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4 Nov 2022


Russia: President signs law on termination of citizens' employment contracts in cases where conscripted company owners do not transfer company rights

[Translation prepared by Business & Human Rights Resource Centre]

A law was signed on the termination of employment contracts of citizens with individual entrepreneurs during the mobilization of a director who has not transfered the company rights, 4 November 2022

Russian President Vladimir Putin signed a law to terminate employment contracts with employees of limited liability companies (LLC), whose sole CEO was mobilized, but did not transfer control of the company to anyone. The employment contracts of employees of individual entrepreneurs (IEs) who have not transferred the management of their business to a trustee will also be subject to termination.

Amendment to Art. 83 of the Labor Code regulates the termination of an employment contract due to circumstances beyond the control of the parties. Employment contracts can now be terminated if an employee has been convicted, died, or found incompetent, or if a court has reinstated an employee who previously performed his job.

The adopted amendment supplements this list with a new circumstance: an employment contract may be terminated if an employer - an individual or an employer who is the sole founder (participant) of a legal entity, simultaneously having the powers of the sole executive body of this legal entity, is called up for military service upon mobilization announced by the President. The norm works if such an employer, for the period of his military service, did not authorize another person to exercise his rights and fulfill his duties. This paragraph applies to legal relations that arose from 21 September 2022 ...

“This primarily concerns unscrupulous employers who did not transfer their affairs by proxy so that employees (mainly of small companies) would not remain in a “suspended” state on contracts with an enterprise that suspended its activities. These are quite rare cases. In fact, the company ceased operations, and people can’t do anything, who should fire them? - said the source of the agency.

Earlier, the State Duma adopted a law according to which individual entrepreneurs and founders of companies called up for mobilization could resolve organizational issues and transfer company rights to a trustee within five working days, in the original version of the bill, it was planned to give businessmen seven days to resolve these issues...