Sometimes they fight


-- 07 August 2009 --
TEXT: E. Istomina
PHOTO: NatalyArt - Fotolia.com

 

A delicate balance between the interests of a company and of its workers crumbles in the times of troubles. Our people are our most valued asset, they used to say; workforce must be optimized, they say now. Russia remains a popular destination for professionals from around the globe. They earn far above the average, and appear to get used to the sweet fruits of globalisation. For them the ‘optimization of workforce’ can be a trial of strength, a tussle which is not only legally complicated, but emotionally demanding too.

Close your eyes and say to yourself: ‘I am going to fight my rights in court in Siberia.’ Well? And that is exactly what John, an engineer from Chicago, intends to do.

 

An elusive right

Labour law, once seen as purely domestic, now has achieved an international dimension. A citizen of one country has a contract with a company from another and the latter seconds him to yet another company in Russia. It might work well in good times; in bad, on top of his worries, one may face many tricky questions: Who can he sue and where? Which laws shall be applied? How much money will be awarded? And will it be collected?

The Russian Labour Code was adopted in 2001, yet the law is an ideological descendant of the Soviet labour legislation, concerned, at least de jure, about full employment and high social benefits. Laying off in Russia is complicated, onerous, and costly.

An employer must warn an employee about dismissal, in the event of the reduction of labour, at least two months in advance and in writing. It must pay a redundancy benefit in amount of two (sometimes three months) salary, plus a compensation for the annual paid leave. Where mid-level managers are concerned the overall package can easily shoot into six figures.

The reality, however, is that many leave with nothing but an air-ticket.

Take, for example, this lightly disguised but real-life example: an American company operating in Siberia. As the world economic crisis came, the stream of revenues dried up. Its staff, mainly high-earning expats, are under the term agreements which still have several months to run.

The company offered its staff to terminate the contract ‘voluntarily’ relieving the company from any liabilities in relation to the redundancy payments except transportation fares home and the two days wage. T., an engineer from Philippines, as most others, agreed. Why?

There are impediments remote from the infantile horrors coming from the James Bond movies. These are access to specialist advice and practicalities of the employment process.

Free legal aid in Russia is almost impossible to come by. Outside large cities even a paid for assistance can be a problem. ‘I speak only English,’ says the engineer, ‘with the help of a Russian friend I've tried the numbers in the Yellow Pages and most don't speak English; the rest, either no answers or recording.’

Knowledge is power. Companies routinely abuse their position. A common trick is to demand signing a resignation letter with an open date together with the employment agreement. In its hire package instruction sheet the company states that the requirement of Russian law is that ‘when an employee leaves the employment regardless of the reason, they resign their position through the ‘at-will’ resignation’ which future employees are asked to sign in advance. The letter, however, is not a technicality but a means to facilitate the lay off.

 

New tricks

Not all are ready to give up without a fight. Being asked to go quietly, John ventured to ask compensation. The response was stern: there is nothing to discuss, take it or leave it. He left. And filed a suit in Siberian court.

The effect was that the company stepped back and claimed that John had never been dismissed, and they expected him to stay until the end of his term. It may look as a victory; it may be another trick. John does not want to return to Russia as he fears revenge but then he can be fired for absence at work and sued for breach of the contract.

This is an American battle on the Russian soil. The company operates in Russia through a branch, which does not have a legal personality of its own. It means that the battle can go back where it came from, to the USA, and test there how Russian tricks can stand the trial.

 

 

A delicate balance between the interests of a company and of its workers crumbles in the times of troubles. Our people are our most valued asset, they used to say; workforce must be optimized, they say now.

Close your eyes and say to yourself: 'I am going to fight my rights in court in Siberia.' Well? And that is exactly what John, an engineer from Chicago, intends to do.

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