Mandatory adjustments to work rules and other internal regulations
Legal Digest \ 18.07.2019
Significant changes have taken place in employment and labour laws in 2019. In the light of these, companies should review their work rules and other internal regulations as to their compliance with legislation and in order to reduce the risks of liability being imposed when the State Labour Inspectorate conducts an audit. Acsour’s experts have drawn up a summary of the principal changes and adjustments to the work rules and other internal regulations.

Recruitment

With regional branches of the Russian Pension Fund (the “Pension Fund”) no longer issuing insurance numbers of individual personal accounts (referred to in Russian as ‘SNILS’), companies should state in their work rules and other internal regulations that an employee may provide to his/her employer:

• a document (in hard copy or electronically) confirming his/her registration in the personal record-keeping system that is generated in the individual’s personal account on the website of the Pension Fund;

If this is the first time that an employee has been hired and he/she files an application for a personal account to be opened with the Pension Fund, the employer itself will receive the document.

• or a SNILS card which has previously been issued (it remains in effect along with the new document and does not have to be replaced).

If an employee loses his/her SNILS card, he/she does not need to have it restored. Instead of the SNILS card in hard copy, the employee can print out the notification from the website of the Pension Fund.

Paying salaries to employees

As stated in Official Explanation No. 14-1/V-178 of the Russian Labour Ministry, the understatement of the amount of an advance payment can be treated as labour discrimination and as prejudicial to an employee’s employment rights.

If the amount of salary for the first half of a month is set as percentage of the basic salary, we recommend that the corresponding section of the work rules and other internal regulations should state that an advance will be paid to the employee pro rata the time he/she worked.

When making a calculation, basic salary and benefits should be taken into consideration which do not depend on monthly performance or monthly standard working time or labour rates. If work rules and other internal regulations contain a provision that personal income tax should be levied on an advance payment, such provision should be deleted.

Annual paid leave for a category of employees entitled to benefits

An employer should include a provision in its work rules and other internal regulations stating that employees who have three children and more of under 12 years old are entitled to vacation at any time that suits them (article 262.2 of the Russian Labour Code (the “Labour Code”)). Moreover, the regulation should contain information about the period for granting vacation to such category of employees: either after they work 6 months at the employer’s company or earlier.

Annual paid leave granted for weekends and/or public holidays

It is recommended that an employer should include a provision in its work rules and other internal regulations that no vacation should be granted for weekends only. If an employee wishes to split his/her vacation into parts, each such part should include at least one business day. Such a conclusion follows from Official Position No. 14-2/OOG-9754 of the Russian Labour Ministry (the “Labour Ministry”) dated 7 December 2018.
Please be reminded that if annual leave in calendar days is split, at least one such part should be no less than 14 calendar days.

Disclosing information about the company on the Internet

If a company’s work rules and other internal regulations contain a provision prohibiting criticism of the employer or expressing an opinion which may have an adverse effect on the company’s reputation, such provision should be excluded.

The case law shows that information an employee discloses about the company is a matter of judgement and the employee cannot be prohibited from expressing his/her opinion as it would contradict freedom of speech.

Payment of child allowance to the Mir card

Starting from 1 May 2019, all employers are required to pay child allowances exclusively to Mir cards. This does not depend on the region where the company is registered, or whether or not it is participating in the pilot project of the Social Insurance Fund involving direct payments to insured persons.

Changes will be extended to the following payments:

- pregnancy and maternity allowance;

- a lump sum allowance to women who registered their pregnancy early;

- a lump sum allowance when a baby is born;

- a monthly childcare allowance.

It is still possible to pay other allowances to cards of different payment systems.

This new development is applicable to allowances that have been assigned since 1 May 2019. Those who started receiving allowances before 30 April 2019 to the card of a different payment system may continue using it until the expiry date of the card. Further, you will need to obtain a Mir card and receive an allowance to it.

No sanctions have been introduced for employers who pay allowances to different cards. A bank, however, can now check which card is pegged to the bank account and suspend payment of any allowance if there are any violations. This will create difficulties for the recipient as the latter will have either to pick up cash at a branch of the bank or instruct the bank that allowances should be paid to the account to which his/her Mir card is pegged.

If an employee strongly objects to the Mir card being issued, he/she may receive allowances via a telegraphic transfer or to an account to which no cards are pegged.

A company’s work rules and other internal regulations should specify the method using which the company pays child allowances (to a Mir card or using alternative options).

Liability for inappropriate wordings in a company’s work and other internal regulations

Conversely, if inappropriate wordings are preserved in an employer’s work and other internal regulations, the employer may face liability for non-compliance with the provisions of employment and labour laws. The form the liability takes will depend on the section of work and other internal regulations that was violated.

Section of work and other internal regulation where the violation took place Liability
The payment of salaries to employees Imposing administrative liability (article 5.62 of the Russian Code of Administrative Offences):
  • for legal entities – a fine of RUB 50,000 to 100,000.
Annual paid leave for employees entitled to benefits Imposing administrative liability (article 5.27 of the Russian Code of Administrative Offences), namely:
  • for legal entities – a fine of RUB 30,000 to 50,000;
  • for a company’s officers – a warning or a fine of RUB 1,000 to 5,000;
  • for individual entrepreneurs – a fine of RUB 1,000 to 5,000.
Sanctions are becoming more stringent for recurring violations:
  • for legal entities – a fine of RUB 50,000 to 70,000;
  • for officers – disqualification for a period from 1 to 3 years, or a fine of RUB 10,000 to 20,000;

  • for individual entrepreneurs – a fine of RUB 10,000 to 20,000.

Laws in Russia are quite frequently amended. Therefore, an HRA audit is required to make sure that a company’s internal regulations are updated and the information set out in them is accurate.

OIga Nikulina, Head of HR Administration at Acsour, will again hold a free webinar: “An HRA audit as an instrument to avoid HR fines”. During the event you will learn how a company can avoid significant losses, adapt its HR records to amendments in legislation, and bring such records into order with the help of an HRA audit.