Comment made by Senior Associate Evgeny Zverev to an article titled “Employers will be blacklisted”

5 February 2010

A ruling was made in St.- Petersburg to keep a register of unscrupulous employers which were caught dismissing employees without valid reason. Data on an infringer shall be placed on record only should appropriate judgement be given and should the fired person desire it. However, blacklisting of persistent non-payers of salaries and other infringers of employee's rights isn’t expected as yet.

The draw municipal law (signed on February 1) was introduced as early as last April when layoffs, of which illegal ones, became a mass phenomenon. However, consideration of this draw law ran over – it took about half a year to comply with technical remarks made by governor. As a result the register shall be kept only since January 1, 2011.

Complaining after the trial

According to the law, employer data shall be entered into the register by persons being dismissed should their dismissal be made unlawful by a valid court ruling. An agency duly authorised by the city government (for instance, the Labour and Employment Committee) shall verify submitted data and “blacklist” the infringer within seven days. The register should be posted on the web site of relevant authorities and be published in media. The list of media hasn’t been made yet.

Upon expiry of one year from the date where the infringing company was entered into the register “conviction is removed from official records” (a relevant entry shall be removed from “blacklist”). A “rehabilitative” procedure is also provided (in case of cancellation of prior judicial act, for instance, in the exercise of supervisory powers) Experts are viewing the new law with skepticism, “They’ll start keeping the Register only after the law will become effective, persons responsible for keeping the register will be nominated and the rules of register keeping will be approved,” said Evgeny Zverev from a law firm “S&K Vertikal”. “The only impact of such blacklisting provided by the law is that such factor shall be taken into account in making decision on supportive measures financed from the St.-Petersburg budget. That is to say, not even a tacit impossibility to receive such public support”.

He believes that the law shall not introduce anything new. After all, the texts of all rulings made by courts should be posted on the Internet the since July 1, and even now visitors of the website may access the court case file, and one may gather data on claims filed against a company and results of litigation.

“A selection of judgements awarded with respect to specific person (for instance, potential employer) will speak volumes to an acquisitive reader. And one has got to thank the St.- Petersburg legislators for their willingness to help such acquisitive readers (from budget resources), by compiling a topical selection of documents (honestly speaking, truncated) concerning labour disputes,” said the lawyer.

This register of unscrupulous persons wasn’t the first to appear at the latest time: taxmen and police officers began to post data pertaining to habitual infringers on their websites even earlier. “Historically such registers date back to a practice adopted in Soviet period when divorce notices were published in newspapers so as to decrease the divorce rate for dear of public reprobation,” reminded Zverev.

Good guys never force their way

Headhunters also believe that the new law is of little help. However, according to Inna Komar, the director of Mega Solution company, it will bring to reason some employers who use to practice illegal dismissal of workers. “Other employers will be forced to search more carefully for labour loopholes as the country mentality will change only after three generations. As for companies which provide the outstaffing services (leasing of staff), the law will give them some additional opportunities of growth, since employers facing increasing legislative pressure and the risk of being entered into the register of unscrupulous employers, will more often require their services”.

However, the law is unlikely to have profound effect on behaviour of unscrupulous employers. After all, the register will contain the corporate name of a legal entity, which were caught breaching the law, instead of a brand name or the name of director. The point is, for many businesses employing workers their corporate name and brand name will differ. Consequently, the owners can easily abandon the existing organisation and establish a new one. And the fact of the former entity being entered into the "blacklist" will not prevent the owners from doing so.

Furthermore, only firms caught in dismissing employees without valid reason should be entered into the register. However, by now lots of businesses have simply disappeared, leaving employees without wages, work books, etc. For instance, only the Dzerzhinsky district court has already sustained scores of claims filed by workers of the "Top-Manager" publishing house: five LLCs run by a certain Irina Schultz were operating under its "umbrella". Few if any cheated employees were dismissed, however, judgements delivered by court along with blacklisting will hardly prevent managers of the disappeared organisation from registering the legal entity with a new name, but, probably, with an old brand.

A measure which is formally in force for years could prove a more effective remedy against such fraudsters. A two-time labour violation committed in the space of a year (should any ruling ordering administrative punishment be adopted on this violation) will entail disqualification of the director or other management official of the employer. On the basis of a court decision he shall be entered into in a special register maintained by the RF MIA within an established period of time (up to three years), and shall forfeit a right to hold a senior role in any Russian company.

Still, this measure is not often applied practically. For the first sixth months of the last year Russian courts have tried less than 2.4 thousand cases under article 5.27 of the Code of Administrative Offences of the Russian Federation. Over one thousand and a half officials were found guilty, almost 700 of them were disqualified. But according to statistics published by the Supreme Court Justice Department of the Russian Federation, during the same period the Russian judges have sustained more than 6 000 of almost 11000 claims for reinstatement filed by citizens.

Furthermore, the courts made over 383 thousand rulings on recovery of wages, sustained tens of thousands other claims brought by citizens against the employers. That is the National Labour Inspection pays regards only to every two-hundredth infringement of employee's right and directors of the guilty companies incurred no substantial punishment in 99.5% of cases.

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