Labor inspections

By Oksana Oleksyuk, Head of Business Development

How to prepare for inspections from labor authorities? What has changed for employers in 2018? These questions concern many companies so we will clarify below what employers need to consider today as well as the new developments that labor authorities have introduced for companies.

Oksana Oleksyuk
Head of Business Development

A change that has affected all employers is the increase in the minimum wage. The federal minimum wage has been RUB 9,489 per month since January 01, 2018. Employers linking employee remuneration with the minimum wage will need to introduce the appropriate changes to their staffing table and other HR documents and take this change into account when calculating benefits for temporary inability to work and other social payments.

Since July 01, 2017 employees have been able to provide their written consent to medical institutions to receive sick leave notes electronically. This new procedure is intended to minimize the number of mistakes when preparing sick leave notes and calculating benefits. Employers may already now voluntarily start accepting sick leave notes in electronic form. To do so, it is necessary to register with a state services portal and set a personal account on the website of the Social Insurance Fund.

Before any inspection from labor authorities, particular attention should be paid to the correctness of application of regional rates and rated increase, as well as the calculation of length of service and of salary of employees working in the Far North. Constitutional Court ruling N 38-P dated December 07, 2017 has established a precedent by regional rates and rated increase for work in locations with particular climatic conditions should be excluded from the minimum wage structure. And employers with disabled employees among their staff should review Ministry of Labor and Social Protection Decree No. 777 dated November 09, 2017 approving methodological recommendations for identifying signs of discrimination against disabled people when recruiting staff.

The issue of wage indexation was addressed in a report from the Federal Service for Labor and Employment (further “Rostrud”). Rostrud recommends employers to index their employees’ wages to the growth in consumer prices for goods and services based on data from the Federal Statistics Service (further “Rosstat”). 

Rostrud introduced checklists on January 01, 2018 so now labor inspections must be conducted with checklists listing the requirements of the law as well as questions to employers. Law makers have put this procedure in place to regulate the interaction between employers and labor inspectors, and this includes excluding from inspection any documents unrelated to what needs to be verified.

The following main subjects have been included in the checklists for 2018: employment and dismissal procedures, work schedule and vacation documentation. Labor inspectors traditionally pay close attention to issues of timeliness of payment and salary scales, the availability of incentives and disciplinary actions, the provision of payslips, etc.

Employers are liable for violation of labor laws. Article 5.27 of the Russian Code of Administrative Offenses provides for the types of violation and fines for such violations, as well as the persons that can be brought to liability. A one-off violation entails the imposition on legal entities of an administrative fine from RUB 30,000 to RUB 100,000 and a fine from RUB 1,000 to RUB 5,000 on company officers. Repeated violations will cost more to employers as fines in such case range from RUB 50,000 to RUB 200,000 with possible disqualification of company officers for up to 3 years. 

It should be noted that recently labor inspectors have increasingly imposed not one total fine for several identical violations but individual fines for every violation of labor rights. Another change introduced in 2018 is the right of labor authorities to conduct unscheduled inspections upon application not only of employees, but also based on information found in the mass media with immediate notification of the prosecution service. Previously, the prosecution service’s consent had to be obtained in advance. In addition, labor authorities are now entitled in some cases not to notify employers of unscheduled field inspections (Russian Labor Code Article 360).

Digital work with Rostrud

Rostrud has developed services for employees and employers to reduce the number of violations of employee rights and to process applications promptly.

The application for mobile devices I-Inspector allows employees to report employers’ violations of labor laws. It is now possible to report violations related to wages, and employees may complain online about any delay in payment or unlawful deductions. To use this application, employees need to open an account on a state services portal that allows viewing user complaints, their status and the responses from state authorities’ representatives. To minimize the risk of unscheduled inspection, we recommend employers to review the complaints posted on I-Inspector to prepare for unscheduled labor inspections.

Rostrud has also set up an Online-Inspection service for employers. This service allows conducting self-checks using the 125 checklists currently available. It offers a set of questionnaires grouped by topics with possible answers. After completing a questionnaire, employers receive recommendations and a report listing the identified violations of mandatory requirements. This service allows doing such self-checks anonymously.

Experts recommend being inspection ready. To do so, it would be a good thing to review corporate policies every year to determine whether they are still in line with the law and the correctness of all related documents. It may also be useful to audit HR documents at least once a year, or better still every six months, as well as verify compliance with the procedures for documentation of HR events. It is also important to consider updates in related areas such as, for example, personal data protection, migration registration, or the introduction of independent centers for qualification assessment and professional standards.

Such approach would allow detecting violations in a timely manner, assessing risks and taking measures to eliminate them. Of course, analytical work requires time to monitor changes to the law, assess their applicability to a specific type of business, as well as a thorough analysis of documents to determine their compliance with current requirements. A professional service provider could, however, fulfill all these functions and thereby save time. A professional service provider could also offer an independent assessment as well as recommendations and suggestions to eliminate any identified violations.

How may we help?

  • HR audit
  • Legal review of internal regulations and document templates
  • Drafting of internal policies and agreement templates
  • Analysis and setup of processes for HR records management
  • HR documentation restitution
  • Support of HR recordkeeping
  • Provision of advice on HR recordkeeping