Responsibilities of employers and guarantees for employees called up during partial mobilization

On September 21, 2022, Presidential Decree No. 647 was published, and partial mobilization was initiated. Konsu’s lawyers are monitoring how this will affect labor relations between employees and employers.

Suspension of an employment contract

According to the Resolution of the Government of the Russian Federation No. 1677 dated September 22, 2022, the employment contracts and service contracts concluded with citizens of the Russian Federation called up for military service due to mobilization in the Armed Forces of the Russian Federation, in accordance with the Decree of the President No. 647 dated September 21, 2022, are suspended. At the same time, termination of the mentioned employment contracts and service contracts on the grounds provided for in paragraph 1 of part 1 of article 83 of the Labor Code of the Russian Federation and paragraph 1 of part 1 of article 39 of the Federal Law of July 27, 2004 No. 79-FZ “On the State Civil Service of the Russian Federation” is not allowed.

Temporary labor contracts expiring during mobilization. On October 13, 2022, the Ministry of Labor clarified that termination of a labor contract with a mobilized employee is allowed if the employment contract is temporary. It can be terminated from the date of expiration based on Part 10 of Article 351.7 of the Labor Code of the Russian Federation at the initiative of the employer due to the expiration of its term.

The procedure for suspending and resuming a labor contract (from clarifications by the Minister of Labor and Social Protection on September 27, 2022, and the draft amendments to the Labor Code of the Russian Federation):

• Employee receives notification for military service during partial mobilization.
• Employee provides the employer with a copy of the notification and a statement on the suspension of the employment contract. Remote workers and employees participating in electronic personnel document flow may send a scan of the summons to the employer.
• Employer issues an order to suspend the employment contract based on the notification. Fixed-term employment contracts and probationary periods are also subject to suspension.
• Employee will have the right to return and continue working under the previous conditions. No additional agreements need to be concluded
• On December 19, 2022, the Federal Law with corresponding amendments to the Labor Code of the Russian Federation was published. They apply to legal relations arising from September 21, 2022, and entered into force on December 19, 2022.
• The accounting department calculates the accrual of all payments and wages for all worked but unpaid days, without waiting for the date of payment of wages provided for by the labor remuneration provision.
• n the event that an employee has received a notice of reduction but is still working, the employment contract will be suspended upon receipt of the labor contract.
• The period of suspension of the employment contract on the specified basis is subject to inclusion in the employment history. The employment record book continues to be kept by the employer.
• As of October 25, 2022, participation in hostilities is counted towards work experience at a rate of one day for every three days of service.
• As of November 22, 2022, the procedure for keeping employment records does not provide for the reflection of information on the mobilization of an employee.
• All employee benefits are maintained (e.g. insurance).
• The suspension of the contract is credited towards vacation length of service. In addition, within six months after the resumption of the employment contract, the employee has the right to be granted annual paid leave at a convenient time for him regardless of his length of service with the employer.
  As of October 21, 2022, during the period of suspension of the employment contract under article 351.7 of the Labor Code of the Russian Federation, employees do not need to be included in the annual vacation schedule.
• It is necessary to inform the employer three days in advance of the return from military service.
• If the employee does not return within three months after demobilization, the employment contract can be terminated at the initiative of the employer.
• The employer will be obliged to report on mobilized personnel in the form of SZV-TD no later than the next working day (draft amendments to the 27th Federal Law). The law will come into force from the day of official publication.
  As of October 7, 2022, the amendments were adopted and came into force. The law was published (No. 379-FZ of October 7, 2022).
• As of October 28, 2022, Resolution of the PFR Board No. 217-p of October 13, 2022 was published. The possibility of reporting the suspension of an employment contract with an employee was added to the SZV-TD form.

• The employer continues to submit reports to the PFR, FSS, and tax authorities for mobilized employees. At the same time, suspending the contract with an employee called up for military service due to mobilization means that the rights and obligations of the parties under this contract are frozen during the period of military service.
• The employee should not perform labor duties, and the employer should not pay wages, provide working conditions, etc. The employer is not obligated to pay a vacation allowance or preserve the average earnings.If the employee was already dismissed on September 21, 2022, due to mobilization, it is necessary to issue an order to cancel the dismissal order, send information about this to the PFR, and make a record of the cancellation of the dismissal order in the employment record book. After that, issue an order to suspend the employment contract based on the summons.

On March 28, 2023, in the event of the termination of a fixed-term employment contract that was previously suspended due to the mobilization of the employee, no final settlement shall be made. According to the clarifications provided in the letter from the Ministry of Labor of Russia dated 21.02.2023 No. 14-6 / B-173, in accordance with the fifth part of Article 351.7 of the Labor Code, the employer is obliged to pay the mobilized employee the full amount of wages and other payments due to him for the period of work preceding the suspension of the employment contract, as well as other payments provided for in the employment contract, collective agreement, agreement between the parties of social partnership (for example, payment of travel expenses, one-time incentives and other payments related to holidays and anniversary dates, payment for meals, material assistance, additional monetary amounts when providing employees with annual leave, payment for study leave, and others) no later than on the day of suspension of the employment contract. In this regard, we believe that in case of termination of a fixed-term employment contract that was previously suspended due to mobilization of the employee, no final settlement is made, since during the suspension of the employment contract for this reason, the employee’s job is preserved, but he is not paid wages.

Employees on fixed-term contracts can be hired to replace mobilized workers

During the period of suspension of the employment contract, the employee’s job and position are preserved. However, during this period, the employer has the right to enter into a fixed-term contract with another specialist (explained in detail at объясняем.рф). The term of the contract is for the duration of the absent employee’s duties at the specified workplace.

Additional obligations of employers regarding notification and ensuring attendance

The Moscow military enlistment office provided clarification to employers on the conduct of partial mobilization (City News Agency). Managers and employees responsible for military registration and enlistment must notify citizens of their conscription and ensure the possibility of timely appearance, regardless of job tasks. Managers and other officials hand over conscription notices to recruits with a signature.

Mobilization of the employer may be a reason for terminating employees

On November 4, 2022, a new basis for terminating an employment contract was added to clause 7 of part one of Article 83 of the Labor Code, which is not dependent on the will of the parties – the call-up of the employer, a natural person or an employer who is the sole founder (participant) of a legal entity and at the same time has the powers of the sole executive body of this legal entity, for military service in mobilization, if he did not authorize another person to exercise his rights and obligations during this period. The law does not specify how to formalize the dismissal if the employer did not delegate their powers to anyone else. The changes came into effect on November 4, 2022.

The obligation to pay average salary and the employer’s right to reimbursement of expenses

The employer is obliged to retain the employee’s job position and average salary in case of the employee’s call-up for:

• military training
• resolving issues related to military registration
• mandatory preparation for military service
• conscription
• voluntary enlistment in military service
• entry into the mobilization reserve.

The employer also has the right to be reimbursed for any expenses incurred as a result of the employee’s call-up.

In case of such a call, the employer is obliged to release the employee and continue to pay them the average wage for all missed working days. The employer’s expenses for paying the average wage are subject to compensation from the federal budget of the Russian Federation in accordance with clause 7 of Article 1 of the Federal Law No. 53-FZ of March 28, 1998. The rules for compensation of expenses were approved by the Government of the Russian Federation on December 1, 2004, No. 704. According to clause 5 of paragraph 2 of the Rules, expenses related to the payment of the average wage, taking into account contributions to the wage fund, are subject to compensation. To obtain compensation, the employer must provide information on the amount of expenses for paying the average wage and indicate the bank details for transferring the compensation. To confirm their right to compensation, individuals need to provide original documents, and organizations need to provide certified copies. The organization provides information on official letterhead signed by the head and stamped (if available). The rules do not provide for a specific list of documents that must be provided to confirm the right to compensation.

We recommend providing a cover letter on official letterhead signed by the head and stamped, bank details for receiving payments, calculation of the employee’s average wage, copies of the call-up notice and military registration certificate, a copy of the work time sheet with notes for the period of absence, and a document confirming the payment of the average wage. The legitimacy of using such a set of documents is indirectly confirmed by court practice: by the decision of the Eighteenth Arbitration Appellate Court dated January 16, 2014 No. 18AP-13985/13, by the decision of the Moscow District Federal Antimonopoly Service dated June 28, 2012 No. F05-6371/12 in case No. A40-28247/2011, and by the decision of the Ninth Arbitration Appellate Court dated February 16, 2012 No. 09AP-35806/11.

Expenses for transportation of employees working on a rotational basis are borne by the employer.

On December 19, 2022, Federal Law No. 545-FZ was published with amendments to Article 302 of the Labor Code of the Russian Federation. The transportation of employees working on a rotational basis from the employer’s location or the gathering point to the place of work and back is carried out at the expense of the employer. The employer may compensate the cost of the employee’s travel from their place of residence to the employer’s location (gathering point), the amount and procedure of such compensation is established by the collective agreement or local normative act. These changes to Article 302 of the Labor Code of the Russian Federation will come into force on March 1, 2023.

Guarantees for volunteers and contractors who signed contracts from February 24 to September 21, 2022

On September 28, 2022, a bill was passed in the third reading according to which volunteers and contractors will also have the right of priority employment for the previously held position. If the previous job is occupied, the employer will be obliged to offer the former employee another job taking into account their health status.

Guarantees for family members of mobilized individuals

According to the draft law, a parent of a child under the age of 18 has a priority right to keep their job in case of downsizing when the other parent is mobilized (Article 179 of the Labor Code of the Russian Federation). Parents of children under the age of 14 cannot be sent on business trips, required to work overtime, at night, or on weekends without their consent in case of mobilization of the other parent (Article 259 of the Labor Code of the Russian Federation).

Other guarantees and support measures

Suspension of enforcement proceedings

Enforcement proceedings against military personnel are subject to suspension (information letter dated September 28, 2022 from the Federal Bailiff Service of Russia).

In accordance with part 2 of article 40 of the Federal Law “On Enforcement Proceedings”, the enforcement proceedings may be fully or partially suspended at the request of a debtor who is serving military service by conscription in the Armed Forces of the Russian Federation, other troops, military formations and bodies created in accordance with the legislation of the Russian Federation. Such debtors can submit applications for the suspension of enforcement proceedings directly at the conscription points of military commissariats. For this purpose, employees of enforcement agencies must be present at the military commissariats in all regions of the country.

December 21, 2022, relevant amendments were adopted in the third reading to the Civil Code, Code of Administrative Offenses, and Arbitration Procedure Code (TASS)

Credit holidays for mobilized individuals and their family members

According to the text of the Federal Law Project N 199777-8, mobilized citizens (and their family members) will have the right to demand a suspension of payments on consumer loans and loans (including credit cards) from banks and MFOs until December 31, 2023. This rule will apply to financial products issued before the announcement of the partial mobilization.

From the text of the bill, it follows that the holidays will be provided on the following conditions:

• The period of the moratorium will be equal to the period of mobilization plus 30 days. The first day of the moratorium cannot be earlier than September 21, 2022.
• It is necessary to inform the bank or MFO about the intention to use the moratorium using any means specified in the contract.
• To confirm the fact of mobilization, supporting documents must be attached to the application. If there are no such documents, the financial organization will request them from the Ministry of Defense itself.
• The application will be processed within a period of no more than 10 days.
• During the moratorium, fines will not be charged, but interest will be charged as follows: 1) on consumer loans and credit cards – in the amount of 2/3 of the average market value; 2) on mortgage loans – in the amount provided for by the contract, but with the caveat that if the borrower continued to pay off the loan and reduce the principal amount of the debt.
• The loan repayment period automatically increases by a period of not less than the mobilization period, but in such a way that after the end of the moratorium, the monthly payment is not more than what it was before the moratorium.
• In case of the mobilized person’s death or disability of the 1st group, the debt is subject to complete write-off.

21.10.2022 Letter of the Bank of Russia No. IN-03-59/126 was published on 21.10.2022 with explanations of the rights of mobilized persons to credit holidays:

• For individual entrepreneurs, the credit holidays apply to business loans.
• A request for credit holidays can be submitted in person or by power of attorney.
• The borrower has the right to demand the establishment of a preferential period from 21.09.2022, but not earlier than the date of mobilization or the beginning of participation in a special military operation by a serviceman, regardless of the date of submission of the relevant requirement (but no later than 31.12.2023), including if the creditor previously refused to grant a preferential period to the borrower or the preferential period was not established. In such a situation, provided that the borrower provides documents confirming the serviceman’s participation in a special military operation, the terms of the contract are subject to change from the date specified by the borrower, including the cancellation of accrued interest, penalties (fines, penalties), and other consequences of the borrower’s failure to make payments during the period from the start of the preferential period to the date of submission of the requirement for its provision (taking into account the maximum duration of the preferential period set by federal law).
• In case the borrower makes payments during the specified period, such payments are directed by the creditor to repay the borrower’s obligations to return the principal amount in accordance with the imperative requirements of the legislation of the Russian Federation.

Payment deferral for leasing of federal property

On October 18, 2022, Government Decree No. 3046-rm of October 15, 2022 was published. Mobilized citizens are granted a deferral of payments for leased federal property. Payment deferral applies to real estate, land, and other federal property leased to individuals (including individual entrepreneurs) and organizations where the same citizen is both the only participant and director in a situation (paragraph 1 of the Decree) where the individual is called for mobilization, is serving in the military under contract, or has signed a contract to voluntarily assist the Armed Forces of the Russian Federation.

The requirements are as follows:

• the property should not be used during the deferral period (paragraph 2.2 and paragraph 2.5 of the Decree);
• the deferral applies only for the duration of the military service (paragraph 4.2 and paragraph 4.5 of the Decree);
• the arrears must be paid gradually, starting from the day of completion of the service, but no more than once a month with equal payments, the size of which should not exceed half of the monthly payment under the lease agreement (paragraph 5.2 and paragraph 5.5 of the Decree);
• the lessor shall transfer the utility payments during the deferral period (paragraph 8.2 of the Decree).

Tenants who meet the specified criteria may terminate the lease agreement without penalties (subparagraph “b” of paragraph 1 and subparagraph “b” of paragraph 4 of the Decree). Municipalities are recommended to take similar measures to support payment deferrals for leasing municipal property (paragraph 7).

Exemption from personal income tax

On November 25, 2022, according to the amendments contained in Federal Law Draft No. 201629-8, it is planned to exempt the following types of income from personal income tax:

• “income related to the termination of obligations under a credit agreement (loan agreement) on the grounds specified in Article 2 of Federal Law No. 377-FZ of October 7, 2022, “On the Features of Performance of Obligations under Credit Agreements (Loan Agreements) by Persons Called Up for Military Service by Mobilization into the Armed Forces of the Russian Federation, Persons Participating in Special Military Operations, as well as Their Family Members and on Amendments to Certain Legislative Acts of the Russian Federation.” This paragraph refers to the cancellation of debts on loans in connection with the death or disability of a mobilized person or a person participating in a special military operation, and their family members.

• income in the form of cash and/or other property received free of charge by persons called up for military service by mobilization into the Armed Forces of the Russian Federation or serving in the military under a contract, or who have concluded a contract for voluntary service (assistance in carrying out tasks assigned to the Armed Forces of the Russian Federation), and/or taxpayers who are family members of these persons, provided that such income is related to the military service of these persons and/or the contracts concluded by them. Exemption from taxation of income in the form of cash and/or other property received free of charge also applies to persons serving in the Armed Forces of the Russian Federation under a contract or in the national guard, military formations and bodies specified in paragraph 6 of Article 1 of the Federal Law of May 31, 1996, No. 61-FZ “On Defense,” and/or taxpayers who are family members of these persons, provided that such income is received in connection with the participation of these persons serving in the military (service) in a special military operation.”

Exemption from VAT and reduction of corporate income tax

On 25.11.2022, amendments will also provide for cases of exemption from VAT and reduction of corporate income tax:

Transfer of property, exempt from personal income tax, to mobilized persons/participants in military operations and their family members, will be exempt from VAT, i.e., property necessary for the purpose of military service. Expenses in the form of monetary funds and other property, which are transferred free of charge to mobilized personnel/contractors and their family members, necessary for mobilization purposes, will be classified as non-operating expenses. Amounts of monetary obligations, which have been terminated due to the death or disability of a mobilized person or a person participating in a special military operation, including the monetary obligations of their family members, will also be recognized as bad debts (debts that are unrecoverable).

These amendments will apply to legal relations arising from 01 January 2022.

Exemption from paying insurance contributions

On November 25, 2022, mobilized individual entrepreneurs who do not make payments to individuals will be automatically exempt from contributions.

As stated in the letter from the Federal Tax Service of Russia dated November 1, 2022, No. BS-4-11/14737@, in accordance with paragraph 7 of Article 430 of the Tax Code of the Russian Federation (hereinafter – the Tax Code), payers of insurance contributions who do not make payments and other rewards to individuals do not calculate and do not pay insurance contributions for mandatory pension insurance and mandatory medical insurance for the period, including that specified in paragraph 1 of part 1 of Article 12 of the Federal Law of December 28, 2013 No. 400-ФЗ “On Insurance Pensions” (hereinafter – Federal Law No. 400-ФЗ), during which they did not carry out the corresponding activities – the period of military service, provided that they submit a statement to the tax authority at the place of registration on exemption from payment of insurance contributions and supporting documents. The period of military service is confirmed by military tickets, certificates of military enlistment offices, military units, archival institutions.

In accordance with the Agreement on Information Exchange between the Ministry of Defense of the Russian Federation and the Federal Tax Service of Russia dated October 12, 2022 No. 205/3/25/ED-23-3/52@, the Ministry of Defense of Russia transfers information to the Federal Tax Service of Russia about mobilized persons, including the period of military service during mobilization.

Exemption from payment of insurance contributions in a fixed amount will be provided based on the data of the Ministry of Defense of Russia at the federal level without requesting supporting documents.

Right to early termination of OSAGO contract

Bank of Russia Directive No. 6323-U dated December 13, 2022 (PDF on the CBR website) has been published. The list of grounds for early termination of the OSAGO contract by the insurer has been supplemented with the following cases:

• the insured’s call to military service in the Armed Forces of the Russian Federation in case of mobilization;
• the insured’s military service in the Armed Forces of the Russian Federation under contract with participation in a special military operation;
• the insured’s participation in a voluntary formation under a contract for voluntary assistance to the Armed Forces of the Russian Federation.

In case of early termination of the OSAGO contract on one of the listed grounds, the insurer returns to the insured a portion of the insurance premium in proportion to the portion intended for insurance compensation that corresponds to the unused period of the OSAGO contract or use of the vehicle.

Deferment from conscription during mobilization

On October 6, 2022, Presidential Decree No. 712 was published, granting the right to deferment from conscription during mobilization to citizens who are receiving full-time or part-time education for the first time, if they are studying:

• “In educational and scientific organizations for accredited programs of secondary vocational and higher education (including residency and assistant internships);
• In educational and scientific organizations for programs for the preparation of scientific and scientific-pedagogical personnel in graduate school;
• In organizations that carry out educational activities for programs of secondary vocational and higher education (including the preparation of scientific and scientific-pedagogical personnel in graduate school, residency and assistant internships) in the territories of innovative scientific and technological centers;
• In spiritual educational organizations for programs for the training of servants and religious personnel of religious organizations, programs of secondary vocational and higher education.”

Previously, for example, students of non-state organizations and graduate students could not apply for deferment. The document applies to legal relations arising from September 21.

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01.03.2022 Overview of Sanctions and Other Restrictions, as well as Legislative Easements and Measures of State Support for Business in Russia