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According to Article 56 of the Labor Code of the Russian Federation, an employment contract is a voluntary agreement between an employee and an employer. Accordingly, as in any agreement, the parties may and have the right to include additional and mandatory information provided by law in the employment contract. If mandatory information or conditions are not included in the employment contract at the time of its conclusion, this does not mean that the employment contract is invalid or needs to be terminated. It simply needs to be supplemented with the missing information or conditions. In particular, missing information is directly entered into the text of the employment contract. This can be a separate sheet of missing information, and missing conditions are an integral part of the employment contract, which are introduced as a separate annex. An additional agreement to the employment contract is the most common form of such supplementation.

According to Article 57 of the Labor Code, an employment contract must contain certain information, a number of mandatory conditions, and additional conditions and mandatory information. In addition, this rule is also regulated by Article 8 of the Labor Code, which states that the employer has the right to adopt internal local regulations in accordance with the norms of labor legislation within the framework of its internal policy, if these internal local regulations do not contradict the norms of the Labor Code. In particular, mandatory information includes:

• the employee’s surname,
• the employee’s name,
• the name of the employer,
• information about the documents certifying the employee’s identity,
• the employer’s taxpayer identification number (INN),
• information about the representative of the employer and the powers on the basis of which the representative of the employer signs the employment contract,
• the place and date of conclusion of the contract.

In addition, a new regulation has recently been introduced regarding foreign citizens who are temporarily residing in the territory of Russia. For them, additional information includes: information about a work permit and information about a patent or information about temporary residence permit. For foreigners who permanently reside in the territory of the Russian Federation, information about a residence permit is required.

The mandatory conditions of an employment contract are:

• Place of work
• Job function
• Start date of work (if the employment contract is for a fixed term, it is necessary to indicate its duration and the grounds on which this employment contract is deemed to be fixed-term with references to the norms of the law, in particular, Article 59 of the Labor Code)
• Conditions of remuneration
• Working hours and rest periods
• Conditions for the employment of workers in hazardous or dangerous working conditions
• Conditions determining the nature of the work in necessary cases
• Mandatory social insurance condition
• Working conditions at the workplace

For foreigners temporarily residing in the territory of the Russian Federation, another mandatory condition is the availability of information on voluntary medical insurance. This can be, for example, the details of a medical insurance policy or an agreement between the employer and a medical organization licensed to provide primary medical care to foreign citizens. In addition, mandatory conditions may be some other conditions provided for by law for certain categories of employees, in particular, for medical and educational workers. Additional conditions that may be included at the request of the employee and employer in the employment contract may include information about the structural unit, the duration of the probationary period, the employee’s obligation to maintain confidentiality, the employee’s obligation to work for a certain period of time after training at the expense of the employer, types and conditions of additional insurance. In addition, there may be additional conditions, such as improving the social and living conditions of the employee and their family members, the rights and obligations of the employee and employer, and additional non-state pension insurance for the employee.

So, we have reviewed the most common types of mistakes that employers make when drafting employment contracts. Now let’s take a closer look at some of them.

Place of work

Specifying the place of work is a mandatory condition for drafting an employment contract, but if it is specified too specifically, the employee may refuse to move if they are offered a new job in the future. Then the employer will have to pay compensation under Article 74 of the Labor Code of the Russian Federation “Changes in organizational or technological working conditions”. This article is quite complicated, so we do not recommend specifying the place of work in too much detail. Another mistake is specifying the place of work too abstractly. In this case, the employer may have difficulties when dismissing the employee for absenteeism – it is unclear where the employee’s place of work is and where they actually did not show up.

An example of an optimal option: “LLC “Mir”, city of Moscow”, or, if the employee is hired into a separate unit or branch, then the place of work can be specified as “LLC “Mir”, branch in the city of Kaliningrad”, and then there will be no questions.

Work function

Another mandatory condition is the work function – work according to the position specified in the staffing table, profession, specialty, with an indication of qualification; the specific type of work assigned (paragraph 3 of part 2 of article 57 of the Labor Code of the Russian Federation). The employment contract must indicate the job title, profession, specialty, and qualification of the workers. If there is a job description, it is not necessary to provide a detailed list of the employee’s duties, and it is sufficient to indicate their position without specifying additional responsibilities. All obligations can be reflected in the job description. In the absence of job descriptions, a description of the work function must be present in the employment contract. Without this, it will be difficult to demand that the employee perform duties not provided for in the contract (article 60, paragraph 2 of article 72.2 of the Labor Code of the Russian Federation).

If an employee is entitled to certain compensation and benefits within the framework of the law, then this position must be indicated in accordance with the ETKS, ECS, or professional standard (paragraph 3 of part 2 of article 57 of the Labor Code of the Russian Federation). This rule will also simplify staff reductions.

Start date

The start date must be specified in the employment contract. If the start date is not specified, the employee is considered to have been hired on the next working day after the contract comes into force and must begin work. If the employee does not start work within the specified time, the employment contract may be annulled by the employer. When concluding an employment contract with a foreigner who needs to obtain a work permit, the issue of which start date to put in the employment contract often arises in practice. When submitting documents to the migration authorities, the employment contract is provided and the date of signing the contract may not coincide with the start date of work, and the start date of work should follow the date of obtaining a work permit.

Fixed-term employment contract

When concluding fixed-term employment contracts, it is necessary to reflect the reasons for concluding a fixed-term employment contract (Article 59 of the Labor Code of the Russian Federation) and the duration of the employment contract (maximum term – 5 years). In case of non-compliance with these two conditions when concluding a fixed-term employment contract, courts usually side with the employee in case of disputes.

Payment terms

Minimum wage

Payment terms must be specified in the employment contract. The salary must be indicated in accordance with the system of payment in the company, within the framework of the staffing table. When specifying the salary and tariff rate, it is necessary to take into account the qualifications, complexity of the work, the minimum wage (MW) for a full-time job or the minimum salary in the region. For example, in Moscow and St. Petersburg – cities of federal significance – the MW differs from the minimum wage in other regions, which is set at the federal level for the entire territory of the Russian Federation, and these conditions must be taken into account. In addition, the employment contract must specify the procedure for payment of wages, including deadlines, if they are not specified in the collective agreement or internal regulations (part 6 of Article 136 of the Labor Code of the Russian Federation). There were many disputes and questions about this requirement of Article 136 of the Labor Code, but now everything works within the framework of this article. However, many employers continue to make mistakes, for example, the salary should be paid no less than every six months.

Salary payment deadlines

In addition to this, the payment deadlines must be specified. It is not enough to simply indicate “twice a month”. If the local normative act provides for payment deadlines, then the employment contract can refer to these norms. Example:

“The salary is paid no less than every six months: for the first half of the month – from the 16th to the 30th (31st) of this month, for the second half of the month – from the 1st to the 15th of the following month.”

Stimulating Payments

Salary can consist of a base pay and stimulating payments. The description of stimulating payments (supplements, bonuses, etc.) can also be specified in the employment contract. Stimulating payments are not tied to specific numbers and months and can be paid for other periods (not just half a month, as reflected in the part of the salary in the employment contract).

If the provision on payment of stimulating payments provides that they are made once a month, then the employer, accordingly, can pay them once a month. This is also reflected in the letter from the Ministry of Labor (dated 23.09.2017 N 14-1/OOG-8532).

Payment of wages at a reduced rate

Employers often encounter difficulties when writing the terms of payment of wages at a reduced rate and very often make mistakes in them. How to correctly reflect a reduced rate in the employment contract? We offer two options for formulations that do not contradict labor legislation:

1. Specify the full salary. “The employee’s wages are paid proportionally to the time worked based on the full rate salary of 30,000 (thirty thousand) rubles 00 kopecks per month.”
2. Specify half the salary. “The employee is assigned a salary of 15,000 (fifteen thousand) rubles per month, which, according to the staffing schedule of LLC “ABC,” is half of the salary for the office administrator position.”

These two formulations will help the accountant calculate the salary and other specialists and employees understand the amount of the employee’s salary without any specific difficulties or disputes.

Indicating the size of the salary in foreign currency

An important condition in an employment contract is the currency in which the salary is specified. Indicating a salary in a foreign currency is a violation, since the salary is paid in rubles (part 1 of article 131 of the Labor Code of the Russian Federation) and it must also be indicated in rubles in the employment contract (letters from the Ministry of Labor dated 11.03.2009 No. 1145-NP and 20.11.2015 No. 2631-6-1). Indicating a salary in a foreign currency without specifying the exchange rate also leads to a situation where the size of the salary is not actually fixed by the employment contract and depends on the exchange rate of the currency. The rule according to which the salary should be fixed is violated. There is judicial practice for these violations, in which employers have been held accountable for the “floating” exchange rate and, accordingly, the “floating” payment of salaries. For foreign companies, one solution to this problem has been to fix the currency exchange rate in the contract, but in this case, indicating the salary in a foreign currency loses its meaning, since a fixed amount in rubles will actually be written into the employment contract.

Working Time and Rest Mode

In addition, the working time and rest mode are a mandatory condition of the employment contract. If it is described in local regulatory acts, then the employment contract may refer to these acts.

For some categories of employees, the duration of working time is limited by law. For example, for disabled people of groups 1 and 2, it is no more than 35 hours per week, for medical workers – no more than 39 hours per week (depending on the specialization, the duration of working time may be lower), for part-time workers – no more than 20 hours per week.

Guarantees and Compensation for Harmful or Dangerous Working Conditions

If you have such employees, the conditions regarding guarantees and compensation must be included in the employment contract. In practice, very few employers correctly specify these points in employment contracts. Most often, this is due to the fact that the employer did not conduct a special assessment of working conditions (in accordance with 426-FZ) in the workplace and cannot know the real working conditions, and therefore cannot correctly specify the conditions, guarantees, and compensation for each employee. All employers need to conduct a special assessment of working conditions and, based on its results, specify working conditions in employment contracts, as well as related guarantees and compensation for harmful and dangerous working conditions reflected in the special assessment cards. If a special assessment of working conditions is not conducted, then the employer can accept a new employee by describing the general characteristics of the workplace. For office workers, this would be a computer, a stationary work phone, etc. For harmful and dangerous workplaces, a special assessment of working conditions must be conducted immediately after the employee is hired. More information about conducting a special assessment of working conditions can be found in our article. We also provide services for conducting a special assessment of working conditions for workplaces.

Mandatory social insurance

The employment contract must include a provision on mandatory social insurance (paragraph 10 of Article 57 of the Labor Code of the Russian Federation). For example, the wording that does not contradict the current legislation: “The employee is subject to mandatory social insurance in accordance with the current legislation of the Russian Federation.” No additional requirements are provided by the Labor Code of the Russian Federation. Foreign employees of the Armed Forces of the Russian Federation are not subject to mandatory social insurance and this condition should not be included in the employment contract (paragraph 1 of Article 2 of the Federal Law No. 225). However, if the employer accidentally forgets to remove this condition from the standard employment contract when concluding a contract with foreign employees of the Armed Forces of the Russian Federation, this will not be considered an error.

Other additional conditions

When hiring for part-time work, the employment contract must indicate that it is part-time work (Art. 282 of the Labor Code of the Russian Federation). The non-standard workday must be reflected in the employment contract (part 2 of Art. 57 of the Labor Code of the Russian Federation, Art. 100, 101 of the Labor Code of the Russian Federation). In this case, it is also necessary to include provisions for additional vacation days for the non-standard workday. Conditions for work from home, distance work, seasonal work, and work in the Far North regions must also be reflected in the employment contract.

What to do in case of errors in the mandatory conditions?

If some mandatory conditions are missing from the employment contract or they have been entered incorrectly, it is necessary to conclude an additional agreement with the employee and make corresponding changes and additions to the employment contract. Additional agreements must be concluded as soon as possible after the errors are discovered in order to avoid sanctions from the state labor inspection and prosecutor’s office as a result of scheduled and unscheduled inspections, as well as complaints and appeals to the court by the employee.

Prohibition on working in competing companies

In our practice, we often come across cases where employers include additional conditions that contradict the legislation. For example, large foreign companies often include a prohibition on working in competing companies after termination. This prohibition is illegal and is considered discrimination against the employee in the field of labor, since it contradicts labor legislation and limits the employee’s rights (letter from the Ministry of Labor of 19.10.2017 No. 14-2 / B-942). After termination of an employment contract on the territory of the Russian Federation, an employee has the right to work for any employer regardless of whether they are direct competitors of the former employer. Including conditions that limit the employee’s rights are at least invalid. In addition, the employer may be held administratively liable by the state labor inspectorate for non-compliance with labor legislation norms.

Disclosure of commercial secrets

Employers of all legal forms like to include conditions on the disclosure of commercial secrets. Foreign companies also like to do this as part of their foreign policy on non-disclosure of commercial secrets and confidentiality of information. In Russia, these conditions operate a little differently. Firstly, it is quite difficult to prove an employee’s guilt in disclosing confidential information. Certain documentary procedures must be followed, witnesses must be called, and the fact of the disclosure of confidential information must be recorded. It is also necessary to determine the exact list of information that is considered confidential. According to Federal Law 98-FZ “On Commercial Secrets,” information constituting commercial secrets includes any information of a production, economic, organizational nature, and employer know-how, etc. However, it should be noted that according to Article 5 of the Federal Law, some information cannot be classified as commercial secrets. In particular, public information, information included in the charter and founding documents, information about the authorized capital, the list of persons, the official who heads the organization, etc. (Art. 5 of 98-FZ).

Employers often formulate the condition of non-disclosure of commercial secrets as a ban on disclosing any information about the employer. This is incorrect since, as mentioned earlier, some information cannot be considered commercial secrets according to Article 5 of 98-FZ. Moreover, it is not sufficient to simply state that an employee is obligated not to disclose confidential information. It is necessary to establish a list of confidential information and have employees sign it.

Establishing a commercial secret regime is the employer’s right, but it is not possible to dismiss an employee for refusing to sign a labor contract with a condition of non-disclosure of commercial secrets when they have already started work. Therefore, this condition must be included before the employee starts working.

Compensation for work on weekends, non-working days, and holidays

Employers often make mistakes when specifying compensation for work on weekends, non-working days, and holidays. On such days, an employee may choose to take the day off on another day and receive payment for working on the weekend in the usual amount or receive increased payment for working on a weekend. This decision is made by the employee and cannot be restricted in the employment contract. If such provisions are present in the employment contract, they will be deemed invalid.

Replacement of vacation with monetary compensation

If an employee has the right to vacation for more than 28 calendar days (for example, for a non-standard working day, part 1 of Article 119 of the Labor Code of the Russian Federation), then they can use these vacation days or replace them with monetary compensation based on an application (part 1 of Article 119 of the Labor Code of the Russian Federation). The employment contract cannot specify which option will be mandatory for the employee.

Condition of the workplace

Regarding this type of condition, disputes and errors often arise when forming the text of the employment contract. According to the Labor Code, a workplace is a place where an employee must be in connection with work and which is directly or indirectly under the control of the employer (part 6 of Article 209 of the Labor Code of the Russian Federation). It is not necessary to specify the specific workplace in the employment contract. Moreover, we do not recommend specifying a specific workplace, as its change will require changes to the employment contract by an additional agreement. In the event that the employee does not agree to sign an additional agreement, the norm of Article 74 of the Labor Code of the Russian Federation “Change of organizational or technological working conditions” may be applied.

Conditions for specifying the place of work (including the structural unit and location)

It is advisable to include information about the structural unit in the employment contract. The affiliation of the position to the structural unit determines the list of job duties, which are separately fixed either in the employment contract or in the job description. For example, if you have a company with various departments and divisions that are structural units within the staff schedule, then they must be specified in the employment contract. For instance, “Lawyer in the Legal Department.” This condition is necessary, especially if there are positions with identical names in the company. For example, “Manager” – you can specify the structural unit for each of the managers. In this case, the employer will not have difficulties, for example, when reducing personnel related to the dismissal of employees holding identical positions in different units.

If the structural unit is located outside the administrative-territorial borders of the main company, then it is essential to indicate the place of work in the employment contracts. If the structural unit is located in the same locality as the main organization, it is not necessary to specify that the employee is hired in the unit. In this case, when transferring to the main organization, it will correspond to the relocation procedure, and it is not necessary to coordinate it with the employee (part 3 of article 72.1 of the Labor Code of the Russian Federation).

Condition on probation

Conditions regarding a probationary period may be included in the employment contract at the discretion of the employer. This is often done in order to protect oneself and at the same time give the employee a chance to get acquainted and determine whether it is convenient for them to continue the employment relationship or to resolve the issue of premature termination of the employee through an expedited procedure. The probationary period cannot exceed 3 months (Article 70 of the Labor Code of the Russian Federation) and cannot be extended even with the consent of the employee (letter from Rostekhnadzor dated March 2, 2011 No. 520-6-1). The minimum term is not established. Employers often reduce wages during the probationary period and indicate this in the employment contract. This condition is discriminatory and contrary to labor law norms, and cannot be included. During the probationary period, the same rights and obligations apply to the employee: payment is made for temporary disability, leave for pregnancy and childbirth, etc. In addition, Article 70 of the Labor Code of the Russian Federation provides for categories of employees who cannot be subject to a probationary period, in particular, when transferring an employee from one employer to another. In this case, the condition of probation should not be applied even if it is established in the employment contract.

The obligation to work for a certain period after training at the employer’s expense

In practice, this type of condition often leads to disputes. In general, it is recommended to create a separate agreement with the employee regarding apprenticeship – an apprenticeship contract (or training agreement). It is not possible to prohibit termination in the employment contract (the employee will still have the right to resign at their own discretion), but it is possible to stipulate that in the event of the employee’s dismissal for an unacceptable reason, they must reimburse the employer for the costs of their training in a certain proportion (Article 249 of the Labor Code of the Russian Federation). The legislation does not establish a list of acceptable reasons, so it is recommended to reflect them in the Training Agreement. (Letter from the Ministry of Labor and Social Protection of the Russian Federation dated October 18, 2013, No. 852-6-1) For example, downsizing can be considered an acceptable reason, while resignation at one’s own discretion can be considered an unacceptable reason.

Condition for compensation for damages due to unfulfilled work, payment of penalties to third parties

The employer cannot demand compensation for damages if they have lost profit due to the employee’s failure to perform their duties or poor performance (Article 238 of the Labor Code of the Russian Federation), unlike in cases of civil contracts. It is also not possible to establish fines in the employment contract. The list of permissible disciplinary measures is established in Article 192 of the Labor Code of the Russian Federation and is exhaustive. If you have deprived an employee of a bonus, this is not a disciplinary measure. The employer must justify the deprivation of a bonus depending on the expediency of its payment.

Prohibition on holding a side job

An employee has the right to enter into employment contracts for work during their free time outside of their main job, including holding a side job (external or internal), and this cannot be prohibited (Article 60.1 of the Labour Code of the Russian Federation). There is an exception to this rule – individuals under 18 years of age who work in hazardous or dangerous working conditions are not allowed to hold a side job if their main job is also associated with such conditions. For example, a driver cannot hold a side job if their main job involves driving a vehicle (Part 5 of Article 282, Part 1 of Article 329 of the Labour Code of the Russian Federation). In addition, there are mandatory conditions for the leader of an organization. A director may hold a side job with another employer only with permission from the authorized body of the legal entity or owner.

Employer’s responsibility for violating labour legislation

Recently, the state labour inspection and prosecutor’s office have resumed inspections of employers to check compliance with labour legislation. Complaints from employees to the state labour inspection, prosecutor’s office, Ministry of Internal Affairs, Investigative Committee, and other government bodies can also serve as a reason for unscheduled inspections. Employers must carefully draft employment contracts. The absence of mandatory information or conditions is not a reason for declaring an employment contract invalid. The employment contract can be supplemented with missing information, and conditions can be determined by an appendix to the contract or a separate additional agreement, which is an integral part of the employment contract. Missing mandatory information can be included in the employment contract by signing a sheet of missing information.

Employer’s Responsibility

There is responsibility of the employer under the Code of Administrative Offences. Recently, in practice, if not one but several similar violations are detected at the employer, the inspector can punish for each violation separately under the Administrative Offences Code of the Russian Federation:

• Part 1, Article 5.27 – a warning or an administrative fine (for officials – 1,000-5,000 rubles, for legal entities – 30,000-50,000 rubles);
• Part 2, Article 5.27 (similar repeated violation) – fines for officials – 10,000-20,000 rubles or disqualification for 1-3 years, for legal entities – 50,000-70,000 rubles.

The inspector’s decision can be appealed, but this is additional costs and efforts for the employer, and the courts do not always take their side. Thus, it is desirable to minimize risks and include all the required mandatory information in the employment contracts, as well as exclude all provisions contradicting the current legislation.

Additional guarantees

If certain specific additional guarantees are established in the employment contract and are mandatory, then they must be actually provided. For example, if the employment contract states that the employer provides the employee with health insurance or pays a monthly bonus in a certain amount, then these conditions must be fulfilled, as they are fixed in the employment contract. If the employer violates one of the conditions, then they must justify the reasons for the violation to the employee in writing.

Thank you very much for your attention! If you have any questions, please feel free to ask, I will be happy to answer.

Question 1

Question: Can the documents for employment indicate the start date of work on a day off or holiday?

Answer: Yes, it is possible. The Labor Code does not prohibit this. However, it is not very convenient in terms of personnel accounting. Nevertheless, the start date of work can be specified as a day off or holiday, and it may differ from the actual start date of work.

Question 2

Question: Is it necessary to include a clause in the employment contract with an employee regarding the existence of an apprenticeship contract?

Answer: In this case, it is necessary to directly indicate in the employment contract that in the event that the employee is undergoing training at the expense of the employer, he/she is obliged to compensate for it (it can be specified immediately “within the framework of the apprenticeship contract” or “training agreement”). It is also possible to specify that the apprenticeship contract or training agreement is an appendix to the employment contract. For example, if it is a training agreement and we conclude an employment contract, we do not always know whether an apprenticeship contract will be concluded with this employee.

Question 3

Question: Does a limited liability company need to conclude an employment contract with a director who is the sole participant in this company?

Answer: Rostroud states that if the director is the sole participant of the company, then it is not mandatory to conclude an employment contract.

Question 4

Question: How do companies solve the issue of paying salaries in foreign currency within the framework of the law, and are there any examples in this case?

Answer: Unfortunately, such cases have not been encountered in practice. State inspectors unequivocally state that the salary is part of the salary and it must be fixed in the employment contract. There have been cases where employers specified a salary in a foreign currency and fixed the exchange rate, but this action is meaningless because it is essentially the same as specifying a salary in rubles. If the exchange rate is not fixed, then the employee will receive a different amount of salary each time, which will be a violation.

Dear listeners! I see that there are no more questions. Thank you very much! If you have any additional questions, you can always contact us. I will be glad to answer you. Goodbye, thank you for your attention!