Russian Federation: Managing Payroll Budget in a Covid-19 Environment

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published on 12 May 2020 | reading time approx. 4 minutes

  

Cost optimisation is one of the principal directions for practically any entity to work on in the current situation. To maintain the viability of their entity or unit and to keep it alive, management try to adapt its operations to new conditions, in particular through optimisation of its payroll budget. This article may help you in better understanding of the arrangements available under labour law for possible personnel cost reductions.

  

  

 

Content:

Downtime (Art 72.2 Part 3 and Art 157 of the Russian Labour Code (LC RF)

 

II. Personnel Number/Staffing List Reduction (Art. 81 Part 1 Clause 2 LC RF)

  • Why is initiation of the personnel reduction procedure not recommended? »

 

    III. Short Working Hours (Art 74 and Article 93 LC RF)

      

    I. Downtime (Art 72.2 Part 3 and Art 157 of the Russian Labour Code (LC RF)

    What time can be treated as downtime?

    Downtime means temporary suspension of work for economic, process-related, technical or organisational reasons. A distinctive feature of downtime is that the reasons for downtime treatment may only be of a temporary nature. However, the Russian Labour Code does not provide an exhaustive list of possible reasons for downtime treatment.


    Downtime may affect one employee, a group of employees, or all employees of a structural subdivision or an entity.

     
    Downtime can be employee-caused, employer-caused or attributable to a reason beyond control of the parties. The size of remuneration due to employees for downtime is determined depending on downtime causes.

     

    Is it allowed to extend downtime treatment to non-working days?

    There is no direct ban on treatment of non-working days as downtime. Moreover, according to the position taken by RosTrud (highest supervisory authority for employee’s rights) downtime may be classified as ‘attributable to reasons beyond control of the parties’ where inability to work is a direct consequence of government measures to prevent the spread of Covid-19. Where downtime is due to a decline in sales caused by the pandemic, it should be classified as ‘employer-caused downtime’ because a direct cause-and-effect link is lacking in this situation between external circumstances and the inability to continue working.

     

    What are the employer’s benefits?

    Firstly, the employer reduces their payroll expense.

     
    Employer-caused downtime is to be remunerated at least as 2/3 of the employee’s average payroll. Downtime attributable to reasons beyond control of the parties is to be remunerated at least as 2/3 of the employee’s tariff rate or salary rate pro rata temporis to the downtime.

     
    Secondly, in case of downtime the employee’s consent is not required to transfer the employee to another job for a period of up to one month (Art 72.2 Clause 3 LC RF).

     

    How should one document idle time?

    Downtime treatment has to be substantiated by the employer’s internal order, which states the reason for downtime treatment and lists the positions whose work is suspended, specifying downtime duration. Where downtime treatment is due to the government measures intended to prevent the spread of Covid-19, the internal order on downtime should include a reference to a particular clause of the legal or regulatory document enacting these measures.

     
    In addition, the employment service has to be notified of the introduction of downtime regime in the enterprise where this regime affects all employees.

     

    II. Personnel Number/Staffing List Reduction (Art. 81 Part 1 Clause 2 LC RF)

    Personnel reduction is the Employer’s managerial decision caused by process-related or economic reasons. In case of a staffing list reduction, the employer removes certain positions from the current staffing list. When reducing the number of personnel, the employer reduces the number of employees in a certain staffing list position (for example, retaining only two managers out of four).

     

    What problems can emerge in this respect – and for what reasons?

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