Redundancy and liquidation severances in Russia: new rules

Redundancy and liquidation severances in Russia: new rules

13 August 2020

On 13th August, Federal Law dated 13.07.2020, No. 210-FZ specifying the procedure and establishing new rules of severance payments, in case of dismissal due to liquidation of the organization, or redundancy, comes into force.

In case of the dismissal due to the organization’s liquidation, all payments shall be made to employees prior to its completion. However, an employer may replace monthly payments for the job-placement period with a one-time compensation in the amount of two average salaries.

According to the new version of Article 178 of the Russian Labour Code, timeframes for applying for redundancy and liquidation severances are defined more precisely. As stated previously, a dismissed employee is entitled to severance payment, in the amount of one average salary, paid on the last day of work.

The employee may also apply for monthly payments for the job-placement period, however, upon the new rules, it shall be done within 15 working days after:

  • the second month from the date of dismissal; and
  • third month from the date of dismissal (if the respective employment center’s decision is made)

The employer, in its turn, shall provide the payments within 15 calendar days from the date of the application.

If the employee finds a job before the end of a month, the average salary shall be paid, in proportion to the period of job-placement in that month.

It is important that, following the new rules, the employer may, at any time and at its discretion, replace the abovementioned monthly payments with a lump sum payment, in the amount of two average salaries.

Similar amendments have been made to Article 318 of the Labour Code, in relation to employees dismissed due to redundancy/company liquidation from organizations located in the Far North and equivalent areas.

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Practice: Labour and Employment

Note: Please be aware that all information provided in this letter was taken from open sources. Neither ALRUD Law Firm, nor the author of this letter bear any liability for consequences of any decisions made in reliance upon this information.

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