Russia | Labor disputes with the governing body of a legal entity — the CEO — what employers should keep in mind when implementing the termination procedure

In 2026, there are several notable examples and consistent trends in legal disputes between CEOs and their organizations. Below is a selection of situations that will help you understand what the courts are currently focusing on.

What types of spores are there:

1. Violation of the termination procedure.

One of the most common grounds for a lawsuit is when, upon termination under paragraph 2 of Article 278 of the Labor Code of the Russian Federation (decision by an authorized body), the company failed to follow its corporate procedures. For example, in a case heard by the Basmanny District Court of Moscow, a director was reinstated because the meeting of the LLC’s participants was convened without 30 days’ notice, the minutes were signed by a single person, and compensation under Article 279 of the Labor Code of the Russian Federation was not paid. The courts emphasize that even if there is a formal basis for dismissal, a violation of procedure (convening, documentation, payment) leads to reinstatement.

Practical conclusion: In July 2026, a CEO may be dismissed without legal action provided that three key requirements are met: a legal basis (Article 278 of the Labor Code of the Russian Federation), compliance with the procedure (Resolution No. 21 of the Plenum of the Supreme Court of the Russian Federation dated June 2, 2015), and payment of compensation (Article 279 of the Labor Code of the Russian Federation, not less than three times the average earnings).

Violation of any of these requirements results in the executive’s reinstatement.

Legal framework:

Pursuant to paragraph 1 of Article 36 of Federal Law No. 14-FZ of February 8, 1998, “On Limited Liability Companies,” the person who convenes a general meeting of the participants of an LLC (including the CEO) is required to notify each participant of the meeting no later than 30 days before the date of the meeting.

A few important points to note:

The articles of incorporation may modify this rule; pursuant to paragraph 4 of Article 36 of Federal Law No. 14-FZ dated February 8, 1998, the articles of incorporation of a company may provide for a shorter notice period for participants. Therefore, in a specific company, the period may sometimes be less than 30 days—it is necessary to consult the articles of association. The articles of association may also specify a different method of notification (for example, by email, if agreed upon in advance).

Consequences of a violation. If the procedure is violated (for example, if a shareholder was not notified or the deadline was not met), this constitutes a strong argument in court. A shareholder may challenge the resolution of the meeting, and the court is highly likely to declare it invalid.

But there is a caveat: the meeting may still be deemed valid if all members of the company were present.

Therefore, in disputes over the dismissal of a director, courts do indeed consider this time frame: if the meeting was held without the required 30-day notice (and the articles of incorporation do not shorten this period), this is a strong argument in favor of the conclusion that the procedure was violated and the decision is unlawful.

2. Dismissal During a Period of Temporary Disability. The courts have confirmed that an employer cannot dismiss a director on its own initiative while the director is on sick leave (the exception being the liquidation of the organization). If this occurs, the director can successfully challenge the dismissal.
3. Family-Related Protections. Appellate courts have begun to more actively review whether employment protections for individuals with family responsibilities were violated during termination. For example, if a director is the sole breadwinner for three minor children (and his spouse is not employed), the court may rule the termination unlawful, as it falls under the prohibition on termination at the employer’s initiative.
4. A situation where the director wants to resign but the owners are preventing him from doing so. The director submits a resignation letter and attempts to convene a meeting, but the founders fail to appoint a replacement or make the necessary changes to the Unified State Register of Legal Entities (EGRUL). In such a situation, the director files a lawsuit seeking a court order to declare the employment contract terminated and to compel the Federal Tax Service to remove the director’s entry from the register. The courts support this approach: the director’s order regarding his or her own resignation does not alter the Unified State Register of Legal Entities; the only recourse is through the courts. Example: Ruling of the Fourth Civil Chamber of the Supreme Court of the Russian Federation dated February 11, 2026, No. 88-1119/2026.
5. Probationary Period. Disputes sometimes arise when directors are terminated for failing to pass their probationary period due to conflicts with subordinates or violations of the code of ethics. In such cases, courts evaluate not only professional qualities but also personal qualities (politeness, professionalism in communication), provided that these are specified in the company’s internal policies.

Ruling No. 56-KG26-12-K9 of the Judicial Chamber for Civil Cases of the Supreme Court of the Russian Federation, dated June 15, 2026. In this ruling, the highest court confirmed that when evaluating a probationary period for a manager, courts do indeed consider not only professional skills but also personal qualities (politeness, professionalism, and the ability to build relationships within the team), provided that such requirements are stipulated in the company’s internal regulations.

Important considerations

When analyzing any such dispute, the courts rely on Resolution No. 21 of the Plenum of the Supreme Court of the Russian Federation dated June 2, 2015, “On Certain Issues Arising in the Courts in the Application of Legislation Governing the Employment of the Head of an Organization and Members of a Collegial Executive Body.” It sets forth general approaches: for example, it emphasizes that a decision to dismiss an employee under Article 278(2) of the Labor Code of the Russian Federation does not require a statement of reasons, but at the same time prohibits abuse of rights and discrimination.

6. Legal Disputes Regarding the Dismissal of a CEO for Breach of Trust and Failure to Perform Duties

About “Loss of Trust”

An important limitation: It is not possible to terminate the CEO under Article 81, Part 1, Clause 7 of the Labor Code of the Russian Federation (loss of trust). This ground applies only to employees who directly handle cash or goods (receipt, storage, transportation). A CEO, as a rule, has different functions—namely, managerial and strategic ones. The courts have consistently affirmed this: if an employer attempts to dismiss a CEO under this provision, the court will most likely rule the dismissal unlawful.

There are occasional exceptions in practice, but they are specific. For example, if a director simultaneously performed duties related to the direct handling of valuables (which must be explicitly documented), or if the case involves a manager in the public sector, where special anti-corruption regulations apply. In such cases, the court will conduct a thorough analysis of the job responsibilities.

Regarding “Failure to Fulfil Duties”

Directors may be dismissed under other provisions of Article 81 of the Labor Code of the Russian Federation:

Paragraph 9, Part 1—making an unfounded decision that resulted in a breach of property security, its unlawful use, or other damage;

Subparagraph 10, Part 1—a single gross violation of employment duties that could have caused harm to employees’ health or property damage to the organization.

What Becomes the Subject of Dispute in Court: The employer must prove the director’s guilt and the connection between his actions (or inaction) and the resulting consequences. The courts accept the following as evidence: the results of an internal investigation, memos, reports, electronic correspondence, orders, and financial documents.

Real-world examples:

The director issued orders to pay himself a salary or other compensation in an amount exceeding that specified in the employment contract and local regulations. The courts consider this to be a culpable act.

The director decided to proceed with a transaction without properly vetting the counterparty, which resulted in financial losses for the company. If it can be proven that there were alternative, safer options that the director failed to pursue, this may constitute grounds for termination.

However, there are also risks for the employer. If the evidence is insufficient, the court will rule in favor of the director: it may not see a direct link between the director’s actions and the damage, may not find the director at fault, or may deem the violation minor. Another common reason for a company to lose a case is a procedural violation. For example, if the company failed to request a written explanation from the director (as required by Article 193 of the Labor Code of the Russian Federation for disciplinary action).

Other important considerations

Even if there is a formal basis for termination, the courts closely examine the totality of the circumstances:

Was the decision-making procedure followed by the authorized body (shareholders’ meeting, board of directors)?

Was there any discrimination or other abuse of rights on the part of the employer?

Was compensation paid in accordance with Article 279 of the Labor Code of the Russian Federation (if the dismissal is not related to misconduct)?

A violation of any of these aspects may serve as grounds for reinstating the director.

It is necessary to analyze job responsibilities in detail, gather a comprehensive body of evidence, and strictly follow the procedure.