What Severance Pay Rules Must Employers Follow in Russia?

Which Employees Qualify for Severance Pay?

• Employees dismissed due to staff redundancy or company liquidation under the Russian Labour Code.
• Employees who refuse to transfer when the workplace relocates or when material employment conditions change lawfully.
• Employees released because they are medically unfit to perform their job and no suitable alternative role is available.
• Employees whose military service or other mandatory state duties require termination of their employment.
• Employees whose fixed-term contracts end early for reasons not attributable to their own misconduct.
• Employees dismissed on grounds where the Labour Code explicitly grants severance, as set out in Articles 178-181.

What Are the Legal Timelines for Paying Severance?

In Russia, severance must generally be paid on the employee’s last working day together with final wages and compensation for unused vacation. For redundancies and liquidation, you typically owe at least one month’s average earnings at termination, plus continued average earnings for up to two additional months while the employee searches for work (and, in some cases, a third month via the employment service). These ongoing payments are usually made monthly as they fall due, subject to the employee proving they remain unemployed. Local practice and court decisions expect strict adherence to these timelines, so your payroll team should schedule payments to hit bank accounts no later than the statutory pay dates. Always document payment dates and calculations to defend against potential labour inspector or court claims.

What Penalties Apply if Severance Is Not Paid Correctly?

If your company underpays or delays severance in Russia, you risk financial penalties, state inspections, and employee lawsuits. The Labour Code allows employees to claim not only the unpaid severance but also interest for late payment and moral damages, and courts tend to interpret ambiguities in favor of the employee.

• Labour inspectors can issue administrative fines against the company and responsible officials.
• Courts may order payment of all arrears plus statutory interest for each day of delay.
• Employees can claim compensation for moral harm where the breach caused distress.
• Repeated or serious violations can trigger enhanced scrutiny of your wider HR practices.
• Non-compliance can damage your employer brand and complicate future downsizing.

Does Outsourcing Employment via an EOR Change Severance Liability?

Using an Employer of Record (EOR) such as https://www.playroll.com/employer-of-record does not remove the need to follow Russian severance rules, but it can shift who is the formal employer of record under local law. In a compliant EOR model, the EOR entity is the legal employer responsible for issuing termination notices, calculating severance, and making payments under the Labour Code. Your company still carries commercial and reputational risk if instructions to the EOR lead to unlawful dismissals or underpayment. You should ensure your EOR contract clearly allocates liability for severance errors, legal fees, and penalties, and that the EOR maintains up-to-date local HR and payroll expertise.

Be 100 Percent Compliant in Offering Severance with Playroll

Playroll helps your company navigate Russia’s severance rules by pairing local legal insight with precise payroll execution. Our team tracks changes to the Russian Labour Code, regional practices, and court trends so your managers know when severance is triggered, how to calculate average earnings, and which documents to issue. We also help you plan workforce changes in advance so you can budget for severance and avoid last-minute compliance surprises.

Beyond calculations, Playroll builds workflows that align HR decisions, legal review, and payroll cutoffs, reducing the risk of late or incorrect payments. Whether you employ directly or through an EOR structure, we help you document business grounds for termination, structure notice and consultation steps, and maintain evidence that severance was paid correctly and on time, keeping your company on the right side of Russian labour authorities.