an organization has restricted the acceptance of documents only for new employees from foreign countries: the rule does not apply to those expatriates who are already in Russia.

To resolve the situation is possible only if the foreign employee will perform their work remotely. If, after weighing up all the pros and cons, you have made this managerial decision, then it is necessary to issue an Order to change the working mode and sign a supplementary agreement to change working conditions to remote working at the address where the employee is resident (staying).

The document should describe the procedure for providing equipment for the employee to perform labour functions, for providing a report on the labour activity he has undertaken, and the conditions for electronic document flow between the employee and the employer. Also, you may sign such a supplementary agreement with an employee remotely using an enhanced qualified electronic digital signature.

If this decision cannot be made, the question arises of how correctly to terminate the employment relationship with the current foreign employee. In this situation, we recommend applying the most conflict-free form — termination of the labour contract by agreement of the parties.

This method will allow you to minimize the risk of judicial labour disputes, optimize the company’s personnel expenses, and ensure that the expatriate’s matters are transferred to a new employee – a Russian citizen who will be able to immediately commence work duties and generate revenue for the company.

New employees should be hired under a fixed-term employment contract or on a permanent basis to support long-term or systematic business processes.

However, if you choose either of these two ways, do not forget to make changes to existing internal regulations to reflect new developments in the activities of the company’s staff, as well as changes to corporate documents.

2. How to organize anti-crisis management?

When talking about international holding companies, it is important to understand that each branch will use unified documents developed in accordance with the legal specifics of the region in which it is located. In the current situation, it is important to organize anti-crisis management that has three components:

  • a business continuity planning policy,
  • an anti-crisis management body,
  • a plan of anti-crisis measures.

All three points need not only a strategic but also a legal component.

The business continuity planning policy regulates the company’s work in emergency situations, minimizes their impact on business and allows for stability in working together with clients. This document will allow you to take control of emerging and anticipated risks, to make a critical evaluation of operational business processes, and to minimize damage from the negative consequences of emergency situations.

Most often, companies use existing international standards as the basis for drawing up the Policy. Due to the current epidemiological situation, many companies are switching to a remote working mode, in which the application of such practices in relation to information security management is particularly relevant.

Such policies require the introduction of an anti-crisis management body. International companies solve this issue centrally and at the same time locally, taking into account the local specifics of doing business. This approach makes branches more prompt in responding to upcoming events and better prepared for them, taking into account the experience of foreign colleagues.

When introducing an anti-crisis management body, it is necessary to make changes to corporate documents, and to adopt an internal regulation governing its activities, specifying the composition.

When forming such a body, it is important to include representatives of key departments: legal, financial, technical, and HR. After all, they will jointly undertake and implement measures to control the crisis situation within the company’s activities.

A Crisis Management Plan is also formed for the company’s anti-crisis management body. This set of rules creates an obligation to make the most effective decisions within limited timeframes, taking care of the health of employees and the stability of the company’s operating activities.

Вводится такой план локальным актом, регулирующим условия работы и исполнение обязанности работодателя по обеспечению гарантий безопасности условий труда, охране труда работников, применения санитарно-эпидемиологических мер.

3. How to perform the exchange of documents within the company and with contractors?

The legal solution is the implementation of an internal and external electronic document flow system. In the context of the digitalization of society, a large information flow, and the scalability of the company’s activities, the value of implementing electronic document flow is of key importance. This will help to achieve the main goal – to ensure business continuity planning.

A legally valid exchange of internal electronic documents within a company should be issued by preparing the following internal regulations:

  • Guidelines for organizing the use of an electronic signature;
  • Guidelines for internal electronic document flow;
  • An agreement for the use of an electronic signature between an employee and the employer.

To exchange electronic documents with contractors, it is important to prepare:

  • Guidelines for the organization of the use of an electronic signature in external electronic document flow;
  • Guidelines for external electronic document flow.
  • A standard form of an agreement for external electronic document flow between a contractor and the company;
  • A contract with a contractor for the use of external electronic document flow;
  • A contract with a certification authority for the use of an electronic digital signature.

4. How to conduct an important transaction without the CEO’s personal attendance?

In a situation when particularly important transactions on behalf of the company are made by the Chief Executive Officer as the sole executive body of the company, the company becomes a hostage to the need for his constant attendance in person.

Changing the corporate management structure will help to maintain control over the implementation of an international company’s business strategy in Russia.

The legislation allows for the appointment of several General Directors who will be entitled to act jointly or individually on behalf of a company — a foreign citizen and a citizen of the Russian Federation.

5. What to do if manufacturers in other countries have suspended their work?

Due to the current global situation, not all developed and developing countries are able to ensure the uninterrupted operation of plants located on their territory. The risk of a suspension of the activities of such companies’ plants increases if they are not classed as systemic and socially important manufacturers.

The leasing or purchase of a plant in Russia may be an effective solution in this situation, especially given the closure of the country’s borders. At the same time, this will help to solve the issue of delivering goods to the Russian market.

6. How to protect corporate data?

In remote working conditions, international companies often face unconscientious economic agents who want to gain access to confidential information so that they can subsequently use it in their activities.

Apart from ensuring that the company’s information is secure, we recommend that you consider introducing internal documents that regulate technical information protection measures.

Any balance that you find between an escalation of measures to control the security of doing business and not infringing the rights of employees working remotely will strengthen your business.

7. How to obtain a refund for employees’ participation in cancelled international events, hotel bookings and air tickets?

Many major players in the event industry have been forced to cancel events this year. This list includes the St. Petersburg International Economic Forum (SPIEF) and the St. Petersburg International Legal Forum (SPILF). In this regard, international companies began to apply to the organizers with demands for a refund.

Firstly, we recommend that you read the contract again — contractors in this area often have a condition for a refund in the event of cancellation or a change in the date when the event takes place. In this case, to obtain a refund it is sufficient to send an official letter addressed to the service provider.

It is almost always possible to resolve the issue positively if you refuse to participate voluntarily and cite the pandemic as a force majeure circumstance.

Moreover, on March 26, the Chamber of Commerce and Industry of the Russian Federation issued its Order No. PR / 0315 confirming the recognition of the pandemic owing to the outbreak of the new coronavirus infection COVID-2019 as a force majeure circumstance in respect of international and foreign trade contracts, as well as in respect of contracts concluded between Russian business entities.

Source: Rusbase

Anna Khrustaleva

Head of Legal Department