Month: September 2022

After the announcement of partial mobilization by the President’s Decree on September 21, 2022 the employers are obliged to facilitate the enlistment into the Russian army when the call up to the military service will be forwarded to the reservists through the employer-company.

According to the Government Decree November 11, 2006 N 663 an employer must notify his employees on the enlistment against their signature as a rule, no later than 3 days before the appearance date specified in an army service summons. By failure to do so the employer would face administrative fines up to 3.000 RUB Clause 21.2 Code of Administrative Offences. Mobilization notification has to be organized by company’s HR department or its director, in case the employer does not have persons specially designated for such tasks.

The employer who duly notified the employee on the enlistment is not responsible for the employee’s further actions. Employer is only obliged to facilitate the timely appearance of the employee by the military enlistment office and not to interfere with the conscription.

In cases where an employee is directly summoned to the army by the military enlistment office, the employer should take the opportunity to make a copy of such summons for his staff files/personnel record.

According to the Federal Law On military duty and military service No 53-FZ dd. 28.03.1998 the called up employee should be released from work and continue to get an average monthly pay for the period he will be absent from work for a medical examination, mandatory preparation for military service, conscription for military service or entry into military service under a contract, admission to the mobilization manpower reserve, conscription for military training. The employee also retains his working place and position in the company. The time spent by the employee at events related to conscription for military service is included in the length of service for his annual paid leave. The employee’s costs during his absence period should be later reimbursed to the employer by the military enlistment office. Called up employees could not be dismissed. Their employment contracts should be uphold and they have the right to return to their previous place of work after they were released from the military service.

In case the employee is absent (vacation, sick leave, unexcused absence) or rejects to accept and sign into the summons the employer should document this fact and report the military enlistment office hereon.

There are cases where the company may receive a request with unspecified employees’ lists who are due to appear before the military commission instead of personal summons for particular employees. Such request will indicate characteristics of military professions (specified in individual military record card), which are summoned to the military enlistment office. Hereafter the employer needs to notify all relevant employees on the summon request. The commissariat will still have to give each of the employees a personal summons. Additionally the employer should also draft a list of employees who meet the criteria indicated in the request and forward it to the military enlistment office.

September 27, 2022 Russian Parliament is considering the draft law on ensuring the labor rights of mobilized. We will monitor the situation closely and update our clients on the relevant changes.

On September 08, 2022 the President Decree No. 618 implemented another hurdle for foreign companies trying to terminate their business operations in Russia. Since March of this year foreign companies from “unfriendly countries” were restricted to execute any transaction with shares of the Russian joint stock companies and other Russian securities, unless they obtained the consent of the Government Commission for these.

From now the approval of the Government Commission will be also mandatory in relation to any transactions with the shares of Russian limited liability companies in cases persons (individuals or legal entities) from “unfriendly countries” are involved. In the event foreign company is party to the transaction its “unfriendly status” can be based both on direct or indirect control of the person from the “unfriendly country”.

Hereto, any transactions entailing directly and (or) indirectly the establishment, change, termination of the rights of ownership, use or disposal of shares or of other rights that allow determining the conditions for managing Russian limited liability company or the conditions for its business activities are subject to the prior approval by the Government commission. If required the Government commission may also stipulate the conditions under which such transactions are allowed. 

The detailed procedure for obtainment of such governmental approval has not been specified yet, and should be issued within 10 days from the publication of President’s Decree.

The approval requirement will not be applicable in case the exemptions from the unfriendly status are given:

• Entities whose beneficiaries are Russian persons will not be considered persons of unfriendly countries, provided that control is disclosed to the tax authorities.
• Entities under the control of persons of friendly countries will also not be considered persons of unfriendly countries, provided that such control was established before March 1, 2022.

Consequently, the separation process from the Russian subsidiaries in the form of third-party sale or management buy-outs will require additional time and efforts from the foreign businesses and even could be put on hold by the Government Commission. 

We will monitor further changes and will be glad to provide advice on your exit / freezing options within the Russian market.