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Law banning staff leasing to come into force in less than two months


From 1 January 2016, outstaffing will be prohibited in Russia and the provision of personnel will be strictly regulated as a result of the entry into force of Federal Law No. 116-FZ dated 5 May 2014 (the “Law”). We previously reported on the Law (for more details please see here).

The Law’s entry into force will affect the majority of companies that currently use the services of recruitment agencies for temporary staff. As a result, such companies need to review shortly, all the cases when the use of temporary staff is permitted by the Law, and take measures to bring their operations and HR policy in line with the restrictions imposed.

From the beginning of next year, only (i) legal entities that temporarily second employees to their affiliates or to a legal entity that is a party to a shareholders agreement with the seconding entity and (ii) duly accredited private employment agencies may carry on the activity of providing personnel.

The procedure for the accreditation of private employment agencies was approved on 29 October 2015 under Russian Government Decree No. 1165. Given the fact that the accreditation procedure has not yet been worked out in practice, there is a concern that in the first months after the Law comes into force, private employment agencies may face delays in obtaining their accreditation. Companies who plan to use the services of such agencies in the near future must therefore take this fact into account.

As for staff provided to affiliated entities or entities that are parties to a shareholder agreement with the seconding entity, the relevant procedure must be regulated in a separate federal law. To date such law has not been adopted. Therefore, the question of how temporary personnel should be provided in these cases remains open.

CMS Client Alert | Employment | November 2015
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