Russia, spanning Eastern Europe and Northern Asia, stands as the largest country globally, covering a vast area. Moscow, the capital and an economic hub, contributes significantly to the global economy. The country's significant population, skilled in various sectors like Education, Medicine, IT, Retail, and Tourism, adds to its economic prowess. Notably, about 50.3% of Russians have tertiary education, showcasing a highly educated workforce. Employers find an advantage in the lower cost of living and wages. This becomes a crucial factor when considering the pay scale for Russian employees, especially compared to higher living costs in other countries. English-speaking talent in cities like Moscow and St. Petersburg and prestigious universities make Russia an attractive destination for expanding a global team. However, navigating local tax compliances, benefits, and payroll intricacies is essential for successful business operations in Russia.

Effective business expansion requires careful consideration of labor laws, especially in industries with specific employee categories, such as manufacturing plants with laborers. In Russia, Gloroots acknowledges the significance of adhering to labor codes and employment laws to protect employee rights while advancing the legitimate interests of business growth. These regulations apply universally to both national and foreign companies, underscoring the importance of compliance. For employers venturing into the Russian market, understanding the nuances of taxes, drafting employment contracts, ensuring compliance, and navigating labor code intricacies is crucial. For instance, Russia has some provision for collective bargaining which is not as prevalent in Western European countries like France where works councils play a significant role. Gloroots offers comprehensive support to employers, ensuring a smooth and legally sound process for hiring and workforce expansion.

The pricing model for Gloroots' Employer of Record (EOR) or Professional Employer Organization (PEO) services in Russia is determined by factors such as the number of employees, service scope, and project intricacies. Typically structured as a monthly fee per employee or a percentage of their salary, additional charges may be applicable for specialized services. To obtain a customized and transparent pricing package tailored to your business objectives in Russia, you should consult Gloroots. Leveraging their specialized expertise ensures a thorough understanding of your unique requirements, enabling a cost-effective and seamless entry into the Russian business landscape.

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Key Metrics For Foreign Employers 

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Here are a few factors for you to consider before considering hiring in Russia.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in Russia.

In Russia, effectively addressing the challenge of "Misclassification of Workers" is crucial due to the potential risks associated with inaccuracies in employee categorization. This includes the misidentification of independent contractors or the incorrect classification of individuals as exempt from specific regulations. To successfully navigate and mitigate these risks, engaging a PEO/EOR is essential. Collaborating with Gloroots, a reliable partner, ensures a dedicated commitment to strict adherence to labor laws, precise worker classification, streamlined payroll management, and comprehensive employee benefits. Entrusting these responsibilities to seasoned professionals guarantees a compliant and efficient experience within Russia's complex labor landscape. This fosters operational efficiency and instills confidence in your business endeavors in the Russian market, safeguarding against potential pitfalls linked to worker misclassification.

In Russia, employment laws provide a crucial framework to safeguard the rights of both employers and employees. Covering aspects like working age, hours, minimum wage, holidays, sick leave, and overtime compensation, these regulations aim for a fair workplace. Compliance is essential for businesses, ensuring a positive and lawful working environment.

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Employment contract

Every employment contract must be in written form. The essential elements of employment agreements comprise:

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• Identification of both parties
• Date and location of contract conclusion
• Start date (and employment duration for temporary contracts)
• Place of work
• Job title, description, duties, and responsibilities
• Workplace conditions, including information on work-related risks and compensation
• Basic salary and additional benefits
• Working hours
• Nature of work, such as telecommuting, office work, or other, if applicable
• Contributions to social insurance

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Working time

In Russia, the standard workweek typically spans 48 hours, with employees working 8 hours per day. 

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Overtime

Payment for overtime is obligatory when working hours exceed the standard limit. The maximum allowed overtime hours are 4 hours in two consecutive days and 120 hours per year. Overtime hours and their compensation are meticulously outlined in employment contracts or collective agreements. Typically, the initial two hours of overtime are remunerated at 150.00% of the regular hourly salary rate, escalating to 200.00% thereafter.

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Public Holidays

15 public holidays throughout the year (approximately).

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Minimum Wage

In Russia, the federal minimum monthly salary is set at 16,242 RUB, with potential variations based on the federal district.

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Annual Leave

Employees are entitled to 28 calendar days (20 working days) of paid leave annually, with a minimum of 14 consecutive days for a single leave period. Additional leave may apply to specific employee categories. Vacation pay, based on the average salary of the preceding 12 months, must be paid at least 3 days before the leave. Unused vacation days carry over for 12 months.

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Paid Sick Leaves

Employees have the right to take sick leave due to illness or injury. During the initial three days of sickness, the employer provides a sick leave allowance, and from the fourth day onward, the allowance is covered by the Social Insurance Fund of the Russian Federation, funded by the employer's insurance payments. The sick leave allowance is influenced by the employee's total length of service but is capped at 2,301 RUB per day, although employers have the option to offer a higher rate. This provision can also apply to an employee caring for a sick child or relative.

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Maternity leaves

The allowance for early registration during the first 12 weeks of pregnancy is 708.23 RUB as of February 1, 2021. Maternity allowance, a one-time payment, is capped at 340,795 RUB for 140 days in 2021. Calculated based on earnings from the preceding two calendar years, the maternity allowance considers average daily earnings multiplied by the number of calendar days on maternity leave. Statutory childbirth allowances amount to a one-time payment of 18,886.32 RUB from February 1, 2021. Childcare leave can extend up to three years from childbirth, with the allowance capped at 29,600.48 RUB for up to 1.5 years in 2021. All social allowances are directly paid to employees by the social fund starting in 2021.

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Paternity leaves

A relative or guardian responsible for a child can apply for paid parental leave until the child turns 18 months, with the allowance covered by the Russian Federation's Social Insurance Fund. Following childbirth, employees can take up to five days of unpaid leave. Those raising a child without the child's mother are entitled to the same benefits provided to women.

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Tax and Social Security contribution:

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Employer Payroll Contribution

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The percentages for Pension, Medical Insurance, and Social Insurance are applied to the salary up to RUB 1,917,000. 

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Employee Payroll Contribution

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Employee Income tax

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Termination Process 

Termination of employment agreements is a highly regulated aspect of Russian employment law, encompassing specific formalities such as notices, deadlines, and severance pay. There are six main grounds for dismissal, including a separation agreement, expiration of a fixed-term contract, employee-initiated termination (resignation), employer-initiated termination (for cause, related to transfers, and redundancy), forced termination due to uncontrollable circumstances, and illegal signing of an employment contract (e.g., hiring a banned professional).

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Unlike the "at-will" employment relationships in some jurisdictions, such terminations are generally not allowed in Russia, except for CEOs of Russian entities. Regardless of the reason, strict compliance with legislative and procedural requirements is mandatory when an employer intends to terminate an employment contract. This ensures that the dismissal procedure is carried out appropriately for the specific grounds identified, maintaining a balance between protecting employee rights and meeting the employer's needs within the framework of Russian employment law.

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Severance Pay

Employees who face termination due to liquidation or redundancy are eligible for a severance payment equivalent to their average monthly wage. Furthermore, the employer must provide the terminated employee with their average monthly salary for the first two months of their job search after the termination date. If, after this period, the employee has not secured new employment and has registered with the employment service within two weeks of dismissal, they are entitled to continued support starting from the third month.

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Notice Period

In Russia, notice periods are not universally mandated. They come into play specifically in cases of dismissal due to liquidation, redundancy, unsuccessful probation, or the conclusion of a fixed-term contract. The requirement for notice is contingent on the circumstances leading to the termination, emphasizing the nuanced nature of notice periods within the framework of Russian employment law.

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Probation Period

Probation or trial periods are typically outlined in collective agreements, but the prevailing norm in Russia is a three-month probation period, which may be extended to six months for roles such as directors and senior managers.

Expanding your global workforce comes with a host of compliance challenges, from employment laws to data protection and diversity requirements. At Gloroots, we streamline this process with a unified platform. Our experts handle everything from employment contracts to on-time payments and compliant benefits. This way, you can concentrate on talent acquisition, while we ensure a stress-free global employment experience for both you and your employees. Connect with our experts today to kickstart your global hiring journey.

Russia places emphasis on higher education, producing a skilled and educated workforce with expertise in various fields. The country ranks 9 for having a Workforce with tertiary education as per The Global Talent Competitiveness Index 2023, making it a perfect spot for abundant talent and skilled workforce.Whether you're exploring opportunities in burgeoning sectors or seeking skilled professionals in fields such as technology, Russia provides a diverse landscape for business growth. Collaborate with Gloroots to navigate complexities and build your team efficiently in this expansive market.