To hell with the Labor Code

Moscow is requiring employers to collect and share employee personal data illegally and shift 30 percent of all staff to remote work, no matter the industry

The coronavirus is tearing through Muscovites again at a pace not seen since the start of the pandemic. In response, Mayor Sergey Sobyanin has ordered employers to shift more than a quarter of their workforces to remote work, leading to confusion among independent contractors and desperation in industries like foodservice, where remote work is simply impractical. Meduza correspondent Alexandra Sivtsova spoke to several entrepreneurs in Moscow to find out how they’re managing the city’s new demands.

On October 12, the spread of coronavirus in Russia reached a worrying milestone, returning to more than 13,000 new daily cases for the first time since the beginning of the pandemic. Once again, Moscow is the epicenter of the rising infection numbers. On October 12 alone, the capital reported 4,395 new cases.

To slow the spread of COVID-19, Moscow Mayor Sergey Sobyanin is rolling out new restrictions once more, like an executive order that required the city’s employers to move at least 30 percent of their staff to remote work starting on October 5. The mayor’s new policy also requires employees older than 65 and persons with chronic illnesses to work remotely.

On October 6, Sobyanin issued additional orders meant to help enforce the new remote-work requirements, forcing employers under threat of fines to share the telephone numbers, license-plate numbers, and transit-card numbers of all staff working remotely. Moscow employers were ordered to start providing this information on a weekly basis, beginning on October 12, though many lawyers argue that the city’s new policy is illegal.

The penalties for failure to comply with Sobyanin’s orders are significant. For first-time offenses, independent contractors face fines as high as 50,000 rubles ($650), while LLCs risk fines as much as 300,000 rubles ($3,900). The city can punish repeat offenders with fines as high as 1 million rubles ($13,000) or by shutting down an organization for up to 90 days.

Small businesses grasping in the dark

Following Sobyanin’s new orders, self-employed contractors and LLC owners have scrambled to understand how the new requirements affect entrepreneurs with no other employees. Do they themselves need to work remotely? If so, do they need to report their own transit information to the authorities? Moscow’s Entrepreneurship and Innovative Development Department and the city’s special hotline have offered different answers to these questions.

Alexander Isaev, a self-employed video production technician, told Meduza that he called the city’s hotline three times on October 9 to find out if the mayor’s remote-work policy affects him. Each time, after a 30-minute wait on hold, operators told him that private entrepreneurs with no staff must nevertheless provide the city with documents about the employees they’ve transferred to remote work.

Elena Burmistrova, the owner of the “Officina” restaurant, confirmed to Meduza that the city’s telephone hotline is overloaded. She says she recently called to find out how she is supposed to transfer her restaurant staff to remote work. “It’s impossible to get through. The first time I finally reached someone, I asked the young woman about foodservice, but she herself didn’t have any answers,” Burmistrova said.

Initial instructions from the Sobyanin administration apparently violated Russia’s Labor Code. For example, Article 20 of the Labor Code states that individual entrepreneurs without other staff are not considered employers. As a result, the city subsequently exempted independent contractors without employees from submitting remote-work reports.

Checkmate, new restrictions

Moscow employers are required to submit these reports through their individual accounts on the mayor’s official website using a special form, where they must indicate the telephone numbers, transit-card numbers, and license-plate numbers of all employees transferred to remote work.

Lyudmila Kharitonova, a managing partner at the “Zartsyn and Partners” law firm, told Meduza that Sobyanin’s orders violate both Russia’s Labor Code and its laws on privacy, which state that employers are not required to collect personal data from employees such as license-plate numbers. When her firm learned about the mayor’s new orders, she says they called the Entrepreneurship and Innovative Development Department and explained that it’s illegal for employers to collect such personal data. “We hadn’t thought about that,” the operator apparently told Kharitonova’s law firm, asking her to phone again the next day. In the meantime, however, the operator said employers “still need to collect the data.”

According to Kharitonova, employers can only collect such employee information if the city declares a disaster situation. She says the Sobyanin administration was in such a rush to impose new restrictions on movement throughout the capital that officials never even stopped to realize that employers lack the right to gather the data in question. The mayor’s new orders, says Kharitonova, offer no guidance about how employee information is supposed to be collected or how it should be transmitted to the city.

To complicate matters further, employees aren’t required by the law to supply employers with their actual transit information — this data must be surrendered voluntarily. At the same time, employers can be fined for failing to send this information to the city.

Aigul Shadrina, the CEO of “S4 Consulting” (an accounting firm that manages the books of dozens of small-business owners in Moscow), told Meduza that her clients are enraged about Sobyanin’s orders requiring city access to employees’ personal data. “The entrepreneurs themselves don’t want to throw their staff under the bus,” says Shadrina.

Elena Burmistrova employs a dozen people at her restaurant. She says she ended up transferring herself and her accountant to remote work, though she wonders if she risks criminal prosecution if she ever needs to swing by her business. “What if they’re tracking me? What happens then?” she asked Meduza. So far, the city hasn’t yet explained what it plans to do with the employee personal data it’s collecting from employers.

Mayor Sobyanin’s requirement that at least 30 percent of all workforces switch to remote work has proved to be unrealistic in Burmistrova’s industry. Others in foodservice have argued similarly that the threshold is too high when virtually all employees (like waiters and waitresses, for example) simply cannot work remotely, for obvious reasons.

To circumvent the rigors of the new restrictions, Aigul Shadrina says business owners have resorted to rotating staff in alternating remote-work shifts, where some employees report for work on Mondays, Wednesdays, and Fridays, while others come to work on Tuesdays, Thursdays, and Saturdays. It’s still unknown if Sobyanin’s administration will tolerate this scheme, however, and some businesses are likely to deviate in practice from the work schedules they report to the city.

Lyudmila Kharitonova says this “chessboard method” is a good idea, given that the mayor’s executive orders specify merely that a business should keep at least 30 percent of its workforce away from the office at any time, without specifying that remote workers must be the same individuals each and every day.

Gaming the system with dead souls

According to Elena Burmistrova, some restaurateurs plan to circumvent Moscow’s new requirements by hiring fictitious employees for remote work, though she warns that these schemes bring the city no closer to a sensible policy on reducing the number of people moving through the capital. The mayor needs to draft different rules for different industries, argues Burmistrova. “Because what is remote work, really? My dishwasher is going to wash the dishes at their own home and I’m supposed to pay their salary for that?” she complained to Meduza.

For businesses where remote work is unfeasible, many employers will hire new workers only to place them on unpaid leave. Lyudmila Kharitonova says the purpose of “employing” people for no work and no pay is to inflate staff sizes without spending more money. Employees formally “working from home” are still owed minimum salaries, Kharitonova points out.

Three of the biggest I.T. associations in Russia have already asked senior officials at the Digital Development, Communications, and Mass Media Ministry to talk to Mayor Sobyanin’s administration about reviewing the business community’s concerns over the new remote-work requirements. The industry’s spokespeople urge the capital to stop asking employers for employees’ personal transit information and telephone numbers, warning that the mayor’s requirements force employers to choose between violating Russia’s Labor Code and risking a fine from the city.

Ministry representatives have stood by Sobyanin’s executive orders, however, maintaining that the city has the right to request such data.

Even for the businesses that actually manage to collect this employee information, transmitting the data to the city hasn’t been easy

In order to submit the necessary employee data to the city, business owners need an electronic digital signature. Not every employer in Moscow has one of these, and many have had to scramble to buy one in the last few days. They’re not free, either. Depending on the nature of your business, obtaining an electronic digital signature in Moscow costs between 2,000 and 8,000 rubles ($25 and $100).

Aigul Shadrina says it’s a miserable time to dump more paperwork on struggling businesses. The new filing requirements mean additional accounting expenses for entrepreneurs. Perhaps even worse, the new rules have created confusion just as businesses were regaining their bearings, rekindling the spring’s sense of instability, says Shadrina.

The city’s online platform for receiving remote employees’ personal data has also failed to keep pace with incoming reports. Several business owners told Meduza that the system often misinterprets the information they upload or rejects it outright. On October 12, moreover, the entire platform crashed when employers rushed to meet the new reporting deadline. Mayor Sobyanin’s administration blamed the crash on employers waiting until the last minute to upload their employee data, though officials also say they will take the crash into account when verifying the submitted information.

Story by Alexandra Sivtsova

Translation by Kevin Rothrock