Global PEO Services (GPS) helps companies hire employees in Russia without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in Russia, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Russian labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in Russia. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Russia has the largest landmass of all countries in the world and boasts natural resources worth $75 trillion, according to World Bank estimates. Ever since the privatization of Russia’s energy and defense-related sectors in the 1990s, the country has taken giant strides when it comes to growth. The GDP of Russia is 4.0 trillion (PPP). Revenues from oil, natural gas, and energy drive the Russian economy. Foreign trade is important as the total value of imports and exports is equal to 46.7% of GDP.
Currency: Russian Ruble
Principal Language: Russian
Government: Federal Semi-presidential Republic
Capital City: Moscow
Major Cities: St. Petersburg, Novosibirsk
Individual labor contracts are mandatory under the Russian labor law. They are either for a specific period but not more than 5 years (known as the fixed-term contract), or last for an indeterminate period.
A standard workweek usually is not more than 40 hours. The Labor Code does not state a standard workday. It specifies shorter standard workweeks for some types of employees:
- For employees below the age of 16: 24 hours a week
- For employees in the age group 16 to 18 years: 35 hours a week
- For employees with disabilities: 35 hours in a week, and
- For employees working in unhealthy, hazardous or dangerous settings: 36 hours a week.
Employees in these categories have their work time reduced without any pay deduction. When an employee is working part-time for other reasons, however, pay is calculated pro rata based on the actual working time.
The Labor Code does not mandate specific days of the week to be days off, but notes that Sunday is a common day off and that in the case of 5-day workweeks, the 2 days off are usually consecutive.
Work time for employees in Russia cannot be more than 40 hours per week. In some circumstances, working time is more restrictive.
Additionally, the total hours per workday cannot be more than 7 hours for workers less than 18 years old or 5 hours for workers less than 16 years old. The workday cannot be more than 8 hours in a day for workers employed in hazardous or unsafe environments.
Overtime pay is stipulated by the law as 1.5 times the normal rate of pay for the first 2 hours more than standard working hours and 2 times the normal rate of pay for all working hours beyond that. Overtime cannot be more than 4 hours in a span of 2 days or 120 hours during a year for an employee. Collective bargaining agreements can also specify compensation payable for overtime work.
Employees need to give written consent to perform overtime work. Employees helping handicapped children aged 18 or less are also entitled to these benefits.
Employees get the following paid federal holidays every year:
- Jan. 1-2: New Year Holidays
- Jan. 7: Christmas
- Feb. 23: Day of the Defender of the Fatherland
- March 8: International Women's Day
- May 1-2: Spring and Labor Day
- May 9: Victory Day
- June 12: Day of Russia
- Nov. 4: National Unity Day
If a holiday occurs on a weekend or any other non-workday, then the paid day off is shifted to the workday that follows the holiday. While working on federal holidays is not allowed, workers may still need to work in some organizations that are continuously operational.
Russian workers are entitled to paid leave for 28 calendar days annually. Workers in unsafe or harmful occupations may get additional leave. Employers can also provide additional leave to workers based on an employment contract or agreement. During the first 6 months of employment, leaves are subject to employers’ discretion and approval.
Some types of paid leaves are guaranteed with no consideration of the time since employment commenced. These include adoptive leave, maternity leave, and leave for workers under the age of 18.
Child Care Leave
Employers need to allow employees 4 days of vacation per month on account of additional responsibility related to parenting disabled children aged less than 18.
Sick Child Leave
Employees get paid leave to look after a sick child, from 7 up to 60 days, varying on the basis of the child’s age and some other criteria. Payment for this leave comes from the Social Insurance Fund, and the amount varies based on the term of insurance and amount of contributions to the fund.
Expecting mothers can take up to 70 calendar days’ leave before childbirth and up to 70 calendar days post-childbirth. Employees receive payment for the leave by the Social Insurance Fund with compensation based on averaged monthly salary during the last 12 months, but the amount cannot be higher than 15,000 rubles. Maternity leave can be taken in part or fully by a child's father, grandparents, any relative or guardian.
Employees are entitled to paid leave — up to 7 calendar days for one instance of sickness, and up to 30 calendar days during a year – to look after a sick family member. Social Insurance Fund pays for Family leave in the same proportion as sick leave.
Social insurance contributions are levied based on all employee wages paid by employers, as defined frequently by employment agreements. All social insurance plans specify thresholds on which the contributions are calculated. The Russian Federation has three types of obligatory pension insurance (OPI) plans, which provide a range of benefits for workers:
Social Insurance Benefit
Employers contribute 22% of payroll. Reduced rates of insurance contributions apply to employers of specific categories. The maximum annual income to calculate contributions are 1,021,000 rubles plus 10% of payroll above this amount in the case of employers in general categories.
Old-Age Pension (Social Assistance)
All employees get coverage under the Russia's pension system. The qualifying age for an old-age pension is 65 years for men and 60 years for women. Benefits are adjusted based on changes in the inflation rate.
The pension consists of a basic flat-rate benefit and an earnings-related benefit.
Companies employing 7 or more people in special economic zones for technology development may pay reduced premiums of around 14%.
All employees are under the coverage of the Russia's pension system. The qualifying age for an old-age pension is 65 years for men and 60 years for women.
Work Injury Compensation
Temporary Disability Benefit: Injured employees are entitled to free medical care and necessary treatment for recovery from their disability, and additional payments until recovery or evaluation of the disability as permanent. The monthly allowance is equivalent to 100% of the concerned employee's gross earnings.
Workers who are unable to perform their work due to work-related injuries or diseases get a lump-sum payment as well as monthly payments and access to medical care. The lump-sum amount will depend on the severity of those employees' incapacity.
Permanent Disability Benefit: The pension amount varies depending on the severity or degree of disability. It applies if a worker has a minimum of 10% loss of work capacity.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Russia and hire their employees without having to establish a branch office or subsidiary in Russia.
- Your candidate is hired via our Russia PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Russia laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 150+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.