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Cancelation of employment contract with foreign employee (highly qualified specialist). Risks for employers

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After having gone through almost the entire procedure for hiring foreign employees with the status of highly qualified specialist (including entering into an employment contract after receipt of a work permit for the highly qualified specialist being hired), the parties sometimes change their mind or the employee stops contacting the employer. In such case, the employer should cancel the employment contract, but this entails certain risks. In this article, we describe how to cancel employment contracts and avoid risks as well as heavy fines. 

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Cancelation of employment contract when hiring a foreign highly qualified specialist

To hire a highly qualified specialist, employers must obtain a work permit for such foreign employee. To this end, the employer must submit alongside other documents the employment contract with the highly qualified specialist. 

When the employment contract signed by the parties is submitted to the authorized body, the documents for work permits and visa invitations are accepted, the employer notifies the Ministry of Internal Affairs of the conclusion of the employment contract. However, the employment relationship between the employee and the employer officially starts only when the employee receives his/her work permit and, if necessary, a work visa and travels to Russia. 

Employers must record the employment of highly qualified specialists from the date on which highly qualified specialists receive their work permit.

However, there are cases where the parties have signed an employment contract, the employee has received a visa invitation and has been informed the visa and work permit are ready for collection, and after that: 

  1. The parties decide not to pursue employment;
  2. The employee vanishes and does not contact the employer. 

Cancelation of regular employment contract 

The Russian Labor Code provides that:

  1. If an employee does not start work on the work start date, the employer is entitled to cancel the employment contract. A canceled employment contract is deemed non-concluded, and no labor relationship arises in this case;
  1. The employee will be entitled to receive compulsory social insurance if the insured event occurs in the period from the date of contract conclusion to the date of contract cancelation;
  2. The employee will be entitled to receive compulsory social insurance if the insured event occurs in the period from the date of contract conclusion to the date of contract cancelation;
    • is specified in the employment contract; or
    • follows the day of entry into force of the employment contract.

Problem of cancelation of employment contract with highly qualified specialist

The situation with highly qualified specialists is complicated because the date of entry into force of employment contracts and the employment date is the date on which highly qualified specialists receive their work permit (or the day following that day). It follows that the date of entry into force of employment contracts with highly qualified specialists is dependent on the employee. 

The law does not currently set out how employers get their employees to collect their work permit within a specific timeframe, so if an employee does not contact his/her employer, the uncertainty can last up to 3 years (i.e. the work permit validity term).

How to cancel an employment contract with a highly qualified specialist

Cancelation by mutual agreement

If the parties decide for some reason not to complete the hiring process before obtaining a work permit for the foreign highly qualified specialist being hired, they will need to:

  1. Draw up an agreement for cancelation of employment contract and ensure that it is signed by both parties;
  2. Issue an order for cancelation of employment contract and employment order (if issued);
  3. Submit a notice of employment contract termination to the Ministry of Internal Affairs within 3 business days of the cancelation date (this date must be specified in the agreement/order).

Alternatively, the parties could use the regular procedure for dismissal by mutual agreement of the parties, but in this case it will be necessary to start the employment relationship first. In other words, the employee must obtain a work permit, and the employer must formally employ and dismiss the employee in compliance with the Labor Code. 

Cancelation of employment contract if the highly qualified specialist does not contact the employer before obtaining a work permit

Risks for employers

1. Work visa and work permit received by employee who did not inform the employer and vanished

If all the documents for employment are ready and the employer told the employee where to get them, then the employee could collect his/her work visa and work permit, and the employer could be unaware of it. In such case, the employer will not be able to fulfill the obligation to notify the Ministry of Internal Affairs of salary payment to the highly qualified specialist by the set deadlines and could therefore be prosecuted and fined as follows:

  • RUB 35,000-RUB 50,000 for company officers;
  • RUB 400,000-RUB 1,000,000 for legal entities.

The Ministry of Internal Affairs could also prohibit the company to hire foreign highly qualified specialists for 2 years. 

2. No contact by employee to company → company canceled employment contract → employee contacted and complained to employer

If enough time has passed after the employee is notified that the documents are ready for collection, and the employee has not got in touch, the employer could initiate the procedure for cancelation of employment contract for no reasons for the employee’s absence at work by: 

  1. Drawing up a statement of absence from work with no reasons for the employee’s absence;
  2. Drawing up an order for cancelation of employment contract and employment order (if issued);
  3. Submit a notice of employment contract termination to the Ministry of Internal Affairs within 3 business days of the cancelation date (this date must be specified in the agreement/order).

It is, however, possible in such case that the employee collects his/her work permit before the employment contract is canceled and the notice is submitted to the Ministry of Internal Affairs. In such case, the employee could submit a complaint to the employer, challenge the employment contract cancelation and be reinstated at work by court order.

Recommendations to employers

Given the gap in the legislation on employment contract cancelation insofar as the entry into force of employment contracts with highly qualified specialists is dependent on the receipt of work permit by highly qualified specialists, employers are entitled to provide in employment contracts for deadlines and obligations for employees, and the following may be specified in such contracts:

  1. The employer’s obligation to notify the employee when his/her work permit is ready;
  2. The notification methods and deadlines for the employee and the employer;
  3. The deadlines for the employee to collect documents and notify the employer of document collection;
  4. The employee’s obligation to assist the employer with work permit application;
  5. A procedure for employment contract cancelation in certain circumstances under Article 61 of the Russian Labor Code. 

Companies should also bear in mind that when they enter into an employment contract with a foreign employee, they must:

  1. Notify the Ministry of Internal Affairs when the foreign employee is in breach of his/her employment contract and when the employment contract is terminated before its term;
  2. Notify the Ministry of Internal Affairs and the Federal Security Service of the employee’s unauthorized leave of his/her place of work or stay. 

There are no special forms for such notification, so such events may be notified in any form.

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