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The Moscow Times Moscow Guide – Winter 2008

Since the middle of autumn one of the most important topics of discussion, could only be … no, not the financial crisis… New Year! The winter issue of The Moscow Times Moscow Guide is entirely devoted to New Years celebrations. Seven great ideas for celebrating the “Night of Nights” will help readers finalise their plans and choose how and where to party, give fresh ideas and lots of practical advice.

And don’t forget – problems will come by themselves, but happiness and luck need an invitation. That why the more cheerful and light-hearted your celebration of the coming holiday is, the happier and more successful 2009 will be for you.

The Crisis: Signs of a Kremlin Fearful Of Unrest
Sociologist Yevgeny Gontmakher has painted a disturbing picture of what might emerge from the financial crisis, forecasting continued unemployment, huge protests and spreading violence.

Market Matters: Huge Grain Harvest No Boon for Farmers
This year Russia is enjoying the biggest grain harvest it has ever seen -- and farmers couldn't be more worried.



Thursday, January 08, 2009 Updated at 31 December 2008 22:36 Moscow Time.

The Moscow Times » Issue 4011 » Business For Business

Employment of a General Director: What a Company Needs to Know

16 October 2008By Salans, Associate, Maria Landau, Alexandra Bludyan /

Employing a general director (president, general manager etc.) as a company's sole executive body is a complicated matter of particular concern to today's corporate owners and the authorized officials charged with the due maintenance of personnel documentation (i.e. HR specialists, accountants). A company's proper documentation of labor relations with its general director -- in accordance with the provisions of applicable law -- is key, first and foremost, to the establishment of a mechanism of interaction over the course of development in relations between the general director and the company's owners, and secondly, of ensuring the possibility of an amicable "divorce" should one become necessary -- an advantage with critical practical applications.

It must be noted that under applicable RF law and practice, the relations between a company and its general director constitute employment relations, a fact which has been confirmed by the RF Supreme Court. Thus, the company will be obliged to enter into a written employment contract with the general director, to pay his/her salary, and to provide safe working conditions, etc. Moreover, if the company's general director is a foreign national, it will be obliged to obtain the required migration permits. The assumption by a foreign national of the duties of general director in the absence of duly-obtained migration documents constitutes a violation of migration laws and may result in the imposition of administrative liability against the employer, i.e. the company and its officials.

In today's business world, the establishment of "non-competition" ground rules is of particular concern to employers. As distinct from the law of many foreign countries, Russian law neither defines nor accepts the concept of "non-competition." However, applicable legislation does provide for certain restrictions with respect to a general director's employment. Thus, a general director may only be hired by a secondary employer with the express permission of the company's authorized body. However, many other specialized rules pertaining to general directors and generally understood to fall under the "non-competition" concept are not directly established by RF law. In practice, therefore, companies frequently utilize other legal mechanisms to protect their interests, i.e. the establishment of "trade secret" regulations with respect to valuable information, which require the employers to implement a number of measures that are listed in law in order to ensure due protection of their trade secrets..

The RF Labor Code establishes additional grounds for the termination of employment contracts with general directors. Thus, the employment contract with the general director may be terminated at any time by decision of the company's authorized body. In such cases, however, it must be remembered that in the absence of any wrongful action on the part of the general director, the employer will be obliged to pay him/her the severance allowance specified in the respective employment contract, but in any case no less than three average monthly wages. The absence of an employment contract with the general director (quite common in practice), and therefore the lack of a written agreement as to severance pay, or, conversely, the existence of an employment contract that fails to specify severance pay, may lead to a labor dispute with the general director.

It should be noted that the employment contract with the general director may establish additional grounds for termination aside from those expressly provided by applicable law.

It is difficult to overstate the significance of the post of general director at Russian companies, and it is frequently the case that conflicts between the general director and corporate owners boil down to labor disputes. When this happens, a well-drafted employment contract can often break the deadlock and, in certain cases, even save the business.