The Constitutional Court of the Russian Federation Prohibited Employers from Concluding Fixed-Term Employment Contracts with Heads of Structural Subdivisions of Organisations

28 December 2023
Dmitry Filippov
Junior Associate

On 19 December 2023 the Constitutional Court of the Russian Federation issued Resolution № 59-P/2023 “On the Case Concerning the Verification of the Constitutionality of Paragraph Eight of Part Two of Article 59 of the Labour Code of the Russian Federation in Connection with the Complaint of Citizen E. A. Selkova” (hereinafter - the “Resolution”).

The facts

The employee entered into a fixed-term employment contract in June 2021 and was employed as the head of the development service. After three months of employment, in September 2021, the employee was dismissed due to the expiry of the employment contract. The employee disagreed with the dismissal and applied to the court for recognition of the employment contract as concluded for an indefinite period and for reinstatement, but the courts rejected the claims1.

In an appeal to the Constitutional Court of the Russian Federation, the employee challenged the constitutionality of Article 59.2.8 of the Labour Code of the Russian Federation, which allows for a different interpretation of the term “manager” and thus unreasonably refers to this category of employees as heads of structural subdivisions of organisations.

Position of the Constitutional Court of the Russian Federation

Labour legislation should protect employees against arbitrary, i.e. without sufficient grounds, conclusion of a fixed-term employment contract, in particular by limiting the cases in which a fixed-term contract may be concluded. At the same time, the legislator should consider the specifics of the labour activity performed by various categories of employees and their working conditions. These circumstances may predetermine special rules allowing for the conclusion of fixed-term labour contracts with certain categories of workers.

Among the categories of employees with whom fixed-term employment contracts may be concluded by agreement of the parties are heads of organisations. At the same time, court practice shows that there is no unified approach to the understanding of the term “manager” itself. In several cases courts refer to the term “manager” only to managers of the organisation as a whole2, but there are judicial acts in which managers also include heads of structural subdivisions of the organisation3. Accordingly, the contested norm is often interpreted differently.

The head of the organisation and the head of a structural subdivision of the organisation have different legal status. The differences between them are expressed in the labour functions of the employees, which differ significantly in the scope and content of their managerial powers, etc. That means that it is impossible to automatically extend the provisions contained in Chapter 43 of the Labour Code of the Russian Federation to the regulation of labour relations with the participation of heads of structural subdivisions of the organisation.

Thus, the contested norm does not comply with the Constitution of the Russian Federation in the part where it allows a different approach to the possibility of concluding a fixed-term employment contract with an employee filling the position of the head of a structural subdivision of the organisation, as well as to the dismissal of such an employee in connection with the expiry of the term of the employment contract.

Until the amendments arising from the Resolution are made, it is not allowed to conclude a fixed-term employment contract with an employee holding the position of the head of a structural subdivision of the organisation. At the same time, fixed-term employment contracts already concluded with employees filling the position of the head of a structural subdivision of the organisation are deemed to be concluded for an indefinite period.

1 Determination of the Second Cassation Court of General Jurisdiction of 16.08.2022 in case No. 88-15485/2022.
2 See, for example: determination of the Fourth Cassation Court of General Jurisdiction of 13.04.2021 in case No. 88-10362/2021, 2-1906/2020, determination of the Fourth Cassation Court of General Jurisdiction of 11.01.2022 No. 88-27076/2021 in case No. 2-1058/2021, determination of the Sixth Cassation Court of General Jurisdiction of 28.05.2020 in case No. 88-10768/2020.
3 See, for example: determination of the Eighth General Court of Cassation of 06.04.2023 No. 88-2911/2023, determination of the Second General Court of Cassation of 12.05.2022 in case No. 88-10215/2022, determination of the Eighth General Court of Cassation of 18.05.2023 No. 88-8978/2023 in case No. 2-3115/2022.