On May 5, 2014 the President of the Russian Federation signed the Federal Law No.116-FZ “On introducing amendments to certain legislative acts of the Russian Federation” (the “Federal Law”) imposing a ban on the use of agency work.

Pursuant to the Federal Law, agency work means performance of works upon direction of the employer but to the benefit of another individual or legal entity (not being the actual employer – the “accepting party”).

However, it should be highlighted that, notwithstanding the ban, the law still allows the following parties (the “providing party”) to provide employee (personnel) labor under a respective agreement: 

• private employment agencies accredited by the Ministry of Labor and Social Protection of the Russian Federation and entitled to so operate;
• employer companies, when providing their employees to work in an affiliated company.

The providing party enters into employment agreements with employees and a personnel provision agreement with the accepting party.

Each case where an employee is provided to the accepting party should be executed as a separate addendum to the employment agreement with such employee. 

In addition, there are certain requirements established for the companies acting in such relations as the accepting parties:

1. Salary of the employees engaged under a personnel provision agreement must not be less than the salary of an employee with the same competence and skills employed by the accepting party.
2. Compensation for work under harmful and/or hazardous work conditions is established based on the description of work conditions at the workplace provided by the accepting party.
3. The accepting party must ensure compliance with the obligations established by labor laws as pertains to occupational health and safety.

 It should be noted that the Federal Law places a ban on providing employees for purposes of: 

• Substituting the accepting party’s employees participating in a strike;
• Performing works in the event of stoppage, bankruptcy proceedings against the accepting party, part-time work regime established by the accepting party for purposes of retaining work positions in the face of mass layoff of its employees;
• Substituting the accepting party’s employees who refused to work in cases provided by the labor laws. 

Provisions of the Federal Law on the amendments associated with the ban imposed on the use of agency work in Russia come into effect on January 1, 2016. That said, as follows from the preliminary analysis of provisions, new legislative acts may subsequently appear to further develop the Federal Law.

Additional notes

Should any questions arise in connection with the above or if you need any additional materials, please contact Anastasia Fomicheva or Anna Chaykina, St. Petersburg Office of Capital Legal Services.

This Information letter keeps the clients of Capital Legal Services and other interested parties abreast of information that may, to any extent, affect their activity or cater to their particular interests. The opinions and commentaries expressed in this information letter shall not be deemed as legal opinions and do not cancel the need to obtain legal advice or legal opinion on separate issues.