Russia
Run your business seamlessly with NH Consulting as we help you go beyond borders to manage your international payroll and hire new talent in Russia.
Employer of record in Russia
Should you find yourself worrying about the pace of expansion or the necessity for in-depth local knowledge when setting up operations or recruiting staff in Russia, considering an employer of record could be your optimal solution to meet your international development goals.
Referred to at times as an international PEO, an employer of record offers you the ability to swiftly engage and integrate employees in Russia, often within a mere two weeks, and does so without the burdensome expenses and liabilities associated with creating a local business presence.
Discover the intricacies of hiring, labor laws, payroll, and employee benefits in Russia and explore how our employer of record solution, known as GEO, along with our team of local HR specialists, can assist in streamlining your global employment strategies.
Hiring in Russia
The primary piece of legislation in Russia that oversees work-related matters is the Labor Code. This code is further supported by additional statutes and regulatory measures pertaining to labor.
As mandated by the laws governing labor in Russia, it is necessary for workers to have formal individual employment agreements.
NH Consulting experts will help you ensure that your hiring process is compliant with the local laws.
Employment in Russia
As you look to hire employees in Russia, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.
In the Russian Federation it is mandatory to have an agreement between the employer and employee working for the company. There are mainly two types of employment agreements, namely:
- Indefinite Term Agreements: The employment document does not contain a term of validity and is considered unlimited.
- Definite Term Agreements: This is an employment scenario where employment relations cannot be established for an indefinite period and the terms of the agreement are fixed.
Typically, a workweek should not surpass 40 hours in duration. However, the Labor Code outlines shorter workweeks for specific employee groups:
- A 24-hour workweek is designated for workers under 16 years old.
- Those who are 16 to 18 years old are allocated a 35-hour workweek.
- A 35-hour workweek is also provided for workers with disabilities.
- For those in roles involving risky or unhealthy conditions, a 36-hour workweek is prescribed.
These workers benefit from reduced hours without a corresponding decrease in wages. On the other hand, when someone is employed part-time for reasons other than those specified, their compensation is adjusted in accordance with the actual hours worked.
As per the Russian Labor Code, Sunday is typically a day of rest. Each workday, employees are granted a break for meals or rest, which should be no less than half an hour and no more than two hours in length. Work conducted between the hours of 10 p.m. and 6 a.m. is categorized as night work.
Limits are placed on overtime, restricting it to no more than four hours across two consecutive days or 120 hours annually for each worker. Generally, employees are not obliged to work on public holidays, though they may consent to do so if they choose.
When determining the salary package for new hires, it is important to take into account the following considerations:
- Starting from 2024, the legal minimum wage per month will be set at 22 440 Russian rubles.
- Work performed during nighttime hours is subject to a higher pay rate, which is dictated by governmental guidelines and may fluctuate based on the specific sector.
- Compensation for hours worked beyond the standard workday is governed by national legislation, which mandates a pay rate of 1.5 times the usual rate for the initial two hours of overtime, and a rate of two times the usual for any additional hours thereafter.
- Staff members who work on public holidays are entitled to either double their standard wage for that day or receive an alternative day off in lieu.
As your official representative for employment matters in Russia, we are equipped to offer you a wealth of information and support regarding staff remuneration. This will ensure that you are fully prepared to extend a competitive job proposal to prospective employees.
The labor regulations in Russia do not stipulate the disbursement of bonus payments.
The trial period shall not surpass a duration of three months for regular staff members, whereas for individuals in executive positions such as CEOs, main financial officers, and their respective deputies, the maximum duration is set at six months.
Under the employment laws of the Russian Federation, it is required to implement a probationary period for newly hired staff. Typically, this trial period cannot extend beyond a three-month timeframe. Exceptions to this rule include individuals younger than 18 and mothers caring for infants under the age of 18 months.
It is the responsibility of the employer to notify an employee at least three days before the end of the probationary period if they have not met the required standards. If the employer does not provide such notice, the employee is deemed to have successfully completed the probation.
Once the probationary period has concluded, terminating an employment agreement becomes more challenging. The labor code specifies the conditions and procedures for the termination of an employment agreement, with job elimination being the most frequent cause. In these circumstances, employees are entitled to a notice period of two months and a severance payment equivalent to one to three months’ salary.
Dismissal may also occur due to an employee’s failure to fulfill their job duties as outlined in the labor code. The code protects pregnant women and mothers with children under three years of age from being let go.
There are additional scenarios where employment can be terminated with prior notice. This encompasses situations such as the dissolution of the company, which requires a two-month notice, and the conclusion of a fixed-term employment contract, which necessitates a three-day notice period.
Partnering with an Employer of Record (EOR) like “NH Consulting” can facilitate these processes for organizations, ensuring compliance with Russian employment regulations and avoiding legal disputes. “NH Consulting” is also equipped to create robust and legally sound employment contracts in line with the Russian labor code.
When discussing the conditions of a job agreement with a prospective employee in Russia, it’s essential to consider the mandatory entitlements and vacation provisions required by law. Additionally, understanding how an employer of record could enhance your organization’s approach to employee benefits is crucial.
Women in the workforce are eligible for a paid maternity leave period of 70 days before giving birth. This period increases to 84 days for expectant mothers of multiples. After delivery, they can take another 70 days of maternity leave, which can be prolonged to 86 days if there are complications during delivery, or extended to 110 days in the case of delivering twins or more.
Financial support during the prenatal and postnatal leave periods is provided by the Social Insurance Fund.
Women in the workforce are eligible for a paid maternity leave period of 70 days before giving birth. This period increases to 84 days for expectant mothers of multiples. After delivery, they can take another 70 days of maternity leave, which can be prolonged to 86 days if there are complications during delivery, or extended to 110 days in the case of delivering twins or more.
Financial support during the prenatal and postnatal leave periods is provided by the Social Insurance Fund.
Staff members have the right to take time off with pay on these designated national holidays:
- New Year’s Celebration
- Orthodox Celebration of Christmas
- Day Honoring the Nation’s Protectors
- Global Day Celebrating Women
- Day of Spring and Toil
- Commemoration of Triumph
- Day of Russian Pride
- Day of National Concord
Should any of these holidays land on a weekend, they will be recognized on the subsequent working day. Additionally, the workday that comes before a national holiday is shortened by an hour.
Healthcare services are provided at no cost to workers through the national social insurance program, with funding contributions made by employers.
Workers who are unable to perform their job duties due to illnesses or injuries not related to their employment are eligible to receive compensation for sick leave until they are fit to resume work. For the initial three days of absence, the employer is responsible for covering a short-term disability benefit, while the Social Insurance Fund covers the subsequent period.
The amount of sick leave pay an employee receives is based on their duration of contributions to the social security system:
- For contributions of less than six months, the payment is set at the minimum wage level.
- For those who have contributed for more than six months but less than five years, the payment is 60% of their average salary.
- Contributors with a history of five to eight years receive 80% of their average salary.
- Employees with over eight years of contributions are compensated with 100% of their average earnings.
These specified compensation rates apply to the first 10 days of sick leave. After this period, the compensation is decreased by half.
Every worker in Russia falls under the umbrella of the national retirement plan. Starting from the first day of January in 2019, a freshly enacted statute commenced a phased increase of the age at which individuals can retire, setting it at 60 for females and 65 for males. This incremental change is scheduled to continue through to the year 2028.
Employees in Russia not only receive health care advantages but are also eligible for a pension supported by government tax funds, along with workers’ compensation provided via compulsory insurance paid by employers.
The social costs borne by employers account for a significant part of the benefits package for employees in Russia. However, we are available to discuss with you alternative supplementary coverage possibilities, like extra contributions to pensions or life insurance policies, should they be required.
Payroll and Taxes in Russia
To establish a payroll system in Russia, it’s essential to have a firm grasp of the nation’s current legal framework. Knowing the specifics of your workforce is crucial for identifying the appropriate legislation to consult.
Understanding the intricacies of taxation is a vital aspect of managing employment and salaries. Collaborating with an Employer of Record (EOR) can streamline this process, freeing up resources and enabling you to concentrate on the core aspects of your enterprise.
Taxation in Russia
In Russia, the management of pension schemes, health care benefits, personal income taxation, and contributions for employer insurance is handled through various funds governed by complex and often unclear regulations. This situation adds layers of difficulty to the processes of payroll management and adhering to tax laws.
- Employers are responsible for deducting income tax at a uniform rate of 13% from their employees’ salaries.
- Russian citizens who do not reside in the country are subject to a higher income tax rate of 30% on their earnings within Russia, although they may be eligible for the standard tax rate for residents by meeting the conditions of the residency test, which includes staying in the country for at least 6 months.
- Payments related to maternity leave, social security benefits, insurance premiums, and pension fund contributions are exempt from personal income tax.
- Individual employees are not obligated to pay social security taxes out of their wages. Instead, these contributions, which total 30% of an employee’s pay, are solely the responsibility of the employer.
Bonuses
In Russia, bonuses tied to performance are widely favored, with certain employers providing an extra month’s salary as a bonus. Many companies extend extra perks to staff members who possess sought-after expertise or whom they wish to retain for various reasons, including educational fee compensation, personal medical coverage, or initiatives aimed at the worker’s family.
Employee onboarding with an employer of record in Russia
We craft and authenticate all necessary employment documentation, simplifying the integration process for both you and your team members in Russia. Your sole responsibilities are to supply the pertinent details and to endorse the finalized work contract. As your designated representative for employment matters in Russia, we will undertake the following:
- Arrange an introductory conversation to cover HR specifics and work-related details pertinent to Russia, as well as to address any inquiries
- Develop a tailored work agreement in English or another regional language
- Distribute the work contract and details regarding benefits to the new hire for their signature and examination
- Collect the necessary fiscal and banking details from the hire to facilitate the establishment of their salary disbursement
- Offer a local liaison for the hire to provide assistance with any queries they might have concerning their job, regional HR, or salary administration
Typically, the complete integration procedure for a new hire can be finalized within a brief period, often not exceeding two weeks.
Why choose «NH Consulting» as your Employer of Record in Russia?
Expanding your business and establishing a remote workforce requires a deep comprehension of local regulations and their impact on hiring practices. The employment landscape is complex, with variations in job contract types, state-specific legislation, payroll configurations, as well as grasping the intricacies of tax laws and the unique aspects of Russian negotiation traditions. These elements can significantly slow down the growth of your enterprise.
However, rather than creating a new business entity and delving into the subtleties of local legal frameworks, collaborating with an Employer of Record (EOR) offers a more straightforward solution. An EOR will manage your human resources requirements, ensuring that all employment practices align flawlessly with the regional legal standards, eliminating any potential for errors or non-compliance.
Reach out to “NH Consulting” now to propel your business forward with the essential support you need.
EOR Solution in Russia
Selecting an Employer of Record (EOR) offers a range of advantages for businesses. It enables organizations to allocate their time and resources away from the intricacies of staffing and human resources management. In effect, using an EOR is among the most efficient methods to establish a presence in the Russian market. By collaborating with “NH Consulting,” your company can facilitate its growth without the necessity of creating a separate legal entity to handle employment logistics.
Collaboration with an Employer of Record can lead to significant time savings for companies, particularly in the areas of establishing recruitment procedures, managing taxation, overseeing payroll, and dealing with other HR-related tasks.
At “NH Consulting,” we are capable of crafting bespoke agreements that adhere strictly to the regulations of the local jurisdiction. Our team at “NH Consulting” is also adept at modifying pre-existing contracts and accelerating the recruitment process by utilizing digital solutions, such as electronic document signing.
Some reasons why you should work with us:
- Active in Eurasia since 2001
- Dutch owned and Dutch managed
- We speak English, German, Dutch
- Group companies in Kazakhstan, Serbia, Georgia, Ukraine
- Our specialists understand very well the local requirements and the international standards
- Our staff is flexible and customer-oriented
- NH Consulting will consult you and offer you the best solution according to your needs
- We will provide you with all necessary assistance and support through our local offices
- Our staff is friendly and will help you to solve your challenges with pleasure!
We are trusted by international companies since 2001
Please describe in detail which service you are interested in. We are here to support you!
You can place an inquiry through info@nh-consulting-services.com to receive an initial consultation.