Digest of key judgments concerning employment relations in Russia: second half of 2020

An employee, with an itinerant nature of work, was dismissed, due to truancy. The employee challenged the dismissal in court, claiming he had fulfilled his job duties during the whole period of employment. The employee’s legal position was confirmed by screenshots of email correspondence, which contained the reports of the performed work.

The courts of first and second levels recognized that the employee’s dismissal, due to truancy, was lawful. The court of cassation disagreed with the position that the provided screenshots could not be used as evidence. The court of cassation sent the case back for reconsideration. The court ruled to consider the provided electronic evidence.

Source: Decision of the Second Court of Cassation of General Jurisdiction, dated August 13th, 2020 in case No. 88-17442/2020

2. The Sixth Court of Cassation of General Jurisdiction confirmed that an employee may voluntarily resign if the resignation application was sent via a text messaging app

The employee sent a photo of the resignation application via WhatsApp. After the employment termination, the employee tried to challenge it and filed a claim with the court.

The court of the first level ruled that the employment termination was illegal. The reason was that the employee may voluntarily resign, only in writing, meaning via hardcopy document with a wet signature. The courts of appeal and cassation levels did not validate this position. The higher courts indicated that it is necessary to take into account all circumstances of the matter. In this case, the employee agreed upon the date of employment termination, stopped performing his job duties. In addition, there were no requests, nor applications from the employee to withdraw the resignation application. It should be noted that, earlier, the courts assessed such situations in the opposite way.

Source: Decision of the Sixth Court of Cassation of General Jurisdiction, dated May 14th, 2020 in case No. 88-10258/2020

The employee claimed that he had terminated the employment contract, based on own initiative, but under pressure from the employer. Then, the employee filed a claim with the court for reinstatement at work. The employee claimed that the job provided him with a stable income and during the lockdown, caused by COVID-19, finding alternative employment would be difficult for him.

The court upheld the employee’s claim. It pointed out that the voluntarily resignation of the employee, when he had not found a new job, was during the period of restrictive measures and deterioration of the epidemic situation. The court ruled that the dismissal did not meet the requirements of reasonable diligence. Based on this, the court reinstated the employee at work.

Source: Decision of the Moskovsky District Court of the city of St. Petersburg, dated November 02nd, 2020 No. 2-4752/2020

2. An employee can be subject to disciplinary liability, in case of refusal to wear a protective mask

The employee failed to comply with the requirement to wear a protective mask, while traveling on a corporate bus, although such a requirement was mandated in the employer’s local policy. The employer initiated disciplinary proceedings. The court supported the employer and recognized such misconduct to be a violation of labour discipline. In addition, the court pointed out the validity of establishing such a requirement, since the Decree of the Governor of the Nizhny Novgorod Region stipulated that everyone was obliged to wear a protective mask due to COVID-19.

Source: Decision of the Arzamas City Court of the Nizhny Novgorod Region dated August 26th, 2020 No. 2-1538/2020

A company concluded an open-ended employment contract with an employee. This person was temporarily employed in the job position of a temporarily absent employee. Once the absent employee returned to work, the temporary employee was suspended from work and the company stopped paying him a salary. The temporary employee filed a claim with the court.

The courts of the first and second levels supported the company. The temporarily absent employee kept the place of work during the period of absence. There were no legal grounds for the conclusion of an open-ended employment contract for the temporary employee. In this regard, the employment contract ceased to have an effect, due to the return of the temporarily absent employee.

The Russian Supreme Court sent the case back for a new trial, due to the necessity to establish the fact whether the parties initially reached an agreement about the real term of the employment contract. In particular, the court indicated that it was essential to know whether the temporary employee was aware of the fact that he had been hired for the job position of the temporarily absent employee.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated September 28th, 2020 No. 43-KG20-4-K6

2. The Social Insurance Fund may requalify civil law relations into employment relations and accrue social security contributions

Based on the results of an on-site inspection, the Social Insurance Fund revealed that the company had not paid social security contributions in relation to several individuals. The Fund considered that in fact, such individuals performed their duties under employment contracts, instead of civil law contracts. The Social Insurance Fund decided to accrue social security contributions and bring the company to liability. The company did not agree with this decision and filed a claim with the court.

The courts of appeal and cassation levels supported the Fund. The courts considered the following arguments: systematic and personal nature of the fulfilled work; performance of a certain function, stipulated in the contract, and the company’s control of the fulfilled work. The courts considered that requalification of the relationships into employment relations had been lawful, and the Social Insurance Fund had legally accrued social security contribution.

Source: Resolution of the Arbitration Court of the Far Eastern District, dated September 11th, 2020 No. F03-3529/2020 in case No. A51-23858/2019

The employee was dismissed, due to repeated failure to comply with a labour discipline, consisting of the employee’s systematic refusal to undergo a medical psychiatric check. The court of cassation considered this case. All the courts agreed with the company’s position and indicated that the employee fell under the category of ‘individuals who were obliged to pass a medical check’. Refusal to undergo a medical check is a violation of a labour discipline. Therefore, the employee’s dismissal was recognized as legal.

Source: Decision of the of the Ninth Court of Cassation of General Jurisdiction, dated September 24th 2020 No. 88-6775/2020

2. The Ninth Court of Cassation of General Jurisdiction explained that it will be possible to bring an employee who damaged someone else's property to the liability, if the respective ground is stipulated in the company’s internal labour regulations

An employee damaged the property of a hotel, while being on a business trip. The hospitality staff claimed that the employee had started a riot. The employee said that there was a conflict, due to the employee’s desire to change his hotel room. The hospitality staff certified this damage by the statement. Due to this, the employer brought the employee to disciplinary liability in the form of a reprimand.

The courts supported the employee, since the internal labour regulations did not contain provisions on employees’ liability, due to non-compliance with the hotels’ accommodation rules, and due to damages to the third parties. The court of cassation confirmed that the reprimand was illegal.

Source: Decision of the of the Ninth Court of Cassation of General Jurisdiction, dated August 27th 2020 No. 88-17966/2020

The employee was dismissed due to truancy. She considered the dismissal as illegal. The employee claimed that she submitted an application for leave. The General Director approved this leave, by word of mouth, but without written confirmation. The courts of three levels supported the employer and considered the parties had not agreed on providing leave. Therefore, the employee was absent from work, without justifiable reasons.

The Russian Supreme Court pointed out that the employee had applied for leave.

The application was registered and filed in the inbox documents folder. Then, the employer had drafted an order on providing the employee with leave which was not executed. According to the Russian Supreme Court, in such a situation, a reference to the absence of the original exemplar of an application and the employer’s failure to execute the respective order, may be considered as the employer’s fault. Therefore, the dismissal, due to truancy, cannot be recognized as legal. As a result, the Russian Supreme Court sent the case back for a new trial.

In another similar case, the Russian Supreme Court stated that courts shall take into account, and verify the employee's arguments, that the immediate supervisor agreed to provide leave, by words of mouth.

The employee claimed that the immediate supervisor allowed him to leave work, before the end of the shift. In this regard, the employee filled out the application for non-paid leave and put it on the desk of the immediate supervisor. The employee was dismissed due to truancy. The lower courts found that the employee left the workplace, without justification and rejected the claim.

The Russian Supreme Court did not agree with the conclusions of the lower courts. It determined that the courts formalized the resolution of the dispute and ignoring that the employee had applied to his immediate supervisor, requesting to provide leave. He was provided with an application form and the deputy director knew about it. Under such circumstances, it is prohibited to dismiss, due to truancy. Therefore, the Russian Supreme Court sent the case back for reconsideration.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated June 22nd, 2020 No. 13-KG20-1-K2, Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated August 24th, 2020 No. 18-KG20-37

2. The Moscow City Court considered dismissal due to truancy, during the lockdown, caused by COVID-19, illegal

The company notified employees about the transfer to remote work, due to the spread of coronavirus and the introduction of a high-alert regime, via corporate e-mail. The employee's immediate supervisor confirmed this, as well. The employee was later dismissed due to truancy. He challenged the dismissal in court.

The court of the first level supported the company. The employee's transfer to remote work had not been formalized. The Moscow City Court did not support this approach. It determined that it was necessary to evaluate the employee's arguments and take into account the introduced high-alert regime, while considering the case. The Court of Appeal indicated that the employee’s failure to come to work was caused by extraordinary circumstances, and the dismissal was illegal.

Source: Appeal ruling of the Moscow City Court, dated September 24th 2020 in case No. 33-36893/2020

3. The Eighth Court of Cassation of General Jurisdiction explained that a utility accident is a justifiable reason for absence at work

The employee was dismissed due to truancy. She did not agree with the dismissal, as she could not have gone to work due to a utility accident in her apartment.

The court of the first instance considered the dismissal legal.

Assessing the time of the accident, the court decided that the employee had to perform her job duties immediately after dealing with the accident but, in fact, she did not do this until the end of the day.

The court of appeal overturned the decision, and the court of cassation agreed with it. The courts pointed out that it is necessary to clarify reasons for employees’ absence from work, as well as taking into account the proportionality. In the accident situation, the employee had to provide access to her apartment for repair work. The court of cassation decided that the employee’s presence at the apartment was necessary and, therefore, she was absent from work due to justifiable reasons.

Source: Decision of the Eighth Court of Cassation of General Jurisdiction, dated June 06th, 2020 No. 88-10036/2020

4. The Russian Supreme Court did not recognize truancy on the birthday

The employee left work earlier on her birthday. Later, she was dismissed due to truancy. The employee did not agree with the dismissal and filed a claim with the court. The claim was supported by the fact that it was the practice, in the company, to leave office earlier on the birthday.

The court of the first level supported the employee, but the court of appeal refused to agree. The court indicated that the employer's local policy does not provide for employees’ possibility to leave work earlier, on their birthday. Therefore, it was the employee’s truancy.

The Russian Supreme Court ruled in opposite. It decided that it was necessary to assess the claim that it was the normal practice, in the company. In addition, the lower courts had not established whether the employee's immediate supervisor had been notified about the reasons for her absence. In this regard, it was unlawful to conclude that the employee had been absent from work without justification. The case was sent back for a new trial.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated July 13th, 2020 No. 16-KG20-5

The employee was dismissed due to staff redundancy. He disagreed with the dismissal and filed a claim with the court. The employee claimed that the company had not offered him all the existing vacancies. The courts of the first and second levels supported the employer and dismissed the employee’s claim. However, the court of cassation sent the case for a new appeal consideration. In the third level, the court clarified that the company was obliged to offer, to the employee, new positions included into the staff structure, during the staff redundancy process. The fact that it is planned to hire another employee, for a new job position does not affect the obligation to offer vacancies. In such a situation, the court considered the dismissal as unlawful.

Source: Decision of the Second Court of Cassation of General Jurisdiction, dated August 13th 2020 No. 8G-16377/2020 [88-18039/2020]

2. The Seventh Court of Cassation of General Jurisdiction determined that the late notification, of the employee, about staff redundancy may be discriminatory

The company carried out a staff redundancy and the plaintiff was notified of dismissal, due to the staff redundancy, a month later than other employees were. When the plaintiff was notified, other employees who were subject to dismissal, due to staff redundancy, had already taken all vacant positions. As a result, the company dismissed only the plaintiff. The employee filed a claim with the court, since he considered his dismissal illegal. The company stated that the company had notified the employee later, about dismissal due to staff redundancy, since the plaintiff had been on leave, when the company had notified other employees.

The court of the first level supported the employer. The courts of appeal and cassation levels disagreed with the employer’s position. The higher courts indicated that, in fact, only one employee (the plaintiff) was subject to staff redundancy. The later notification limited his guarantees, in terms of the staff redundancy. In addition, in a situation, when other employees, who were subject to staff redundancy, had been transferred to vacant positions, the employer had not taken into account the preemptive right of the plaintiff, to retain his job position.

Source: Decision of the Seventh Court of Cassation of General Jurisdiction, dated May 21th, 2020 in case No. 88-5333/2020

3. The Second Court of Cassation of General Jurisdiction confirmed the approach that part-time job positions are considered vacancies, during a staff redundancy

The employee was dismissed due to staff redundancy. She filed a claim with the court. The employee stated that the company did not offer, to her, all the vacant positions. In the third court level, the court clarified that the key point, while consideration of such cases, is the fact of the existence of vacant positions. The employer shall offer part-time job positions to employees, who are subject to staff redundancy, or verify and prove that the employee’s qualification does not correspond to the requirements for such a position.

Source: Decision of the Second Court of Cassation of General Jurisdiction, dated July 23th 2020 No. 88-11740/2020

The General Director paid a salary to an employee from his personal bank account. The employee terminated his employment contract and filed a claim with the court to recover the salary. The court supported the employee and recovered the salary from the company. It determined that there were no pieces of evidence confirming that the respective payments, from the General Director’s personal bank account, were the employee’s salary.

The General Director filed a claim with the court to recover the money, which he had earlier paid to the employee, from his personal bank account, as unjust enrichment. The court of the first level dismissed the claim, but the court of appeal and cassation sustained his claim and recognized it as legal.

The Russian Supreme Court did not agree with these courts' position. It decided that overpaid salary might be recovered, as unjust enrichment, only in case of the employee’s bad faith, or calculation error. The court had not established such facts: therefore, it was impossible to recover money from the employee.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated September 14th 2020 No. 46-KG20-6-K6

2. The Third Court of Cassation of General Jurisdiction recalled that the employee may recover the regional benefits and allowance payments, even if such payments are not specified in the employment contract

The employee filed a claim, to the court, to recover the percentage allowance and the regional benefit (coefficient), which had not been paid to him, together with his salary. The employee claimed that the company had not accrued, nor paid the respective payments to him. The employer stated that there was a technical error, during preparation of the employment contract and, therefore, the amount of the employee’s salary included the percentage allowance and the regional benefit (coefficient). The employee’s payslips contained the correct parts of the employee’s salary.

The court agreed with the employee. The court rejected the employer’s argument that the amount of the plaintiff's salary specified in the employment contract included the percentage allowance and the regional benefit (coefficient). These were additional remuneration elements, due to the employee. The court indicated that all additional payments and compensatory allowances, as well as their amount, due to work, in conditions deviating from normal conditions, shall be directly specified in the employment contract. If the employment contract contains only the provisions on base salary, then the regional coefficient and percentage allowance shall be accrued on top of the base salary.

Source: Decision of the Third Court of Cassation of General Jurisdiction, dated August 30th 2020 in the case No. 88-14354/2020

3. The Seventh Court of Cassation of General Jurisdiction clarified that employees, occupying the same job position may receive a different salary

The employee revealed that the salary of his colleague, who occupied the same job position, was higher than his. The employee considered this illegal and filed a claim with the court, requesting an increase to his salary.

The courts of all three levels supported the employer. The courts indicated that upon the conclusion of the employment contract, the employee agreed to a certain amount of salary. In addition, the employee, on the same job position, had more responsibilities. In such a case, it was possible to pay the different amounts of salary.

Source: Decision of the Seventh Court of Cassation of General Jurisdiction, dated September 11th 2020 in the case No. 2-564/2019

4. The Russian Supreme Court confirmed that bankruptcy is not a reason to cancel bonus payments

The bankruptcy manager filed a claim with the court for a declaration to recognize additional agreements to an employment contract to be invalid. Further, that to recognize as illegal, the increase of salary and bonus payments to the employee of the company, which had been declared bankrupt. The bankruptcy manager claimed to enforce the invalidity of the legal, transaction in this case.

The lower courts supported the bankruptcy manager. They pointed out that the salary increase and bonus payment should be subject to not only to the performance of a particular employee, but of the company as well. This is impossible in a bankruptcy situation.

The Russian Supreme Court disagreed with the courts’ position and sent the case back for a new trial. The Russian Supreme Court pointed out that the company’s bankruptcy does not limit the employees’ guarantees of remuneration.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated December 21th 2020 No. 305-ES17-9623 (7) in case No. А41-34824/2016

The employer provided employees with payments for meals, regardless of their contribution to the business, or working conditions, or length of service. After a tax audit, insurance contributions were charged on these payments. The Federal Tax Service pointed out that it is required to accrue insurance contributions, in case the respective benefits on providing employees with payments for meals are established not by law, but only by local normative acts.

The court considered that such payments cannot be considered as remuneration expenses: therefore, they have a social nature. The inspectorate's approach was recognized as illegal.

Source: Decision of the Arbitration Court of the East Siberian District, dated November 02nd, 2020 No. F02-5629/2020 in case No. A19-29229/2019

2. The court confirmed that compensation for the payment of kindergartens and vacation packages shall not be subject to social security contributions

The court considered several similar disputes, with the tax services, in relation to the payment of insurance contributions. In one case, a company provided employees with compensation for the payment of kindergartens. In another case, a company provided employees with compensation for the payment of vacation packages for families’ health-improving rest. In both cases, the courts recognized that these payments have a social nature, and, therefore, the company was not required to pay social security contributions on these expenses.

Source: Decision of the Arbitration Court of the Volga District, dated November 24th, 2020 No. F06-67251/2020 in case No. A12-47264/2019, Decision of the Arbitration Court of the Volga District, dated November 20th, 2020 No. F06-67240/2020 in case No. A12-3728/2020

The company notified the employee about the employee’s dismissal, by phone. Then, the employee applied to the prosecutor's office. After consideration of her application, the prosecutor raised a protest against the employer's actions. The employee requested, from the employer, a copy of the dismissal order and a labour book, after two years from the dismissal date. Then, the employee filed a claim with the court to recognize the dismissal as illegal. The courts of the first and appeal levels indicated that the limitation period which is 1 month starting the dismissal date, had been missed. They stated that the limitation period should have been calculated from the day of the prosecutor’s response, to the employee’s appeal.

The Russian Supreme Court restored the limitation period and sent the case back for a new trial. The Russian Supreme Court determined that the limitation period for filing a claim, with the court, starts from the day when the employee is provided with the dismissal order, or labour book, even if such events have happened much later than the dismissal date.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated May 18th, 2020 No. 18-KG20-14

2. The Russian Supreme Court indicated that the employer's promise may be a justifiable reason for missing the limitation period

The company asked the employee to terminate his employment contract and then conclude a fixed-term employment contract. The employer promised to rehire the employee on the same job position. The employee voluntarily resigned. Then the company repeatedly concluded, with him, fixed-term employment contracts. As a result, he was appointed to a lower position.

The employee filed a claim with the court to reinstate him at the job position, which he had earlier occupied based on an open-ended employment contract. The claim was filed beyond the limitation period. The employee explained that the missed limitation period by the fact that he was waiting for the fulfillment of the promise of his immediate supervisor to appoint him at the job position, which he had earlier occupied. When the employee realized that he had been tricked, he filed a claim with the court immediately.

The courts of the first and appeal levels rejected the employee’s claim and judged the reason for missing the limitation period to be unjustifiable. The Russian Supreme Court agreed with the employee’s position and ruled that it is necessary to take into account all the circumstances of such cases. The employer promised to appoint the employee to the job position, which he had earlier occupied. When the employee was appointed at a lower job position, he realized that his rights had been violated. Considering the ongoing employment relationship, these circumstances were justifiable and could prevent filing a claim, with the court, on time. The Russian Supreme Court restored the limitation period and sent the case back for a new trial.

Source: Decision of the Judicial Chamber on Civil Cases of the Supreme Court of the Russian Federation, dated June 29th, 2020 No. 16-KG20-6

The employee was reinstated at work by the court. Then, he filed a claim for compensation of moral damage, more than a year after the dismissal. The employer stated that the employee had missed the three-month’s limitation period, for filing a claim with the court. The employer’s legal position was that the limitation period shall start from the day when the employee found out, or should have found out, about the violation of his rights. The district and regional courts agreed with the employer.

The Constitutional Court of the Russian Federation did not support this position and indicated that the employee is entitled to file a claim, to recover compensation for moral damage, once the decision on reinstatement at work comes into force.

The Constitutional Court of the Russian Federation ruled that it is required to stipulate the respective changes (decided in this case) in the Russian Labour Code. It is required to specify that employees are entitled to file a claim, to recover a moral damage, within three months from the date when the court decision, which restored employees’ labour rights, came into force.

It should be noted that, before the respective changes are implemented in the Russian Labour Code, employees are entitled to file a claim on compensation of moral, or physical suffering, either simultaneously with the primary claim on restoration of violated labour rights, or within three months from the date when the court decision, which restored the employees’ labour rights, come into force.

Source: Resolution of the Constitutional Court of the Russian Federation, dated July 14th, 2020 No. 35-P