How to put a foreign employee on the payroll: step-by-step instruction and answers to other hiring and staffing questions of foreign representative offices

Why do companies resort to hiring foreign staff members? Firstly, they headhunt foreign citizens and highly qualified specialists to apply cutting-edge management techniques from abroad. In many instances, such foreigners are recruited by representative offices, branches and subsidiaries of non-CIS entities.

Another reason to employ foreigners is the desire to save on staff cost. These transient “labour migrants” or “guest workers” come to Russia to earn money, are often exempt from visas and typically have low salary expectations.

The role of non-CIS employees in the representative offices of foreign companies

Companies seeking to attract world-class specialists in a bid to implement cutting-edge techniques often recruit experienced Westerners. Russian migration law provides for two methods:

• Under Russian foreigner quotas.
• As highly qualified specialists.

Let us consider the peculiarities and advantages of each solution.

According to Article 55 of the Russian Civil Code, representative offices are not legal entities. Hence, for the purposes of the employment contract, the parent company acts as the employer.

Typically, it is the CEO of the parent company that formally confirms the contract with the head of the foreign representative office – alternatively, an authorised person using their power of attorney.

As for employment contracts with the representative office’s employees, they are normally signed either by the duly authorised head of the representative office or, again, by the CEO of the parent company.

The representative office can enter into contracts with foreign workers:

1. up to the number of foreign workers agreed at the time of accreditation.
2. if it has permission to recruit and employ foreigners.
3. if the foreign workers have a work permit.

How to put a foreigner on the payroll of a foreign representative office or branch?
Let us look at each step in turn.

Step 1. Securing permission to recruit foreign staff

Without this permission it is impossible to legally hire foreign citizens who are temporarily resident in Russia on a visa.

To obtain it, the inviting entity must first pay a 10,000-rouble fee for each worker and submit a set of documents including:

• an application for permission to hire and employ foreign citizens;
• copies of the incorporation documents (for legal entities) or a copy of an identity document (for individual entrepreneurs).
• a draft contract in accordance with Russian legislation and international treaties where Russia is one of the parties (or other documentary evidence confirming preliminary agreement with foreign citizens or partners on the intention and conditions of recruitment).

The Ministry of the Interior grants annual recruitment permits. The turnaround time is 30 days.

Step 2. Invitations and work permits

Once the recruitment of foreign employees has been authorised, an invitation to enter Russia and to receive the visa and work permit must be issued to each future employee.

To this end, the following documents must be submitted to the Migration Service:

1. application in Russian;
2. document establishing the employer’s (inviting party’s) identity;
3. copy of a passport or other identity document;
4. letters of guarantee in which the inviting party assumes responsibility for the employee’s upkeep, medical care and housing during his stay in Russia;

Documents required for the issuance of a work permit (to be submitted together with the entry permit application for each prospective foreign employee):

• work permit application (in the prescribed form);
• 30x40mm colour photograph of the prospective employee;
• copy of an identity document;
• copy of education certificates;
• medical note confirming the applicant is free of HIV and certain other diseases;
• a receipt confirming the payment of the state fee.

3. Informing the local migration services of the foreigner’s arrival and employment status

After these formalities, you can proceed to enter into contracts with the foreign citizens and employ them.

Step 4. Contract of employment or civil law contract

The contract of employment must contain the following information:

1. Full details of the document authorising employment (work permit/temporary residence permit/full residence permit).
2. Medical insurance details.

When commencing employment, foreign citizens must supply nearly all documents required of Russian new hires.

In order to finalise the contract of employment, the employer should ask the employee for the following documents:

• passport or other ID;
• migration card, visa;
• one of the documents conferring the right of gainful employment;
  1. work permit;
  2. temporary residence permit;
  3. full residence permit;
• employment booklet (i.e. a standardised booklet containing the worker’s occupational record; if none is available, it must be provided by the company).
• state retirement insurance certificate. If this is the employee’s first workplace, you as their employer must provide this certificate.
• voluntary medical insurance contract (policy) valid on Russian territory (for temporary residents). This document is not required if the employer has contracted a healthcare organisation to provide paid medical services to the foreign worker.
• certificates confirming the employee’s education, qualification or specialised knowledge if the job requires specialised knowledge or training.

Military service records are not required for foreign citizens. In the case of civil law contracts (as a services subcontractor) the same documents are requested, except for the employment booklet.

Hiring highly qualified specialists

Highly qualified specialists (HQS) are foreign workers who meet the following requirements:

1. They have work experience, skills or achievements in their concrete field of activity (evaluated by the employer);
2. Their compensation under the contract of employment or civil law contract must not fall short of 167,000 roubles per month.

Advantages of hiring a HQS:

1. The company does not need permission to hire and employ foreign workers.
2. HQS recruitment is exempt from work permit quotas.
3. HQS work permit are valid for up to three years, while work permits for other foreign employees are limited to one year.
4. An HQS may work in several Russian regions as indicated in his or her work permit, while other foreign employees require a separate work permit for each Russian region they operate in.
5. An HQS is entitled to unlimited business trips across all Russian regions if his or her contract of employment specifies the necessity of business travel, while other foreign employees cannot go on business trips for more than 10 days per year if performing a management function or 40 days if their contract of employment provides for business travel).
6. An HQS is exempt from registration of his or her place of stay for the first 90 days of entering the Russian Federation and for 30 days in the case of travel within Russia (other foreign workers: 7 days).
7. The turnaround for HQS work permits including the work visa invitation is around 15 days, whilst “normal” permits take about 3½ months to complete.

Hiring CIS nationals

Nationals of other CIS countries (Ukraine, Moldova, Azerbaijan, Uzbekistan, Tadjikistan) benefit from a simplified recruitment regime:

1. there is no need to secure permission for the recruitment of foreign workers;
2. companies need not obtain a work permit since foreigners must do so themselves. Instead of a standard work permit, they receive a so-called patent. They must apply for it within 30 days of their arrival in the Russian Federation.

Hiring EEU nationals

Nationals of the Eurasian Economic Union (Belarus, Armenia, Kazakhstan, Kyrgyzstan) do not need any permits. Their registration notice period has been prolonged from 7 to 30 calendar days (90 days for Belarusian citizens).

The period of stay in the Russian Federation for such workers depends on the validity of their contract of employment; their employer (if that employer is the inviting party) must renew their registration only once per year.

Top 8 hiring and staffing questions asked by the representative offices and branches of foreign companies

Question 1: Must local normative acts (directives, instructions, guidelines) in the representative office be provided in two languages (Russian and the language of the representative office)?
Answer: There is no such requirement. Staff records can be in Russian only.

Question 2: The contracts with the employees of foreign representative offices have been concluded in the foreign organisation’s country of origin. Do we need to enter into employment contracts with them in the Russian Federation, or is it sufficient to translate the foreign contracts into Russian?
Answer: Employment contracts with representative office staff must comply with Russian legal requirements. Foreign contracts translated into Russian may violate Russian labour law.
We suggest that you enter into new contracts on Russian territory. Our specialists can draw up employment contracts with foreign citizens that fully take Russian legislation into account.

Question 3: Must foreign employees of the representative office have Russian employment booklets?
Answer: Yes, they must. Employment booklets must be provided to all employees (except those who have two jobs) who have been employed for at least 5 days. The representative office must buy a sufficient number of blank employment booklets, enter records in them, store them and use them precisely as required by Russian law.

Question 4: Can we use the representative office’s seal in the employment booklets?
Answer: Yes, the employment booklet must be stamped by the representative office: on the first page if it is the first entry and in the case of dismissal.

Question 5: Are the certificate showing the individual pension account number (SNILS) and the individual taxpayer number (INN) required for foreign employees? Who must pick up these documents at the Russian Pension Fund and tax office?
Answer: Yes, the SNILS and INN are mandatory. The representative office must apply for the SNILS, while the foreign worker must get the INN himself in the tax office.

Question 6: Must the representative office notify the Federal Migration Service (Ministry of the Interior), and in which cases?
Answer: Yes, the Ministry must be informed of the conclusion and termination of employment contracts with foreign employees within three working days; of their arrival at the place of stay within seven working days; and the company must confirm to the Ministry quarterly that it has met its obligation to pay the HQS a salary.

Question 7: If the foreign representative office employee temporarily returns to the parent company, is this going to be considered a business trip?
Answer: Yes, the employee’s trip must be treated as a business trip under Russian law. Our experts will help you to create the appropriate staff records and take the trip-related payouts into account to determine the salary for the month.

Question 8: What other pitfalls must the representative office avoid in its HR record keeping?
Answer: Russian labour law regulates the relationship between the employer and foreign employee. For this reason, HR record keeping does not differ much between a representative office and a Russian company: it follows the same procedures and causes the same workload as with Russian employees. A frequent stumbling block is the Federal Law “On Personal Data” № 152-F3 of 27th July 2006, combined with amendments to it that came into force in July 2017. At a meeting with you, we would be delighted to tell you more about the peculiarities of staff record keeping under this law.

Companies often task accountants, HR specialists or even office managers with the documentation of foreign employees, with no concept of the complexities and pitfalls of migration law. To the tune of 1 million roubles, fines can be substantial enough to destabilise the business. Consequently, you might want to train your staff on first-rate, expensive courses. Best of all, though, you should entrust professionals with tasks specific to foreign workers.