Balancing Company Labor Expenses During the Pandemic in Russia

According to information from the anti-coronavirus crisis in Russia, the number of novel coronavirus cases has surpassed 15,770, affecting 82 regions. As the curve shows progressive growth in the number of contaminated areas in Russia, new strict administrative measures for people and companies have been introduced.

It shall be mentioned that, contrary to other countries such as India in which the lockdown is total, imperative measures of temporary business operation suspension were introduced only for some market sectors which are of a more sensitive nature in terms of virus spread prevention (e.g. parks, shopping centers, cinemas, attractions, education centers, beauty shops). However, as demand decreases and the virus spreads, more questions related to the labor management and the labor resources optimization have arisen. Some of which we have answered below.


  1. Is a company which follows under operation suspension obliged to pay salaries in full?

Generally speaking, yes, the only exception is the Downtime Regime which is prescribed by Art. 157 of the Russian Labor Code (RLC). In this case, companies may be allowed to reduce payment to 2/3 of salary as foreseen in the labor contract.

To introduce the Downtime regime, a company shall issue a specific order and inform all employees covered. In cases where such a regime is implemented to the company as a whole, the company is also obliged to inform the State Employment Service within 3 days.

Note: Apart from the cut of salary expenses, the Downtime Regime also gives a company the opportunity for a temporary unilateral relocation of the labor resources affected.


  1. Whether a company affected by the COVID-19, but allowed to operate, can introduce the Downtime regime?

Yes, but company needs to keep in mind that the burden of proof to apply the Downtime regime is on the employer. In reality, this means that the absence of direct administrative regulations for suspension of company operations in your industry may require more efforts to provide solid grounds for the application of the Downtime regime. Moreover, in this case the risk that the company would be deemed at fault in the imposition of such a regime is higher. Finally, it affects the way in which employees’ wages are calculated, since they can include two thirds of their wages in the calculation of the average wage for the preceding twelve months.


  1. Can a company change employees from full time to part time?

Yes, the company would need to sign a supplementary agreement with the employee in order to shift to a part time post. In this case, the salary shall be paid according to the number of working hours agreed/work accomplished.

Note: As foreseen by Art. 74 of RLC, the alternative uniliteral method of part time introduction requires 2-month notification which makes it difficult to follow in current circumstances where a company requires prompt actions.


  1. Can a company force its employees to take annual leave/unpaid leave during the period in which the specific measures apply?

Only for instances of annual leave and only in one particular case, namely where the company had arranged this period of leave with the employees late last year, otherwise it will be deemed as an infringement of the labor law and will cause corresponding legal liabilities.


Along with labor management, it may also be suggested for companies to stay on the top of new support measures. For example, SME’s received relief for social security payments (total decrease can reach 15%). The reduced rates shall be applied to the part exceeding the Federal minimum wage. At the same time, the Central Bank has launched a special bank loan project, in which banks will distribute up to 4 per cent of wages to small and medium-sized enterprises (SMEs). Additional measures are currently being considered to be introduced shortly.

If you have any other questions D’Andrea & Partners professionals will be glad to assist you. In order to reach us you may use the following email address: