Taxes and payrolls: the Russian labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Russian labour market.
Even if the national currency is the Russian Ruble (RUB), the whole article is in EUR to compare easily across countries and exchange rates.
General data about the Russian labour market
| Minimum wage | 162.39€ |
| Payment basis | Twice a month |
| Payment | Must be paid no later than 15 calendar days after the last day of the payroll period. |
| Maximum working hours a week | 40h |
| Maximum overtime hours a year | 120h |
| Working hours compensation | 150.00% of the regular hourly salary rate for the first two hours of overtime, increasing to 200.00% after that. |
Payroll taxes in Russia
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % |
| 22% Pension + 5.1% medical insurance + 2.9% social insurance applied on salary up to 18,668€ | 30% |
| 10% Pension + 2.1% medical applied on salary exceeding 18,668€ | 15.1% |
| Accident Insurance (dependent on the degree of inherent risk in the employee’s occupation) | 0.2% to 8.5% |
| Total | 30.02% to 38.50% |
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
| Gross salary | Income tax |
| Annual income up to 49,993.85€ | 13% |
| Annual income above 49,993.85€ | 15% |
Contingencies from self-employees
Self-employed pay 6.6% taxes of total employment.
Example of net salary in Russia
As a reference, we use the average salary of a software engineer. In Russia, on average, software engineers earn annually 30,300€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 30,300 | |||
| 22% Pension + 5.1% medical insurance + 2.9% social insurance applied on salary up to 18,668€ | 30% | 9,090 | ||
| Accident Insurance | 0.2% to 8.5% | 60.6 to 2,575.5 | ||
| Total | 30.2% to 38.5% | 9,150.6 to 11,665.5€ | ||
| Income tax | 13% | 3,939€ | ||
| Net salary (annually) | 26,361€ |
The employer contributes 9,150.6 to 11,665.5€.
After paying the income tax, the employee has a net salary of 26,361€ coming from a gross salary of 30,300€.
Unemployment regulation in Russia
Notice periods in Russia are not required. Notice only applies if dismissal is a result of liquidation, redundancy, failed probation, or end of fixed term contract.
Severance pay lasts for two months.
The probation period usually lasts for three months, 6 for positions such as directors or senior managers.
Different kinds of leaves in Russia
Employees are entitled to 28 calendar days (20 working days) of paid leave per year. One period of leave should be no less than 14 days. There are 15 days of public holidays.
In the case of sickness in Russia, the employee is entitled to a sick leave allowance paid by the employer for the first three days of sickness. After that, it is paid by the Social Insurance Fund of the Russian Federation, using insurance payments made by the employer. The sick leave allowance varies based on the employee’s overall length of service but does not exceed 25€ per day. Employers have the option to pay a higher rate.
Other common leaves:
- Study leave: employees studying higher education are entitled to 40 days paid leave during the first two years of learning and 50 days paid leave for the remaining learning term; the employer pays this allowance.
- Bereavement: 5 days leave.
- Military leave: employees who are parents and spouses of military personnel, killed or seriously injured during military service, or due to a disease associated with military service are entitled to up to 14 calendar days of unpaid leave during a year.
Paid parental leave
The maternity leave allowance is determined by calculating the earnings from the two calendar years before the year of maternity leave. These earnings are divided by the total number of calendar days in those two years, excluding periods of temporary disability. The resulting average daily earnings are then multiplied by the number of calendar days of maternity leave to determine the total maternity leave allowance to be paid. Maternity leave lasts for 140 days.
A relative or guardian caring for a child in Russia can request paid parental leave until the child reaches 18 months of age, with the payment of the allowance provided by the Social Insurance Fund of the Russian Federation.
Employees can also take up to five days of unpaid leave after the birth of a child.
In cases where employees are raising a child without the child’s mother, they are entitled to the same benefits that are guaranteed to women.
Other common Russian benefits
| Benefit | % of companies with this benefit |
| Diversity | 16.5 |
| Health Insurance | 12.8 |
| Professional Development | 12.4 |
| Cutting Edge Technology | 12.0 |
| Equal Opportunity Employer | 9.5 |
How to employ a Russian worker
This often involves registering a legal entity or establishing a branch or representative office.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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