Expand your business into Russia, even without a Russian entity
Russia is the largest country in the world by landmass, with a population of almost 150 million and a large, diverse economy. These factors, along with its convenient location spanning both Europe and Asia, make Russia an exciting and potentially very lucrative place to do business.
However, while there are undeniably many great reasons to expand your business to Russia, it can also be a challenge to navigate the country’s complex legal and administrative procedures. The Russian language can present a barrier, as can the country’s often-difficult administrative procedures and business regulations. These hurdles can cause delays and may result in your expansion taking longer and being more expensive than planned.
At New Horizons, we offer customizable outsourcing services to help organizations expand into Russia. Through our professional employer organization (Russia PEO), payroll, and employ of record (EOR) services, we can take care of all of your setup and administration in Russia, making your expansion more efficient and more effective.
Our dedicated in-house recruitment experts can also help you to source, recruit, and onboard new employees in Russia. Even if you don’t have a registered entity in Russia, you can use our local subsidiary as employer of record, providing all the benefits of hiring talent in Russia but without the hassle
Our services can reduce your expansion costs by thousands of dollars and cut down the process to a matter of days.
Our Russia PEO simplifies your expansion
New Horizons enables your business to expand its operations into Russia, without needing to set up a legal subsidiary.
Rapid Market Entry
New Horizons will enable you to source, hire, and onboard professionals across Russia in as little as 48 hours.
Cost-Effective Expansion
Our Russia PEO solution can help you benefit from cost savings of up to 85%, without the need to establish a Russian entity.
Payroll Outsourcing
Accurate, on-time salary and payroll processing, individual income tax declaration, expense management, statutory benefits administration, and social benefits contribution.
Employee Onboarding
Utilize the relevant provision for all types of Russian labor contracts, whether a fixed-term or open-ended contract.
Onsite Legal & HR Team
In-country legal guidance through employee acquisition, contract renewals and termination, benefits distribution, and HR compliance; as well as local tax, law, and financial expertise.
Ensure Full Compliance
We ensure that employment contracts are fully compliant and adhere to Russian labor laws and best practices.
Employment & Labor Laws in Russia
Russian employment contracts
It is legally required for employers in Russia to provide a formal written employment contract for every employee. These contracts need to contain details of the agreement, such as the benefits, salary/wage, and other so on.
Any reference to compensation should be in Russian rubles, the national currency, and the contract should be worded in Russian.
By partnering with our Russia PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Russia
The standard working week in Russia is 40 hours. Any time worked beyond this must be agreed upon beforehand and employers must pay overtime rates. Also, employees cannot generally exceed four hours of overtime in a two-day period.
Public holidays in Russia
There are several nationally recognized paid public holidays in Russia.
In addition to the standard public holidays, Russian employees receive several days off for New Year’s Day and Orthodox Christmas. During this period, from Jan 1 to Jan 7, almost all stores and businesses close.
The following is an expanded list of holidays, not all of which will necessarily be offered to employees:
Date | Description | 1 Jan | New Year’s Day |
|---|---|
02-03 Jan | New Year’s Holiday (Bridge Day) |
06-08 Jan | Orthodox Christmas Holiday |
23 Feb | Defence of the Fatherland Day |
24 Feb | Defence of the Fatherland Day (in lieu) |
09 Mar | International Women’s Day (in lieu) |
30 Mar-17 Apr | National Holiday |
19 Apr | Orthodox Easter Day |
20 Apr-30 Apr | National Holiday |
01 May | Day of Spring and Labor |
04 May | Public Holiday |
05 May | Day of Spring and Labor |
06-08 May | National Holiday |
09 May | Victory Day |
11 May | Victory Day (in lieu) |
12 Jun | Russia Day |
01 Jul | Constitution Vote Public Holiday |
04 Nov | Day of Unity |
29 Nov | Mother’s Day |
Vacation leave in Russia
Russian employees are entitled to a minimum of 28 days of paid vacation leave. At least 14 days of this leave needs to be taken in one block, and any vacation leave offered beyond the normal 28 days can be ‘sold’ for extra pay.
Sick leave in Russia
Employees in Russia who are absent from work through sickness or injury are still entitled to payments upon the provision of a doctor’s note. The precise amount of compensation is between 60% and 100% of normal pay and is based on a range of factors.
Maternity and paternity leave in Russia
Mothers in Russia can usually take 140 days of paid leave, with 70 days taken before and after their child’s birth. They may also be entitled to extended leave in some cases, such as when more than one child is born, or if they have associated health problems. Leave can also be extended to up to three years (unpaid), and employers must retain their job during this time
Fathers are not legally entitled to any paternity leave in Russia.
Employee severance and terminations in Russia
Employees are quite strongly protected in Russia, so employers usually need to negotiate terms of termination on a case-by-case basis. In general, employees receive several (three or more) months of severance pay in place of a notice period.
To avoid legal trouble, it is advisable to get professional advice when terminating employees in Russia.
Workers in a probation period (which are limited to three months) are not usually entitled to these notice periods.
Taxation in Russia
Employers in Russia must contribute toward employee social security benefits. These contributions cover things like pensions, disability insurance, and more, and total around 22% of salaries (although there are maximum limits in place).
The income tax rate in Russia is a flat 13% of income, however, this can vary in some cases, such as for foreign workers.
The corporate tax rate in Russia is generally 20%.
Health coverage in Russia
Russia has a nationalized healthcare system, so employers do not need to offer health insurance to their employees. However, some companies may choose to offer private coverage for employees.
Russia compensations & benefits
Compensation Laws in Russia
The monthly minimum wage in most of Russia is 12,130 rubles as of 2020. There is a higher minimum of 20,195 rubles in Moscow, the country’s capital city.
Minimum Wage Country Comparison Chart | (Per month in USD) |
|---|---|
Switzerland (Geneva) | $4,000 |
Italy | $2,255 |
Russia | $195 |
Algeria | $156 |
Uzbekistan | $22 |
Benefit management in Russia
Building an employee benefits system in Russia can be a long and complicated process, with the language, laws, and administrative procedures all potentially stalling your expansion progress.
A simple alternative is to outsource your Russian benefits management to New Horizons. Our team will ensure that your benefits system is set up rapidly and compliantly, so you can focus on the important job of expanding into Russia.
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How can New Horizons help you expand into Russia?
New Horizons’ Russian employer of record, payroll, and Russia PEO services offer your business everything needed to start building a presence and expanding in Russia. Our dedicated expansion teams can help you be up and running in Russia in as little as 48 hours, and could save you more than 80% in expansion costs, even if you don’t have a Russian entity.
Our team can also handle your company’s payroll, benefits, and expenses in Russia, as well as any relevant legal compliance and HR work. And as the only Russia PEO with an in-house recruitment team, New Horizons can also find, hire, and onboard your local workforce for you.
Get in touch with our Russian expansion experts today to learn how our tailored services can help you expand more effectively.
