Cancellation of an Employment Contract Under the Russian Labor Code

In Russia, the labor relationship between an employee and an employer is governed mainly by the Labor Code. An employment agreement in Russia may contain rules and regulations determined and established by the employee and the employer on their own and on a voluntary basis, but only if they do not contradict the Russian Labor Code. Otherwise, such rules and regulations will be declared invalid, and the Labor Code will be applied again to the legal relations of the parties.

Given the fact that the Labor Code contains a large number of mandatory regulations, including those relating to the procedure of employment agreements cancellation, it is necessary for each employer to know them.

Failure of the employer to comply with the procedure for cancelling an employment agreement with the employee could result in employment reinstatement of such employee (for example, by a court decision), salary payment to the employee for the entire period of his absence from work, compensation for nonpecuniary damages, and other additional costs that could be avoided if the employer had strictly followed the procedure of cancellation of the employment agreement. Thus, pursuant to the Russian Labor Code, the employment agreement can be cancelled:

  1. By agreement of the parties
  2. Upon the employee’s initiative
  3. Upon the employer’s initiative

It is necessary to distinguish between the termination of the employment agreement and its cancellation. Cancellation of the emfployment agreement is one of the grounds for its termination (rescission of the agreement). In addition to its cancellation, the employment agreement can be terminated on other grounds (its expiration, the employee’s transfer for work to another employer, etc.).

Cancellation by Agreement of the Parties

Since, according to Russian labor law, the employer has significant restrictions regarding the right to dismiss the employee (mainly, the employee must perform a statutory guilty action), a mutual agreement between the parties is a good way out of the situation. When the employee is likely not to be in breach and performs his/her job duties according to his contract but not as well as the employer would like it, a mutual agreement is the easiest way out, although the employee is not likely to leave the employer voluntarily.

The parties may cancel the employment agreement by their mutual agreement at any time. During the preparation and conclusion of the employment termination agreement, it is necessary to note clearly and definitely the will of both parties, especially of the employee, aimed at termination of the agreement. Usually, employees agree to leave the employer voluntarily if offered financial compensation.

Cancellation Upon the Employee’s Initiative

Unlike the employer, the employee may cancel the employment agreement at any time by agreeing to continue working for two weeks from the date of delivery of the resignation letter to the employer. If the employee is the sole executive body (the company’s director, president, etc.) or a member of the collective executive body, he or she must give one month’s notice.

It should be noted that if the employee suddenly changes his mind about resigning from his job, he is entitled to withdraw his resignation within two weeks (or one month for executives). In such a case, the employee should be able to keep his/her job, but only if another candidate has not already been offered the position in writing, because that employment agreement cannot be broken.

The employer is obliged to prepare the order of dismissal of the employee, and the employee must sign the order. On the last working day, the employer must give the employee his workbook and other documents upon the employee’s written request and pay all monies due to the employee. If after two weeks (one month) the employment agreement has not been cancelled and the employee does not insist on its cancellation, the employment agreement remains in effect.

Cancellation Upon the Employer’s Initiative

The employment agreement can be cancelled by the employer in the following cases:

  1. Liquidation of the employer
  2. Reduction of the number of employees or staff
  3. Non-compliance of the employee with the position held or work performed due to insufficient qualifications confirmed by the competency test results
  4. Change of owner of the organization property (regarding the head of the organization, his/her deputies, and the chief accountant)
  5. Repeated failure of the employee to perform his/her job duties without good reasons, if he has a disciplinary penalty
  6. Single serious violation by the employee of his/her job duties, such as the following:
  • Non-attendance, i.e. absence from work without valid reasons during the working day (shift), regardless of its duration, as well as in case of absence from work without valid reasons for more than four hours at a time during the working day (shift)
  • Appearance of the employee at work (in the workplace or in the territory of the organization - the employer or object where the employee must perform his/her work functions on behalf of the employer) in a state of alcoholic, narcotic, or other intoxication
  • Disclosure of secrets protected by law (state, commercial, official and other), which became known to the employee in connection with the performance of his/her job duties, including disclosure of personal data of another employee
  • Theft committed in the workplace (including a minor one) of another person’s property, embezzlement, its intentional destruction or damage established by a legally effective court verdict or decision of the judge, body or official authorized to consider cases on administrative offences
  • Violation by the employee of safety and health protection requirements established by the commission on labor protection, if such violation caused heavy consequences (job-related accident, fault, calamity) or definitely created a real threat of such consequences
  1. Misconduct of the employee directly serving monetary or commodity values, if his/her actions can be qualified for loss of confidence in such employee on the employer’s part
  2. Failure of the employee to take measures to prevent or resolve a conflict of interest, which he/she is a party to; failure to submit or submission of incomplete or false information about his/her income, expenses, assets and property-related liabilities or failure to submit or deliberate submission of incomplete or false information about the income, expenses, assets and property-related liabilities of his/her spouse and minor children; opening (availability) of accounts (deposits), storage of cash and valuables in foreign banks located outside the Russian Federation; ownership and (or) use of foreign financial instruments by the employee, his/her spouse and minor children in cases stipulated by the Labor Code, other federal laws, regulations of the President of the Russian Federation and the Russian Government, if such actions can be qualified for loss of confidence in such employee on the employer’s part.
  3. Act of indecency performed by the employee fulfilling educational functions, which is incompatible with the continuation of this work
  4. Adoption of unjustified decision by the head of the organization (branch, representative office), his/her deputies and the chief accountant resulted in property impairment, its misuse or other damage to the organization’s property
  5. Single serious violation by the head of the organization (branch, representative office), his/her deputies of their job duties
  6. Submission by the employee of false documents to the employer upon conclusion of the employment agreement
  7. On other grounds provided by law or an agreement with the head of the organization.

There are many grounds for cancellation of the employment agreement by the employer, but all of them have their own peculiarities. For example, any employee’s misconduct (or lack of action) must be established by the court, the authorized state body, or an act executed by a commission formed by the employer. At the same time, the employee must be asked for an explanation of what happened, which should be taken into account by the employer when making a decision on dismissal.

Due to the fact that the employee’s dismissal is also a type of disciplinary punishment, when making a decision the employer should also take into account the extent and gravity of the employee’s disciplinary offence, as well as the circumstances under which it was committed.

In such cases like liquidation of the employer or reduction of the number of employees or staff, the employer shall notify each employee in writing at least three months before. If the dismissal will be collective, the employer shall also notify the relevant employment agencies in writing.

How Jus Privatum Can Help

Jus Privatum specialists have a wide range of experience in the field of labor law; they will help you determine the grounds for cancellation of the employment agreement, and assist you in an arrangement that will not lead to a court order or other competent authorities annulling the decision.

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