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Five new positions of the SC of Russia: what conclusions the employers should make

Tatiana Samarina, Senior Lawyer of the Law Firm "YUST", Doctor at Law

The companies as well as their employees keep asking each year new questions regarding the application of ambiguous provisions of the Labour Code. Thanks to the relentlessness of parties to labour disputes in the cases that reach the Supreme Court, many problems get solved. This article is about the most notable resolutions adopted by the Supreme Court during the last year. All five cases ended unfavorably for the employers, but the legal positions expressed in them cleared some debatable questions related with dismissals of employees. Employers should take those positions into account as new legal risks.

Individual severance packages are mandatory even if mentioned only in the employment contract

Employment contracts with certain employees sometimes fix individual conditions, including those as regard severance packages (additional compensations etc.), which are not given to other employees of the same company. This is allowed under part 4 of Article 178 of the Labour Code.

Despite that provision, employers frequently refuse to pay the individual severance payment, alleging that legislation does not establish their obligation to pay additional compensation at the termination of the employment contract, and that local regulation acts of the employer company and the collective agreement also fix no additional severance pay. Earlier the court practice frequently favoured the employer (for example, the determinations of the Moscow City Court dated 06.09.2012 on the case No. 11-19853, dated30.08.2012 on the case No. 11-16231/2012, by the Krasnoyarsk Territory Court dated 22.08.2012 on the case No. 33-7140/12). But the Supreme Court did not agree with such position, which follows the resolution No. 45-КГ-12-6 dated 14.09.2012.

Circumstances of the case. An employee filed with the court a claim against the former employer demanding payment of the severance pay, of interest on late payment, compensation of moral damages. The employee motivated his claim by alleging an ancillary agreement to the employment contract, which stipulated payment of a certain amount in the case of dismissal independently from the basis of termination of employment. The employer did not pay the amount willingly. The first and second instances upheld the employer’s position. In their opinion, the ancillary agreement was a breach of the collective agreement and the company’s salary regulations, according to which the compensation payments are only due, when an employee retires. Besides, the reservation of severance pay independently from the basis of termination of employment incited the employee to terminate the employment.

The position of the Supreme Court. According to Article 9 of the Labour Code, employment agreements may not contain conditions, which prejudice the employee’s rights and guarantees stipulated by the labour legislation. But such conditions as, to the contrary, improve the employee’s situation as compared to the law, cannot be considered breaching of the legislation, and must be observed by the employers. On this basis, the Supreme Court made a precedent conclusion: the condition of increased severance pay may be fixed for a certain employee individually in his employment contract or in an ancillary agreement thereto. It is not required to include the provision in a collective agreement, since it does not regulate the relations of individual employees with the employer. When the case was considered in the highest instance, the earlier adopted court acts were revoked and the case submitted for new consideration.

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Source of the publication: Company Lawyer magazine, No. 1, 2013.

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