The Russian President has April 8, 2013 signed into law amendments to the Labor Code introducing a new chapter On Remote Work.
This new law represents a significant change and modernization of the Russian labor laws, for it will now for the first time become legal to arrange work on a remote basis at employees home. From before there are in the Labor Code provisions about so-called “domestic work” but these provisions have had limited effect and have not in fact regulated the situation where employers hire people to work at homes or otherwise remotely beyond the office. The old rules of “domestic work,” which will stay in force, regulate a quite peculiar labor relation with a person that works in a capacity of a contracting manufacturer producing light consumer and artisan goods from materials and instruments provided by the employer or purchased by the domestic worker at own expense. Thus those provisions have not been applicable to organizing remote work for a broad category of workers. There has been a great need in Russia to apply a regime of remote working for categories of employees like IT-specialists, sales representatives, consultants, translators etc. Now with the change it becomes finally possible to properly regulate such work practices.
Under the new law remote work (referred to in Russian as distance work) is understood to be work outside the employer’s place of business, its branch office, representative office, or other site beyond the employer’s control. The new law stresses the need to organize communication through means of modern IT telecommunication facilities by making it a necessary condition for remote work to use the facilities of various channels of IT telecommunication networks, including the Internet, to perform the work and to interact with the employer. An important provision of the law is that it is explicitly stated that the hiring of a person for remote work does not constitute an obligation for the employer to register a branch or any kind of subdivision. The provisions on remote work introduce a lot of possibilities of flexibility in the employment agreement; most importantly it allows setting the terms of termination of employment more freely without being restricted by the closed list of termination clauses as per the general provisions of law.
We will below discuss more in detail the new provisions of remote work and also shortly the other related working regimes, domestic work and work in long-term shifts, and also the possibility to conclude a civil law contract instead of an employment agreement under the labor law.
Remote work is understood to be work outside the employer’s place of business, its branch office, representative office, or other site beyond the employer’s control.
A necessary condition for distance work is the use of IT telecommunications networks, including the Internet, to perform the work and to interact with the employer (Labor Code, art. 312.1).
An important provision of the law is that it is explicitly stated that the hiring of a person for distance work does not constitute an obligation for the employer to register a branch or any kind of subdivision (no tax registration necessary). This conclusion can be drawn from the fact that according to the law a separate structural subdivision must be registered with the tax authorities in case the employer organizes a stationary workspace at a separate geographical location (Tax Code, art. 83(1) and 11(2)) whereas a remote worker’s workplace is by definition not stationary for the employer. The law on remote work contains a number of provisions that are specific to this kind of a working regime. According to the law, the remote worker (or a candidate for a vacancy) and the employer shall exchange electronic documents by means of enhanced qualified electronic signatures. But this is necessary only when so agreed between the parties. If there is no such agreement then the parties need to ensure physical signature when such signature is required by law (art. 312.1).
The contract with the remote worker should explicitly stipulate the condition that the working regime is that of remote work. The contract may stipulate that the remote worker must utilize for the performance of the agreed work equipment, hardware and software, means of protecting information, and other technical means provided by or recommended by the employer.
The employment contract must foresee conditions regarding the following:
– procedures and terms for providing for equipment, hardware and software, means of protecting information, and other such technological means delivered by or recommended by the employer
– procedures and terms for reporting on work performed
– terms of compensation for use of the equipment, hardware and software (etc.) belonging to (or rented by) the distant worker
– the procedure for reimbursing other costs connected with the performance of remote work
The employer’s duties to guarantee labor protection and work place safety apply concerning remote workers only as applicable to the nature of the working arrangement. If otherwise not specified by the employment contract, the remote worker decides on his own discretion on the daily working regime and time of rest
An employment contract and addenda to it may be concluded via exchange of electronic documents. In that case, the employer’s location is indicated as the location for where the employment contract was concluded. No later than three calendar days after the conclusion of the employment contract, the employer must send to the remote worker a duly executed copy of that employment contract on hard copy by registered mail with delivery confirmation. The dispatch of the documents required to be submitted in connection with entering into an employment agreement (art. 65) shall be done by sending copies of them as electronic documents. However, when required by the employer, the job seeker must send such documents as notarized copies by registered mail with delivery confirmation.
An employee may be familiarized with work-related documents, including local normative acts and orders of the employer specified by the Labor Code, through exchange of electronic documents. In cases when the employee, in accordance with the Labor Code, is entitled or obligated to file an official request or provide the employer with an official explanation (etc.), the remote worker may do so in the form of an electronic document. When so agreed between the parties, data on the remote worker are not entered into the labor book, and a labor book is not issued to a first-time worker.
Likewise, the Parties are entitled to conclude an employment contract on remote work without using electronic documents in the traditional manner. In that case, the contract indicates the place where the contract was actually concluded. The job seeker submits original documents to be presented when concluding an employment contract. Furthermore, in that case the employer must provide for the certificate of state pension insurance for a remote worker who is taking up a job for the first time. In this case the worker is also entitled to demand that a labor book be properly executed.
In a range of cases, remote work requires due execution of written documents which are sent through the postal service as registered letters with delivery confirmation. An employer, even in a case when an employment contract has been concluded via exchange of electronic documents, is obliged to send the remote worker a duly executed copy of that employment contract on hard copy. For provision of the mandatory insurance coverage for mandatory social insurance in the event of temporary incapability and in connection with maternity leave, the remote worker sends the employer the originals of required documents. In the event of termination of the employment contract even if it is specified that one should become familiar with the dismissal order in the form of an electronic document, the employer must, on the termination day of that employment contract, send the remote worker a duly executed copy of that order on hard copy. In other cases, the use of hard copies is not mandatory.
The parties may in a remote work agreement (similarly as with domestic workers) set the terms of termination of employment more freely without being restricted by the closed list of termination clauses as per the general provisions of law.
In addition to the new provisions on remote work, there are in the Labor Code provisions about so-called “domestic work” (chapter 49). But these provisions have had limited effect and have not in fact regulated the situation where employers hire people to work at homes or otherwise remotely beyond the office. The old rules of “domestic work,” which will stay in force, regulate a quite peculiar labor relation with a person that works in a capacity of a contractor-manufacturer producing light consumer and artisan goods from materials and instruments provided by the employer or purchased by the domestic worker at own expense. Thus those provisions have not been applicable to organizing remote work for a broad category of workers.
Domestic work is regulated by the general rules of the law, but a certain amount of flexibility is allowed.
The domestic worker may involve his family members into the work, but no labor relations emerge between them and the employer (art. 310).
In case of domestic work the employer and the employee will agree separately which party will provide the equipment and supplies (material) needed for the work. If the domestic worker uses his own materials or equipment, then the employer has an obligation to compensate for such use.
Health and safety rules should be followed even if work is organized as domestic work.
The law allows in regards to domestic workers for flexibility in setting the terms of termination of the employment agreement individually beyond the narrow confines of the general provisions of law applicable for normal working relations (art. 312).
Long-Term Shifts at Remote Places
The working regime “long-term shifts at remote places” is a form of employment under which the employee is sent to work at a place distant from his usual place of residence in circumstances when it is required that the person must lodge for lengthy periods at the place of performance of work (chapter 47). This form of employment is meant for the situations where work has to be done in scarcely populated places or areas with extraordinary constraints set by nature.
Workers under the regime of long-term shifts at remote places have to be returned home at least once a month or in exceptional cases at least once every three months (art. 299).
The working time under this form of employment is calculated according to the special rules referred to as summing up working time. Hereby, the whole time spent at the location of the remote work and for traveling thereto is taken into consideration in calculating the working time (art. 300). The total working time has to fall within the general rules of legal working hours.
Civil Contractor’s Agreement
The services or work of an individual in Russia can be legally hired either by conclusion of an employment agreement according to the labor law or a contract under the civil law, referred to as a civil law contract. An employment contract is regulated by the Labor Code. Civil law contracts are regulated by the Civil Code and fall thus beyond the scope of the labor law regulations.
The concept of a civil law contract refers to an agreement whereby a company hires the services of an individual without the intention to conclude an employment agreement. The main distinction between an employment agreement and a civil law contract is that the hired person does not under the latter construction enjoy the safety guarantees envisioned by the labor law (such as protection against termination at will, overtime and sick leave compensation, vacations) and is not subordinated to the staff management rules of the contracting organization.
Civil-law contractor arrangements are used when engaging a freelancer for temporary projects or auxiliary work which is performed from time to time and is of the nature usually performed by contractors instead of staff. A typical situation is when using the services of non-staff translators. Under these types of contracts, the parties are subject to civil-law rules, which provide for equality of the contracting parties and freedom of agreement. The Civil Code imposes, however, certain mandatory conditions that such agreements must meet (chapters 37 and 39 of Civil Code). In particular, the parties must agree upon a specific subject-matter of the contract, which must be described in detail in the contract specifying its scope and quality. The date of completion of work must also be specified as well as the starting and end dates for performance of the work. And the price of the contract and the settlement terms must also be provided for.
Often the main motivation to use such civil-law contracts is the intention of the contracting company to avoid the regulations of labor law. But it should be noted that a court may requalify the civil law contract into an employment agreement when the real circumstances of the work relation meet the criteria of the labor law (Labor Code, art. 11). Court practice has shown that courts are apt to ruling in favor of the civil contractor when claiming that the real nature of the work constituted an employment relation. Court practice reveals that courts hereby stress the following kind of criteria:
1) Such a contract has been systematic renewed or extended (Ruling of the Territorial Commercial Court of Moscow Region N KА-А40/7019-08 dated 28.08.2008).
2) The contractor is de facto managed as an employee being subject to the company’s internal regulations (Ruling of the Territorial Commercial Court of Moscow Region N KА-А40/5330-09 dated 19.06.2009; Ruling of the Territorial Commercial Court of the Moscow Region 13.11.2008 N KА-А40/10488-08).
3) A pattern of regular payments as for staff members is detected (Ruling of the Territorial Commercial Court of the Moscow Region N KА-А40/5330-09 dated 19.06.2009).
4) When the terms of compensation de facto point to the nature of employment, for example, when no term has been agreed for completion of work and connection between completion of work and payment not set (Ruling of the Federal Arbitration Court in the Moscow Region N KА-А40/5330-09 dated 19.06.2009 on case N А40-66166/08-76-271).
Naturally civil law contracts may also be concluded with persons registered as individual entrepreneurs. When such entrepreneurs in reality are engaged in the given line of business, there is less risk of such requalification.