Along with other Eastern European countries, Russia has turned into a popular hiring destination for European and US-American companies looking for fresh IT talent. The current number of skilled developers is estimated to be around 400,000, with thousands of ITC graduates joining their ranks every year.
Other factors that make Russia an attractive destination for growing your global team are the country’s low wages and the high-quality education provided by the country’s top universities.
Every employment agreement has to be concluded in writing. The minimum requirements for employment contracts include:
- Identification of both parties
- Date and place of contract conclusion
- Date of commencement (and employment duration for temporary contracts)
- Job title, description, duties and responsibilities
- Workplace conditions, i.e. information on risks related to the work, and compensation
- Basic salary and additional benefits
- Working hours
- Nature of work, i.e. teleworking, office work or other, if applicable
- Social insurance contributions
Unless stated otherwise, employment agreements in Russia are considered indefinite. However, it is also legitimate to conclude a fixed-term contract under certain circumstances – and as long as the duration of such agreement doesn’t exceed 5 years.
Employers have the right to impose a 3-month trial period. For high-level positions, the probationary period can be extended to 6 months. During this time, the notice period is reduced to 3 days.
Working Hours and Breaks
A standard working week in Russia is 40 hours. For special categories of workers such as medical and teaching staff, weekly working hours are reduced. During an 8-hour day, employees must have a 30-minute lunch break at their disposal – may be extended to up to 2 hours. The minimum weekly rest period stipulated by law is 42 hours.
Any work conducted in addition to the employee’s normal working hours counts as overtime. Although overtime work is permitted, the employer needs the employee’s written consent. Even with the employee’s consent, ovetime mustn’t exceed 120 hours per year – or 4 hours over 2 days in a row. Overtime work is to be remunerated by a rate of 150 percent of the employee’s usual wages – 200 percent beginning with the 3rd hour.
Employees in Russia must be paid at least twice a month.
Currently (2021), the federal minimum wage is fixed at RUB 12,792 per month. Depending on the region, different minimum wage rates may apply. In Moscow, for instance, the minimum wage is RUB 20,589.
Employers have to provide sick pay for their employees during the first 3 sick days – upon presentation of a medical certificate. After 3 days, the employee receives sick benefits from the Russian Social Security Fund amounting to either 60, 80 or 100 percent of his or her usual wages – depending on his or her length of service.
There is no legal obligation for employers to pay their employees a 13th salary, but some companies do.
Taxes and Social Security Contribution
Employees and employers in Russia are subject to the following tax and social security contribution rates (rates for 2021):
20% corporate tax rate
20% VAT (standard rate)
Individual income tax rates:
Up to RUB 5 million: 13%; above RUB 5 million: 15%
30.2% – 38.5% of employee’s salary:
22% pension contribution (up to RUB 1,465,000 – additional 10% on income exceeding this cap)
2.9% social security (up to RUB 966,000)
5.1% health insurance
0.2% – 8.5% occupational insurance
0% of employee’s salary
Employees are not required to make social security contributions
The legally required annual leave entitlement in Russia is 28 (calendar) days. Unused leave can be carried over into the following year. In addition, the country observes 7 public holidays, with the New Year celebrations spanning over the entire first week of January.
Maternity Leave and Paternity Leave
Maternity leave in Russia starts 70 days before the expected delivery date and continues for another 70 days after birth which brings it to a total of 140 days. In case of multiple births or complications during birth, maternity leave is extended. During this time, the mother receives statutory benefits.
There are no legal provisions for paternity leave although fathers are allowed to take parental leave (see below).
After maternity leave is over, either mother or father – or any other close relative wishing to take care of the child – can go on childcare leave until the child reaches the age of 3. However, a statutory allowance is only paid until the child is 18 months old.
Additional Leaves and Benefits
Additional leave must be granted to certain types of employees and those with special personal circumstances. These include:
- 3 extra days for employees with irregular working hours
- 4 extra days for employees with a disabled child
- Unpaid leave for marriage or death of a close family member
Further unpaid leave may be granted upon request. Other popular benefits offered to employees include additional sick and maternity pay as well as lunch allowances.
In addition to resignation, termination of a fixed-term employment agreement and mutual separation, the employment may be terminated due to one of the following reasons (non-exhaustive list):
- Redundancy and other business-related reasons
- Forced termination due to external circumstances
- Summary dismissal due to unacceptable behavior
- Employee’s underperformance
The legal notice period for employees wishing to resign is 2 weeks. Notice periods for employers are longer and depend on the reason for dismissal:
- Redundancy: 2 months
- Dismissal for just cause: 2 days
The latter must be respected in order to give the employee the chance to explain his or her wrongful behavior. Employer and employee may agree on different notice periods as long as the adjustment is in favor of the employee.
Unlike in other countries, fixed-term contracts don’t automatically end with their expiration date. Instead, employers are obliged to provide a 3-day notice. If they fail to do so, the contract will automatically turn into an open-ended employment contract. What’s more, employers have to make sure to strictly comply with any regulations related to employment termination, regardless of the reason for dismissal.
Whether or not severance pay is required depends on the grounds for termination. No severance is required if the termination is due to just cause, resignation or expiration of a fixed-term contract. In case the employment is terminated due to business reasons, severance pay must be between 1 and 3 monthly wages. For termination due to reasons related to health, relocation and other, severance pay must equal 2 weeks’ wages.
Hiring in Russia?
Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Russia? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.