Russia: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

Legal Forms of Companies

Open Joint Stock Company (OAO): Number of partners: 1 partner or more
Capital (max/min): RUB 100,000
Shareholders and liability: Liability is limited to the amount of capital invested.
Closed Joint Stock Company (ZAO): Number of partners: From 1 to 50 participants maximum.
Capital (max/min): RUB 10,000
Shareholders and liability: Liability is limited to the amount of capital invested.
Limited Liability Company (OOO): Number of partners: From 1 to 50 participants maximum.
Capital (max/min): RUB 10,000
Shareholders and liability: Liability is limited to the amount of capital invested.
Limited Partnership: Number of partners: No minimum.
Capital (max/min): No minimum capital required.
Shareholders and liability: General partners have unlimited liability; sleeping partners have limited liability.
General (full) Partnership: Number of partners: No minimum.
Capital (max/min): No minimum capital required.
Shareholders and liability: Liability is unlimited.

Business Setup Procedures

Setting Up a Company	Russia	Eastern Europe & Central Asia
Procedures (number)	4.00	5.26
Time (days)	10.10	11.78

Source: The World Bank - Doing Business, Latest data available.

The Competent Organisation: The local tax office.
For Further Information: World Bank Group, Doing Business, provides information on procedures in order start a business in Russia.

Financial Information Directories

Dun & Bradstreet - Worldwide directory with financial information on businesses

Rustocks - Information in the Russian stock-market and domestic companies

Recovery Procedures

Principle: Russian law provides for 4 types of procedure in case of insolvency: observation, rehabilitation under the authority of a receiver, appointment of an outside manager then compulsory liquidation. At each step, an amicable agreement may be reached.

Cases are judged by arbitration tribunals. After the verdict, the creditor must wait a month before being able to recover his debts. At the end, he can demand the execution of the sentence and appeal to a bailiff. If the bailiff cannot manage to get all the debt together within 30 days, the creditor can ask the Arbitration Tribunal to start an insolvency procedure.

Many informal methods are also used (negotiations, visits, appeals to private companies or corporative associations), but they often have no result.
Minimum Debt-to-Capital Ratio Triggering Liquidation: None
Bankruptcy Laws: Consult the analysis on the Insolvency Law (Bankruptcy) dated 26 October 2002 by Standard&Poor's.
Reorganization and Rehabilitation Laws: The Insolvency Law (Bankrupcy) also covers these procedures.

The Active Population in Figures

	2018	2019	2020
Labour Force	73,825,997	72,674,670	71,903,592

Source: International Labour Organization - ILOSTAT, Latest data available.

	2017	2018	2019
Total activity rate	74.15%	74.43%	73.96%
Men activity rate	79.88%	80.00%	79.37%
Women activity rate	68.88%	69.30%	68.97%

Source: International Labour Organization - ILOSTAT, Latest data available.

For Further Statistics: World Bank
Federal education portal (in Russian)
For Further Information About the Labour Market: Russian Union of Industrialists and Businessmen

Working Conditions

Opening Hours
Legal Weekly Duration: 40 hours a week
Maximum Duration: 54 hours a week (not more than 4 hours overtime over 2 consecutive days).
Overtime may not be more than 120 hours a year.
Night Hours: From 10pm to 6am.
For night work, the legal duration of working time is reduced by 1 hour.

Working Rest Day: Work is usually not allowed over week-ends or on public holidays.
In a certain number of cases, it is nevertheless permitted with the written agreement of the employee.
Paid Annual Vacation: 28 days per year
Retirement Age: Retirement is possible from age 55 for women and age 60 for men (after they have provided a 5 year contribution to the private sector and 15 to the public sector).
Child Labour and Minimum Age For Employment: Employing people under 15 is prohibited.
People under 18 can only be employed for a limited list of jobs. In addition, it is forbidden to make them work at night, at the week-end or make them do overtime.
Informal Labour Market: Between 10 and 15% of the working population. This rate is tending to drop due to economic growth and the reduction in taxes.
A large number have formal employment but carry out some form of trade.

The Cost of Labour

Pay

Minimum Wage: Since 1 June 2022, the monthly minimum wage is set to 15,279 RUB (USD 243).
Average Wage: In 2021, the average nominal salary was measured at approximately RUB 56,500 per month (Statista).
Other Forms of Pay
Pay For Overtime: +50% for the first 2 hours, then +100%
Pay For Rest Days Worked: +100%
Pay For Night Hours: No legal provision.
Pay For Overtime at Night: As for overtime.

Social Security Costs

The Areas Covered: Retirement, health insurance and disability benefit, family allowances.
Contributions: Contributions Paid By the Employer: Insurance contributions are levied on companies, individual entrepreneurs and self-employed individuals. The threshold is subject to annual revision by the Russian government. The rate is 30% withholding tax, broken down into: 22% up to the threshold (RUB 1,565,000), and 10% excess of the threshold to the State Pension Fund, 2.9% (up to RUB 1,032,000) to Social Insurance Fund, 5.1% to the Federal Medical Insurance Fund. For foreign employees, a withholding tax of 1.8% is payable to the Social Insurance Fund.
Contributions Paid By the Employee: No mandatory contributions are payable by employees.
Competent Organization: Federal Tax Service
Social Security Fund

Management of Human Resources

Recruitment

Method of Recruitment: The most common method of recruitment is still by word of mouth.
There are many Internet sites for advertisements, and this is an efficient way of recruiting.
Moreover, more and more companies are resorting to recruitment agencies. An interview takes place before hiring.
Recruitment Agencies: Regional or national head-hunters who generally contact candidates directly. The market is in full expansion.There are more than a hundred agencies in Moscow, most of them Russian, but the large international agencies are also present such as Adecco, Alexander Hughes, Arthur Hunt, and Brainpower.
Click here to see a list of recruitment agencies.
Recruitment Websites: Tip Top Job International
The Moscow Times Career Centre
Expat.ru

The Contract

Type of Contract: A work contract is governed by legal provisions and to a lesser extent by collective agreements and individual negotiation.
Contracts can be permanent or fixed-term. The use of a fixed-term contract must be justified.

Breach of Contracts

Retirement: It can take several forms: "normal" retirement, for personal reasons, an agreement with the employer, voluntary early retirement, etc.
Dismissals: Only allowed in a limited number of cases: liquidation of the company, down-sizing, serious professional misconduct, inadequacy for the work required.
Other Possible Methods: Mutual agreement, at the employee's initiative, the employee's refusal to continue to work when working conditions have changed.
Labour Laws: Synthesis of labor legislation in Russia
Different laws
Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises.

Dispute Settlement

Conciliation Process

Cases of Dispute: Most disputes are the result of challenging a dismissal or disciplinary measure, but collective disputes are on the rise.
Legal Framework: Procedures are different according to whether the case concerns one person or if it is collective. If the case only concerns one person, a distinction is made between disputes over the application of existing working conditions and those concerning new working conditions. Within the framework of collective disputes, arbitration is obligatory.
The 2 parties first set up an arbitration committee with equal representation whose decisions are binding.
If arbitration fails, the parties can appoint a mediator, who may be recommended by the Service for the Settling of Collective Labor Disputes.
In case of failure, the decision will fall to an ad hoc arbitration committee created by the parties and the above-mentioned service. The composition, procedures and powers of this committee are set by common agreement.
Procedure: Labor Code of the Russian Federation

Judicial Structures

Legal Framework: Labor Code of the Russian Federation
Competent Legal Body: Individual disputes are usually dealt with by the Dispute Settlement Committee, an equal representation body inside the company.The worker can appeal the decision of this Committee or in some instances take the case directly to a civil tribunal.

Social Partners

Social Dialogue and Involvement of Social Partners: The scope of the unions is seriously limited by government policy and the position of strength of the Federation of Russian independent unions (FSIR), which is close to the government and prevents other unions from developing freely.
In addition, the new law on NGOs also applies to unions and limits their activity considerably.
Unionisation Rate: 46% according to the FSIR (of which 95% are members of this). Membership levels are dropping.
Labour Unions: Federation of Russian Independent Unions

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