Joining the federal agricultural industry agreement for 2018-2020

At federal level, the industry agreement has been adopted which sets additional obligations and automatically extends to companies in Russia's agricultural industry. To refuse to join the agreement, a well-grounded written refusal should be filed with the Russian Ministry of Labour and Social Protection (the 'Ministry of Labour') by 14 July 2018.

On 15 June 2017, Rossiyskaya Gazeta published a Letter of the Ministry of Labour with a proposal to join the Federal Agricultural Industry Agreement for 2018-2020 (the 'Agreement').

The Agreement is binding on:

• the members of the All-Russian Agricultural Association of Employers Russian Agricultural Association (abbreviated in Russian as "Rosagropromsoyuz") and the employers who are members of the respective structures;
• companies and their members that are part of the Russian Association of Farm Enterprises and Farmers’ Cooperatives;
• companies that are subordinate to the Russian Ministry of Agriculture and Russian Federal Service for Veterinary and Phytosanitary Surveillance (abbreviated in Russian as "Rosselkhoznadzor");
• companies that are not members of either Rosagropromsoyuz or the Russian Association of Farm Enterprises and Farmers’ Cooperatives but have instructed the above associations to participate in collective bargaining and enter into the Agreement on their behalf;
• other companies in the agricultural industry, unless such companies submit to the Ministry of Labour a well-grounded refusal to join the Agreement by 14 July 2018.

Below we set out some of the provisions of the Agreement which impose additional obligations on employers:

o an increased night differential shall be set of at least 25% of the tariff rate/salary (clause 5.5);

• an increased rate of payment shall be set for employees who work in hazardous and/or dangerous working conditions (clause 7.3(b)):

· at least 5% of the tariff rate/salary for specialists whose working conditions have been assigned to hazard level 3;
· at least 6% of the tariff rate/salary for specialists whose working conditions have been assigned to hazard level 4;
· at least 8% of the tariff rate/salary for specialists whose working conditions have been classified as dangerous;

• provision has been made for contributions to be paid to the trade union for cultural, sports, and recreational activities in the amount of at least 0.5% of payroll costs (clause 10.2).

Implications for companies

For companies which did not play a part in the Agreement being concluded (i.e. those which are not members of the Union of employers and did not authorise it to enter into the Agreement), the only option for refusing to join is to file a well-grounded written refusal with the Ministry of Labour, accompanied by the minutes of the discussions with the elective body of the primary trade union organisation which represents the company's employees (article 48(8) of the Russian Labour Code).

We recommend considering whether it is prudent to join the Agreement, and, if the decision is taken to refuse to join, filing a well-grounded written refusal with the Ministry of Labour. The time period for filing a well-grounded refusal is 30 calendar days after the agreement is published. To rule out disputes over whether the refusal to join the agreement was filed in due time, we recommend that you ensure that the refusal is filed with the Ministry of Labour on or before 14 July 2018.

If such well-grounded refusal is filed with the Ministry of Labour later than the specified deadline, the employees will have the right to claim (including through the court) that guarantees, compensations and benefits be granted to them in accordance with the Agreement. Labour inspectorates will have grounds to hold the company administratively liable for not complying with the Agreement.

Help from your advisers

Pepeliaev Group's lawyers will readily provide the necessary legal support when the documents are prepared which are required to refuse to join the Agreement, and on any other issues which relate to the Agreement being in effect.