How to dismiss an employee in Russia?

How to dismiss an employee who has worked for the Company for many years and has had no official deficiency reports or complaints from the Management concerning his/her work? What are the methods of dismissal?

According to the Labor code of the Russian Federation, there are a number of alternatives to terminate the employment contract, especially at the employer’s initiative; following on from the information obtained in our research, the following variants possible:

1. Reduction in the number of employees or staff size (Clause 2 of Part 1 of Article 81of the Labor code of the Russian Federation):

1.1. The employer shall:

А. Issue an administrative order on the planned reduction in the number of employees in connection with cutting financial costs, specifying which of the employees in equal positions should be dismissed in connection with the reduction of the number of employees.

In this case it is necessary to take into consideration the primary factors for keeping the employee.

These include:

– First and foremost employees with a higher proficiency and those whose dismissal is prohibited.

– Among those who have an equal labor performance and proficiency, the following persons shall have preference for keeping the job: married persons having two or more dependents (unemployable members of the family fully supported by the employee or receiving assistance from the latter which is their constant and basic source of the means of sustenance); persons in whose family there are no other employees with independent earnings; employees having suffered a labor injury or been affected by an occupational illness (Part 2 of Article 179 of the Labor code of the Russian Federation).

The decision to allow the employees to keep their jobs is taken by the employer’s Commission, established to determine which of the employees should be dismissed and why.

B. Issue an order on the approval of a new list of staff without the position of the employee subject to dismissal.

С. Give the employee a written notice of dismissal no later than two months in advance. This should be proved by the handwritten signature of the employee in the notice of the employment contract termination.

The employer’s failure to do so entails the reinstatement of the employee in his/her job.

With the written consent of the employee the employer has the right to dismiss him/her before the expiry of the term of notice paying compensation pro rata for the remaining term of the said notice (Part 3 of Article 180 of the Labor code of the Russian Federation). If the employee does not give his/her written consent, dismissal before the notice period expires will be illegal;

D. Notify the employment service body of the personnel reduction no less than 2 months prior to dismissal.

E. Offer the employee in writing another available job (vacant post or position according to his/her qualifications or a lower paid job) taking into account his/her state of health. All vacancies meeting the indicated requirements which the employer has in the given locality, and also vacancies in other localities if envisaged by the employment contract, shall be offered to the employee. The employer is obliged to offer the employee another job (position) available during the whole period of measures taken to reduce the personnel number from the moment of giving notice on the forthcoming dismissal until the moment of termination of the employment contract, if the employer has vacant positions on their staff. If there are no vacant positions, the employer informs the employee of the absence of the possibility to offer another job as there are no vacancies left on the staff.

In reply to the employer’s written vacancy offer the employee shall give his/her written consent or disagreement with the new position.

The employer’s failure to perform this obligation entails reinstatement of the employee in his/her job.

1.2. Payments to the employee at the termination of the employment contract in connection with a reduction in the number of employees or staff size

– Severance pay at the rate of an average monthly salary of the employee is to be given on the day of his/her dismissal

– Monthly average salary for the period of the employee searching for a job, which is payable two months after the dismissal. The employee shall write an application for the payment and submit the work record card original showing that he/she has not been gainfully employed from the moment of the dismissal.

– The average monthly salary for the third month shall be paid by the employer with an expiry date of three months after the dismissal if the employee turns to the employment body within a fortnight after the dismissal and is not placed in a new job by the said body.
Please note:

Following on from the above, when reducing the number of personnel or staff, the employer on average pays the employee 5 average monthly salaries: two months’ salary (wages) from the moment of reception of the notice on the forthcoming reduction, and three average monthly salaries as guaranteed payments in connection with the personnel reduction.

Besides this, the staff reduction procedure is a lengthy process requiring no less than 2 months, and also means much work for the employer connected with due execution of paper documents.

If the employer breaches procedure, the Court will reinstate the employee in his/her job obliging the employer to pay compensation for the forced absenteeism.

In addition, it’s also necessary to consider situations where there is one employee who has been employed for a longer period than another, both working in similar positions. In such circumstances it will be necessary to give reasons to prove why this particular employee and not the other is subject to dismissal.

If the Court establishes the presence of a bias in keeping the other person employed, the dismissed employee will also be reinstated in his/her job and the employer will be obliged to pay compensation for the employee’s forced absenteeism.

In cases of personnel reduction, if procedure is not strictly followed then the risks of having the employee reinstated in his/her job are very great.

Besides, one should take into consideration that there is a certain circle of people protected from dismissals in accordance with the law.

2. Repeated failure of the employee to perform his/her labor duties without a valid excuse, if the employee was subjected to disciplinary sanctions (Clause 5 of Part 1 of Article 81 of the Labor code of the Russian Federation)

For a minor offence, when an employee does not perform well, if at all, the job functions assigned to him/her through his/her own fault, the employer has the right to apply the following disciplinary sanctions:

1) Warning; as a rule applied for the first time, when there have been no other official sanctions resorted to;

2) Reprimand; as a rule after a prior warning;

3) Dismissal based on the relevant grounds – if the employee has had more than one disciplinary sanction applied.

Note: When applying disciplinary sanctions one should take into account the gravity of the misdeed and the circumstances under which it was committed.

Actions of the employer when applying the disciplinary sanction:

1. Before applying the disciplinary sanction the employer should request a written explanation from the employee. (Order from the employer that the employee should submit a written explanation).

2. Written explanation from the employee concerning the cause of his/her misdeed. If no explanation is given by the employee within two working days, a corresponding act shall be drawn.

The employee not giving an explanation does not prevent the application of disciplinary sanctions.

Note: Disciplinary sanctions can be applied no later than one month from the date the offence is detected and no later than 6 months from the date of its occurrence, excluding periods of sick leave or holiday leave of the employee.

3. The Order of the employer on disciplinary sanctions is announced to the employee in exchange for a signed receipt within three working days from the date of its issue, excluding periods of the employee’s absence from the place of work.

If the employee does not agree to receive the order (instruction) in exchange for a signed receipt, a corresponding act shall be drawn.

Please note:

On the basis of the above one may conclude that the procedure for dismissing an employee following a disciplinary sanction requires the employer to strictly observe the time limits and order of imposing the disciplinary sanctions. It is also important to take into account the gravity of the misdeeds of the employee, before taking the decision on the employment contract termination for the said reason.

In addition, an entry will be made in the work record card of the employee stating that he/she is dismissed in connection with repeated non-performance of his/her job duties. (A list of the relevant functions should be clearly stated in his/her duty regulations).

At such a dismissal the employee, as a rule, goes to the court to appeal against the acts of the employer and to be reinstated in his job, as such a dismissal entry in the work record card will make it very difficult for the employee to find another job. The court considers all circumstances of the case, and if any breach in applying disciplinary sanctions or abuse of the employer’s powers in office are detected, then the court will reinstate the employee in his/her job obliging the employer to pay compensation for the induced absenteeism, as well as for the moral harm suffered.

3. Employment contract termination by an agreement of the parties (Clause 1 of Part 1 of Article 77 of the Labor code of the Russian Federation)

The employment contract can be terminated at any moment by an agreement of parties. Termination of the contract on this basis can be initiated either by the employee, or the employer. The arrangement of the parties is registered in the form of a separate document, an agreement on the employment contract termination.

As a rule, when both parties agree to terminate the employment contract, the said parties agree on the compensation payment to be given by the employer to the employee. For an amount which does not exceed three times an average monthly salary, it shall not be subject to Personal income tax; any amount exceeding three months’ worth of salary shall be subject to Personal income tax withheld by the employer.

The compensation payment effected in connection with the termination of the employment contract can be established as any amount, its exact size not specified in the law. However, according to the current practice such payment usually depends on the length of service of the employee in the Company, his/her achievements, experience, etc, and if the employee has worked for the Company for 10 years and more, he/she can ask for 3 to 5 average monthly salaries. As a rule, the maximum sum of such a payment is 5 average monthly salaries, corresponding to the average amounts due and payable when reducing the number of staff of the Company.

However, the employer can establish the payment amounts at their own discretion and as agreed with the employee.

It should be noted that it would be very difficult for the employee to challenge the dismissal when there is an agreement of parties, as it is not only on the initiative of the employer, but also on the initiative of the employee: a mutual agreement of the two parties to the employment contract. The employee also receives monetary compensation for the dismissal. The court in this case will in most instances protect the employer.

What method of dismissal is the most effective, least risky, and best avoids conflicts to the maximum extent possible, both within the Company and in judicial bodies; how is it possible to dismiss the employee within the shortest period of time?

Proceeding from the above, the most effective, fast and safe method of the employee’s dismissal is the dismissal agreed to by both parties.

Konsu is a preferred legal advisory services in the area of labor law partner for international companies operating in Russia. We have been on the Russian market since 1992 and employ more than 200 professionals in Moscow and St. Petersburg.