Knowing your rights following lay off or redundancy

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By Luke Conner, Conner & Company LLC, in association with Alexey Kokorin

T he recent financial crisis, including the onset of sanctions, the seemingly ever decreasing oil price and the resulting devaluation of the rouble, has done little to help the employment prospects of expatriates in Moscow or elsewhere in Russia. Indeed, a large proportion of the expat community have lost their jobs, whether through lay off or redundancy. This article aims to provide a lawyer’s perspective on the situation and a brief guide to your rights should you ever need to rely on them.

One of the first myths to debunk, is that lots of expatriates have been ‘made redundant.’ Under Russian law, a distinction is made between genuine redundancy, where a company is liquidated or a particular position in the workplace is closed down completely, and termination of an employment contract by mutual agreement, where an employee is asked by his/her employer to leave (perhaps because of the current market climate or an internal disagreement of some kind) and agrees a severance package. In our experience, such termination by mutual agreement is far more commonplace than genuine redundancy, although the two are often confused in practice.

So what are your rights in the latter situation? Effectively, if you are being asked to leave and you have not committed a gross violation of your official duties as an employee and your position is not defunct, then you can agree a severance payment with your employer. The most common practice is for employers to offer 3 months’ salary (net of taxes) in line with the maximum that would be payable in case of redundancy. That said, there are often cases of employers paying 5 or 6 months’ salary and sometimes employees may accept a lower payment of, say, 2 months’ salary. The agreed amount should be documented in a contract of termination, which should also specify the day when you are expected to leave the company.

Your rights as an employee who is being made redundant (i.e. where your position in the workplace is completely eliminated) are to 2 months’ advance notice. During this period, the employer should offer you other vacant positions within the company. If there is no suitable alternative role or you do not accept the employer’s offer, your employment will then terminate on the date when the 2 month notice period expires or on such other earlier date as you and your employer have agreed. You will be entitled to 1 month’s average net salary as severance pay, plus up to 2 months’ average net salary if during that period you remain out of work.

Whatever the reason for your contract being terminated, you are entitled to all outstanding salary amounts and to a payment in respect of all accrued, but unused, holiday entitlement. Additionally, on your last day of employment, the employer should return your work book to you with an appropriate entry.

One point worth noting which may be relevant for certain expatriates, is that CEOs (i.e. company general directors) are subject to slightly different rules, and may have their contracts terminated based on a decision of the shareholders of the company. Such dismissal does not require notice, but the CEO will be automatically entitled to 3 months’ average net salary (if a larger amount has not been provided for in the employment contract). CEOs’ employment contracts may also contain separately negotiated grounds for dismissal.

If you have any further questions on the above or other local legal issues, please do not hesitate to contact Luke Conner at Conner & Company LLC, based in Moscow.