When you’re interviewing a potential job candidate, they’re likely to ask questions about two vital factors — compensation and benefits. Employees care about choosing a job that provides an acceptable level of compensation and benefits that truly matter to their families. Meeting Russia’s compensation laws and providing a well-rounded Russian benefit management plan will also benefit your company, as employees will stay in their positions longer and you’ll stay compliant.
G-P provides Employer of Record services, including Russia compensation and benefits outsourcing, to companies planning an expansion. Relying on us ensures compliance, and you won’t have to incorporate in Russia before you begin working.
Russia Compensation Laws
Russia’s federal minimum wage is 13 890 Russian rubles per month. The country has one of the lowest minimum wages in Europe. Local government agreements may have separate Russian compensation laws that could create different minimum wages depending on your location. Always research both the federal minimum wage rate and any variances in cities such as Moscow or St. Petersburg before drafting an employment contract.
Guaranteed Benefits in Russia
Creating a strong benefit management plan in Russia has to start with identifying guaranteed benefits for all employees. Russia celebrates both the New Year and Orthodox Christmas in the first week of January, and your company will most likely shut down that week. Employees should also get time off for the country’s six other public holidays and at least 28 calendar days of paid vacation each year.
Another statutory benefit is maternity leave for female employees. You should give pregnant employees 140 days of paid maternity leave — 70 before birth and 70 after. Employers should extend the leave to 194 days if there are multiple births or complications, and employees can also choose to extend their leave up to three years and still return to their position.
Russia Benefits Management
Instead of you simply giving out guaranteed benefits required by law, we recommend adding supplemental benefits to your plan. While incentive bonuses are not mandatory to stay compliant, they are common, and your company should look at providing these or a 13th-month bonus.
All Russian citizens have access to the country’s free medical services, but employers may also offer a private plan. If you don’t have the time or staff to source a specific plan, you could also provide a stipend for employees to find their own plan.
Restrictions for Benefits and Compensation
Companies are not legally allowed to hire employees, pay them, and provide benefits until they establish a subsidiary in Russia. This restriction can turn into a time-consuming process, as you may spend months trying to incorporate. Instead, G-P offers a suite of expansion services without any restrictions to benefits and compensation. When you choose Russia benefits and compensation outsourcing with us, you can onboard employees and pay them in just a few days.
Russia Competitive Benefits Planning
When you establish your company in Russia, your employee benefits plans can be a catalyst for growth. Your offerings can help you attract potential candidates, deepen engagement with current employees, and further your regional business development goals. To design a competitive plan, you’ll need to meet legal requirements and employee expectations.
Russia Employee Benefits Plans
As you build your team in Russia, you’ll want to focus resources on your benefits strategy. Offering extra provisions for your employees can help motivate them to contribute more to your company. A competitive plan will also demonstrate your appreciation for their efforts and set them up for growth and success.
Consider offering some of these popular fringe benefits:
- Child care and education assistance
- Housing reimbursement
- Ongoing learning opportunities for employees
- Supplemental sick pay
- Medical and life insurance for employees and their dependents
- Additional vacation days
- Mobile and Wi-Fi connection compensation
Requirements for Employee Benefits in Russia
To keep your company compliant, you must provide these offerings according to national labor codes:
- Public holiday leave
- Annual leave
- Sick leave
- Maternity leave
- Parental leave
- Study leave
- Military leave
- Bereavement leave
How to Design Your Employee Benefits Program
While you can expect any business region to have unique market standards and compliance regulations, you can approach benefits planning with similar techniques anywhere.
1. Establish Company Objectives and Budget
Discuss your program goals with stakeholders and determine how your available resources can help you meet your objectives.
For example, if your company’s goal is team growth, you might need to focus on the required benefits. Supplemental offerings may not be sustainable for a larger number of employees. If you’re focused on retention, you might allocate more resources toward a generous benefits plan.
2. Understand the Market
Before you build out your program, you need to understand what kinds of benefits employees expect. Research market trends and see if you can match or exceed the benefits other employers in the area are offering.
You’ll want to explore employees’ preferences for benefits and note any underserved needs. If you can meet them, your company will gain a competitive edge in the market.
3. Design Your Scheme
Once you’ve done some research, you can begin developing your benefits program. Start by incorporating the mandatory benefits into your budget. You can use any leftover funds to cover the fringe benefits employees want most.
As you calculate final program costs, consider your administration expenses, employee contributions, and cost containment features.
Average Cost of Benefits Per Employee
Employee benefits plans vary widely from one company to another, so an average cost may not be helpful in your planning. As you build your budget, consider setting aside a percentage of revenue each year to support your program. With this approach, you’ll be able to scale your offerings and funding as you continue to grow your team.
How to Calculate Employee Benefits
Calculations for mandatory benefits will be straightforward. You can simply follow the rates laid out in the national labor laws.
For supplemental offerings, calculations may vary. You might aim to set rates that match or outperform the offerings your competitors are providing their employees.
How Are Employee Benefits Taxed in Russia?
Most benefits are considered taxable earnings in Russia, so you can expect to factor bonuses and other offerings into your deductions from employee paychecks. Remember that you’ll also need to make employer contributions to the state Medical Insurance Fund and Social Insurance Fund.
Employee Health Benefits Plans
Employees receive health coverage under the Medical Insurance Fund sponsored by the government. Supplemental health insurance is not a required benefit.
Work With G-P to Build Your Global Team
G-P’ Global Growth Platform™ helps you build and scale an international team quickly and easily, ensuring all benefits offered to candidates are compliant and in line with local regulations. Learn more about our platform and request a proposal today.