Recent developments

On 15 June 2018 the Ministry of Labor and Social Protection of the Russian Federation ("Ministry of Labor") published an invitation to join the new Federal Industry Agreement on the Agro-Industrial sector for 2018-2020 (the "Agreement").

A Federal Industry Agreement is a sector-specific regulatory act that establishes general terms for employee salaries, guarantees and benefits in a given industrial sector. These agreements, which are negotiated between trade unions and the Ministry of Labor, are binding upon all companies in that sector. Under the Russian Labor Code, a company may opt out by providing a reasoned, written refusal to the Ministry of Labor within thirty days of the agreement's enactment.

Please note that the Agreement applies to companies engaged in the manufacture and wholesale of food, alcohol and tobacco, as well as in manufacturing medicinal drugs and materials used for medical purposes, and establishes additional guarantees for employees in these companies.

Companies choosing to opt out of the Agreement must submit their reasoned refusal to the Ministry by 15 July 2018 inclusive. Otherwise, the Agreement will become mandatory for the relevant employers.

Provisions of the Agreement

The Agreement introduces a number of additional guarantees to employees of the industry above those in the labor legislation. In particular, companies are required to:

  • provide additional annual paid leave to employees working in harmful and (or) hazardous working conditions – from 7 to 10 days (depending on the degree of harmfulness)
  • establish increased remuneration for employees working in harmful and (or) hazardous working conditions (the minimum salary increase is from 4 to 8%, depending on the degree of harmfulness)
  • ensure additional payment for night shifts of no less than 25% of the wage rate (base salary) for each hour of work
  • provide additional guarantees and compensation to employees who have suffered from an occupational disease or industrial accident (including, if an employee dies, reimbursement of all funeral expenses and compensation for moral damage to a family that has lost its breadwinner)
  • implement measures aimed at promoting youth employment in agro-industrial organizations (specifically, provide financial aid to young employees returning to the company after compulsory military service), etc.

Moreover, according to the Agreement, if they have the financial capacity, employers should consider providing other benefits to employees (for example, providing financial aid to employees in certain cases, paying more for evening work, etc.).

The Agreement also provides additional guarantees to trade unions, including:

  • companies should not apply disciplinary measures to employees who are members of elective trade union bodies or transfer them to other work positions without the consent of a higher trade union body
  • companies are obliged to allocate no less than 0.5% of the payroll budget to trade union bodies for organizing cultural, sports and recreational activities.

Actions to consider

Companies that do not wish to join the new Agreement should submit their reasoned refusals as soon as possible. Records of consultations with the elected body of the primary trade union must be included with such refusals. The Ministry of Labor can require a company and the relevant union representatives to attend further consultations in the event they refuse to join.

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