Operating a Business

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In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Open Joint Stock Company (OAO)
Number of partners: 1 partner or more
Capital (max/min): RUB 100,000
Shareholders and liability: Liability is limited to the amount of capital invested.
Closed Joint Stock Company (ZAO)
Number of partners: From 1 to 50 participants maximum.
Capital (max/min): RUB 10,000
Shareholders and liability: Liability is limited to the amount of capital invested.
Limited Liability Company (OOO)
Number of partners: From 1 to 50 participants maximum.
Capital (max/min): RUB 10,000
Shareholders and liability: Liability is limited to the amount of capital invested.
Limited Partnership
Number of partners: No minimum.
Capital (max/min): No minimum capital required.
Shareholders and liability: General partners have unlimited liability; sleeping partners have limited liability.
General (full) Partnership
Number of partners: No minimum.
Capital (max/min): No minimum capital required.
Shareholders and liability: Liability is unlimited.
 

Business Directories

Financial Information Directories
Dun & Bradstreet - Worldwide directory with financial information on businesses
Rustocks - Information in the Russian stock-market and domestic companies

To go further, check out our service Business Directories.


 

Professional Associations

General Professional Associations
KSORR - Coordinating Council of Employers'Unions of Russia
RSPP - Russian Union of Industrialists and Entrepreneurs

To go further, check out our service Professional Associations.


 

Business Setup Procedures

Setting Up a Company Russia Eastern Europe & Central Asia
Procedures (number) 4.00 5.26
Time (days) 10.10 11.78

Source: Doing Business - Latest available data.

 
The Competent Organisation
The local tax office.
For Further Information
World Bank Group, Doing Business, provides information on procedures in order start a business in Russia.
Registration Chamber
 

Recovery Procedures

Principle
Russian law provides for 4 types of procedure in case of insolvency: observation, rehabilitation under the authority of a receiver, appointment of an outside manager then compulsory liquidation. At each step, an amicable agreement may be reached.

Cases are judged by arbitration tribunals. After the verdict, the creditor must wait a month before being able to recover his debts. At the end, he can demand the execution of the sentence and appeal to a bailiff. If the bailiff cannot manage to get all the debt together within 30 days, the creditor can ask the Arbitration Tribunal to start an insolvency procedure.

Many informal methods are also used (negotiations, visits, appeals to private companies or corporative associations), but they often have no result.
Minimum Debt-to-Capital Ratio Triggering Liquidation
None
Bankruptcy Laws
Consult the analysis on the Insolvency Law (Bankruptcy) dated 26 October 2002 by Standard&Poor's.
Reorganization and Rehabilitation Laws
The Insolvency Law (Bankrupcy) also covers these procedures.

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The Active Population in Figures

201820192020
Labour Force 73,825,99772,674,67071,903,592

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 74.15%74.43%73.96%
Men activity rate 79.88%80.00%79.37%
Women activity rate 68.88%69.30%68.97%

Source: International Labour Organization, ILOSTAT database

 
Employed Persons, by Occupation (% of Total Labour Force) 2015
Wholesale and retail trade; repair of motor vehicles and motorcycles 15.9%
Electricity, gas, steam and air conditioning supply 14.3%
Accommodation and food service activities 9.5%
Professional, scientific and technical activities 9.2%
Administrative and support service activities 7.9%
Construction 7.6%
Real estate activities 7.4%
Financial and insurance activities 7.2%
Agriculture, forestry and fishing 6.5%
Public administration and defence; compulsory social security 4.3%
Water supply; sewerage, waste management and remediation activities 3.2%
Transportation and storage 2.5%
Information and communication 2.2%
Manufacturing 2.1%
Mining and quarrying 0.2%
Education 0.0%
Human health and social work activities 0.0%
 

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
40 hours a week
  • Maximum Duration
54 hours a week (not more than 4 hours overtime over 2 consecutive days).
Overtime may not be more than 120 hours a year.
  • Night Hours
From 10pm to 6am.
For night work, the legal duration of working time is reduced by 1 hour.
Working Rest Day
Work is usually not allowed over week-ends or on public holidays.
In a certain number of cases, it is nevertheless permitted with the written agreement of the employee.
Paid Annual Vacation
28 days per year
Retirement Age
Retirement is possible from age 55 for women and age 60 for men (after they have provided a 5 year contribution to the private sector and 15 to the public sector).
Child Labour and Minimum Age For Employment
Employing people under 15 is prohibited.
People under 18 can only be employed for a limited list of jobs. In addition, it is forbidden to make them work at night, at the week-end or make them do overtime.
Informal Labour Market
Between 10 and 15% of the working population. This rate is tending to drop due to economic growth and the reduction in taxes.
A large number have formal employment but carry out some form of trade.

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The Cost of Labour

Pay

Minimum Wage
Since 1 June 2022, the monthly minimum wage is set to 15,279 RUB (USD 243).
Average Wage
In 2021, the average nominal salary was measured at approximately RUB 56,500 per month (Statista).
Other Forms of Pay
  • Pay For Overtime
+50% for the first 2 hours, then +100%
  • Pay For Rest Days Worked
+100%
  • Pay For Night Hours
No legal provision.
  • Pay For Overtime at Night
As for overtime.
 

Social Security Costs

The Areas Covered
Retirement, health insurance and disability benefit, family allowances.
Contributions
Contributions Paid By the Employer: Insurance contributions are levied on companies, individual entrepreneurs and self-employed individuals. The threshold is subject to annual revision by the Russian government. The rate is 30% withholding tax, broken down into: 22% up to the threshold (RUB 1,565,000), and 10% excess of the threshold to the State Pension Fund, 2.9% (up to RUB 1,032,000) to Social Insurance Fund, 5.1% to the Federal Medical Insurance Fund. For foreign employees, a withholding tax of 1.8% is payable to the Social Insurance Fund.
Contributions Paid By the Employee: No mandatory contributions are payable by employees.
Competent Organization
Federal Tax Service
Social Security Fund

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Management of Human Resources

 

Recruitment

Method of Recruitment
The most common method of recruitment is still by word of mouth.
There are many Internet sites for advertisements, and this is an efficient way of recruiting.
Moreover, more and more companies are resorting to recruitment agencies. An interview takes place before hiring.
Recruitment Agencies
Regional or national head-hunters who generally contact candidates directly.  The market is in full expansion.There are more than a hundred agencies in Moscow, most of them Russian, but the large international agencies are also present such as Adecco, Alexander Hughes, Arthur Hunt, and Brainpower.
Click here to see a list of recruitment agencies.
Recruitment Websites
Tip Top Job International
The Moscow Times Career Centre
Expat.ru
 

The Contract

Type of Contract
A work contract is governed by legal provisions and to a lesser extent by collective agreements and individual negotiation.
Contracts can be permanent or fixed-term. The use of a fixed-term contract must be justified.

Breach of Contracts

  • Retirement
It can take several forms: "normal" retirement, for personal reasons, an agreement with the employer, voluntary early retirement, etc.
  • Dismissals
Only allowed in a limited number of cases: liquidation of the company, down-sizing, serious professional misconduct, inadequacy for the work required.
  • Other Possible Methods
Mutual agreement, at the employee's initiative, the employee's refusal to continue to work when working conditions have changed.
Labour Laws
Synthesis of labor legislation in Russia
Different laws
Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises.
 

Dispute Settlement

 

Conciliation Process

Cases of Dispute
Most disputes are the result of challenging a dismissal or disciplinary measure, but collective disputes are on the rise.
  • Legal Framework
Procedures are different according to whether the case concerns one person or if it is collective. If the case only concerns one person, a distinction is made between disputes over the application of existing working conditions and those concerning new working conditions. Within the framework of collective disputes, arbitration is obligatory.
The 2 parties first set up an arbitration committee with equal representation whose decisions are binding.
If arbitration fails, the parties can appoint a mediator, who may be recommended by the Service for the Settling of Collective Labor Disputes.
In case of failure, the decision will fall to an ad hoc arbitration committee created by the parties and the above-mentioned service. The composition, procedures and powers of this committee are set by common agreement.
  • Procedure
Labor Code of the Russian Federation
 

Judicial Structures

  • Legal Framework
Labor Code of the Russian Federation
  • Competent Legal Body
Individual disputes are usually dealt with by the Dispute Settlement Committee, an equal representation body inside the company.The worker can appeal the decision of this Committee or in some instances take the case directly to a civil tribunal.
 

Social Partners

Social Dialogue and Involvement of Social Partners
The scope of the unions is seriously limited by government policy and the position of strength of the Federation of Russian independent unions (FSIR), which is close to the government and prevents other unions from developing freely.
In addition, the new law on NGOs also applies to unions and limits their activity considerably.
Unionisation Rate
46% according to the FSIR (of which 95% are members of this). Membership levels are dropping.
Unions
Federation of Russian Independent Unions
Regulation Bodies
Ministry of Labour and Social Protection
 
 

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Latest Update: November 2022