After protracted discussions a law was adopted which could in practice significantly affect the activities of many companies. The law places serious restrictions on the provision of secondment and staffing services and the use of such services, establishing a closed list of instances when use of secondment and staffing is allowed.
As of January 1, 2016, only the following entities will be entitled to provide exclusively temporary staffing or secondment:
- Private employment agencies with a special state accreditation;
- Other companies, including foreign ones, when employees are sent temporarily (so-called secondment) to :
- a legal entity affiliated with the party sending employees;
- a joint stock company, if the sending party is a party to a shareholder agreement for exercising the rights certified by the shares of such joint stock company;
- a legal entity which is a party to a shareholder agreement with the sending party.
Other entities are not entitled to send their staff to work at third parties. The maximum period for which temporary staff can be provided by a private agency in a number of cases is 9 months. Because the law is worded rather imprecisely, in practice there is a risk that the period for secondment may be limited to 9 months also.
Private employment agency
Private employment agencies are understood to mean legal entities registered in Russia that are accredited to conduct staffing. Such agencies must have charter capital in excess of 1,000,000 rubles and a qualified head with experience in that sphere of work.
A private employment agency may send its employees to work temporarily for another party only in the following cases:
- If employees are sent to an individual for personal care and provision of domestic services;
- If employees are sent to an individual entrepreneur or a legal entity for temporary performance of duties which are usually performed by employees who are currently absent, but for whom their jobs are held open to them while they are absent;
- If employees are sent to an individual entrepreneur or a legal entity to perform work related to the temporary (up to 9 months) expansion of production or services rendered.
Cases where use of staffing is not allowed
The law provides for cases where the use of secondment and staffing is prohibited. Among such cases is the use of staff to replace employees taking part in a strike.
Negative consequences for companies using staffing or secondment
The law envisages that the receiving party bears subsidiary (additional) liability for the obligations of the sending party arising from the employment relationship with the provided staff, including the obligation to pay wages, vacation pay, severance pay and other amounts due to employees. This means that if the party providing staff fails to pay salaries to the employees sent to work at a receiving party, the receiving party may be required to pay the unpaid salaries.
The law also establishes additional obligations for the parties providing staff. For example, the law requires that companies providing staff pay the social contributions for the staff provided based on the rates applicable to the operations of the receiving party. This obligation is likely to result in an increase in agency expenses, and, consequently, an increase in the cost of their services.
The law also requires including a number of mandatory conditions in staffing, secondment and employment contracts.
In light of the new rules, we recommend that companies using agency staff or sending their staff to work for other entities:
- Check beforehand whether their staffing, secondment and employment contracts comply with the requirements of the new law;
- Determine how to optimize internal human resources to avoid an increase in expenses and the abovementioned risks.
Specialists at BRICS Consulting will be happy to assist you in the organization of staffing or provide more detailed information.