RUSSIA: Annual Update – Expected labour law changes in 2016


General prohibition on secondment (zayomny trud) : With effect from January 1, 2016 it is prohibited for a company (a lending company) to send an employee to perform their job functions under the control and management and for the interest of a third party (a receiving company).

Despite this general prohibition against secondment, it remains possible for a company to lend its employees on secondment to:
(1) its affiliates;
(2) a receiving company which is a joint stock company if: the lending company is not a PEA (see below), is a shareholder of a receiving company and concludes a shareholders’ agreement with it;
(3) a receiving company where the (non-PEA) lending and the receiving companies are both parties to the same shareholders’ agreement.
Action required:
For a qualifying secondment arrangement, the lending company shall:
(1) enter a secondment agreement with the receiving company;
(2) sign an addendum to the employment contract with the relevant employee.
Please note that in case of default of salary payment under an employment contract by the lending company and an employee, a receiving company has secondary liability.

Secondment by Private Employment Agency (PEA): As an alternative, also with effect from January 1, 2016 it is possible to set up a company specialising in secondment – a Private Employment Agency. Qualifying as a PEA company will require accreditation by the Federal Agency for Labour and Employment.

A PEA can provide secondments to:
(1) individuals who are not sole entrepreneurs – for the purpose of house-keeping and other personal services;
(2) sole entrepreneurs or companies – to replace a current employee who is currently absent but retains the job in accordance with the law (for example, during any types of leave or business trip);
(3) sole entrepreneurs or companies – for works associated with temporary (up to 9 months) expansion of production.
Action required:
A company can be accredited as a PEA if the following criteria are met:
(1) 1 million roubles of minimal charter capital;
(2) the company is not subject to a special tax regime;
(3) no default of payment of taxes and/or other mandatory payments;
(4) executive director of a PEA shall have:
(a) higher education;
(b) no criminal record for crimes against the person or for economic crimes; and
(c) at least two years of experience in recruitment in the last three years.

Personal Data Storage

Law regarding storage of the personal data of Russian citizens: The 2014 law requiring the storage of the personal data of Russian citizens on servers physically located in Russia came into force in 2015. The detailed Minsviaz Guidelines on the new rules came into effect on September 1, 2015. It can be expected that compliance inspections by the regulator will start to accelerate during 2016.
Action required: Companies should urgently make sure they take steps to understand and comply with the Minsviaz guidelines.