Representative office employees: answers to important questions

According to Article 20 of the Labour Code of the Russian Federation, the employer shall be an individual or a legal entity entering labor relations with the employee. Also another subject empowered to conclude labor contracts can act as an employer.

Question: Are there any employee limitations in a representative office?

Answer: In the Russian Federation territory the rules set by the Labour Code, the laws, other normative legal acts containing the labor law norms shall cover labor relations of foreign companies, unless otherwise provided for by an international treaty ( Article 11 of the Labour Code of the Russian Federation).

According to Article 20 of the Labour Code of the Russian Federation, the employer shall be an individual or a legal entity entering labor relations with the employee. Also another subject empowered to conclude labor contracts can act as an employer.

As representative/branch offices are not independent legal entities ( item 3, Article 55 of the Civil Code of the Russian Federation), the foreign company (and not its representative office) will act as an employer. The manager of such representative office acts on behalf of the foreign employer on the grounds of the warrant. The manager of the representative office can sign such labour contract providing he was invested with authority.

The labour contract shall state that an employee is hired in the representative office (Article 57 of the Labour Code of the Russian Federation).

The Labour legislation of the Russian Federation applies to all labour relations including those between a foreign employer and an employee in the territory of the Russian Federation. Thus, the labour law of the Russian Federation will regulate the work of a foreign company — employer.

The Labour Code of the Russian Federation has no staff limitation. Thus, a foreign company has the right to hire Russian employees without limitations.

However, there are other legal restrictions on the number of foreign employees being hired. In case of foreign company conducting activities via representative office and planning to hire foreign citizens, there is a special procedure of their legalization personal accreditation in the territory of the Russian Federation.

According to Decree of the Council of Ministers of the USSR dtd. 30.11.1989 No.1074 «On approval of the procedure for opening and operating in the USSR foreign representative offices, banks and companies», a personal accreditation of foreign employees of the representative office is obligatory for their labour activity in Russia (Articles 13, 14 of the Decree). The number of foreign staff members is specified at the opening (Article 12 of the Decree). The staff number record is approved by the State Registration Chamber. As a general rule, not more than five persons can be accredited to work in the representative office of the foreign company. The state duty for the approval of up to four persons is 5,000 RUB. However, if the representative office plans to employ more than five persons, the State Registration Chamber will ask for the grounds and the state duty will be as high as 15,000 RUB.

Question: What is a validation period of the highly-qualified specialist (HQS) status of foreign employees working in the representative office? Will it be affected by the accreditation expiration of the representative office?

Answer: The accreditation period is important to get a work permit and visa. As there is a possibility that the representative office may not extend the accreditation, all documents are valid through the accreditation period of the representative office.

Earlier the HQS status was not available for the representative office, but since 01.01.2015 the situation has changed. The representative offices were permitted to employ HQSs, the HQS status is granted for 3 years. It is important to realize that after receiving the HQS status the Immigration Service visits the location of the organization to confirm the company functioning.

Thus, in case the accreditation period is expiring it is worth extending the accreditation of the representative office first and then receiving a HQS status for the employees.

For more information on the HQS status advantages, please read the article on our website «Accreditation of representative office employees — obligation and not advantage».

Useful links:

How to increase the representative office employee’s income by 24% without Company’s expenses increase

How can the head of a foreign representative office be reimbursed for personal expenses in a correct manner?

Accreditation of representative office employees — obligation and not advantage

Binding of employees' salaries to foreign currencies: possible or not?

Why the documentation of representative office employees must comply with Russian legislation

Risks incurred by foreign companies that do not process holidays, sickness and business trips under Russian rules

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