In Resolution No. 59-P dated 13 October 2026, the Constitutional Court of the Russian Federation held that an employer may not refuse to pay a severance payment (compensation) provided for in an employment contract solely on the grounds that the employee is resigning voluntarily. This ruling reinforces the significance of contractual employee guarantees and requires employers to take a more careful approach to negotiating terms regarding payments upon the termination of an employment relationship.
Circumstances of the case
The case arose from complaints filed by two employees whose employment contracts provided for the right to compensation in the amount of five months' average earnings upon termination of the employment contract – whether by mutual agreement of the parties or at the employee's own initiative.
Upon the employees' voluntary resignation, the employer failed to pay compensation. Initially, the court of first instance denied the employees' claim for recovery of the funds. The appellate court subsequently granted their claims; however, the cassation court overturned the appellate ruling and remanded the case for a new hearing. Upon reconsideration, the claim was denied.
Among other things, the courts proceeded from the position that the payment provided for in the employment contracts did not correspond to the nature of compensatory guarantees established by labor legislation, and that its recovery could result in the employees' unjust enrichment and a violation of the interests of the company's other employees.
As a result, the employees petitioned the Constitutional Court of the Russian Federation, raising the question of the constitutionality of part 8 of Article 178 of the Labor Code of the Russian Federation and of whether it is permissible to deny recovery of compensation expressly provided for in an employment contract.
Key findings of the Constitutional Court of the Russian Federation
1. The employer is obliged to comply with the agreed terms of the employment contract
The Constitutional Court recalled that freedom of contract in employment presupposes the ability to establish additional guarantees and compensations not directly provided for by law, provided they do not worsen the employee's position as compared with the guarantees established by legislation.
The parties are entitled to agree on additional terms of the employment contract, and the employer must comply with them. Accordingly, a voluntarily assumed employer obligation to pay compensation upon dismissal cannot be arbitrarily revoked merely because such a payment is not directly provided for by law for the relevant ground for dismissal.
2. Voluntary at one’s own request does not in itself deprive the employee of the right to contractual compensation
The Constitutional Court stated that where an employment contract provides for a severance payment (compensation) upon dismissal at the employee's initiative, the employer may not refuse to pay it solely by reason of the employee's choice of that ground for dismissal.
At the same time, the Constitutional Court developed the legal position previously set out in Resolution No. 40-P of 13 July 2023, which concerned payments upon termination by mutual agreement of the parties. The new Resolution extends the same approach to situations where the employment contract is terminated at the employee's own initiative.
3. The employer cannot justify the refusal to pay by the sole assumption of abuse of rights on the part of the employee
The Constitutional Court drew attention to the de facto inequality of the parties to an employment relationship: an employer, as a rule, has greater economic and organisational capacity to determine the terms of the employment contract.
Therefore, where the compensation clause was voluntarily agreed by the parties and does not contradict the law, the employer's subsequent refusal to perform cannot be justified solely by reference to the employee's bad faith or the unfounded nature of the payment.
4. Freedom of contract does not mean the absence of restrictions for the employer
The Constitutional Court did not endorse severance payments of any kind regardless of their content and the circumstances of their establishment. When agreeing on additional guarantees, the parties must take into account the requirements of legislation, the employer's financial capacity, the interests of other employees, and specific statutory restrictions. In particular, the restrictions provided for by Article 349.3 of the Labor Code of the Russian Federation must be taken into account.
Thus, what is decisive is not the mere presence of a compensation clause in the employment contract, but the lawfulness of the relevant provision and compliance with the statutory restrictions.
What employers should consider
In light of the Constitutional Court's position, employers should bear in mind that, regardless of the ground for terminating the employment contract, a promised but unpaid compensation may be recovered by employees in court. Where the relevant payment is expressly provided for in the employment contract, is applicable to the specific situation, and does not contradict the law, the employer is obliged to make it. Moreover, the absence of an analogous guarantee in the employer's internal policies does not, in itself, release the employer from performance of the individual employment contract. In addition, the potential amount of an employee's claims may be substantial: in addition to the severance payment itself, an employee may claim default interest for delayed payment, as well as compensation for moral harm.
To materially reduce risks, employers are advised to:
- Conduct an audit of employment contracts and their additional agreements. Review provisions on severance payments and additional compensations – including in connection with dismissal at the employee's own initiative, by mutual agreement of the parties, and on other grounds – and assess the potential size of the related liabilities.
- Review the approval process for additional payments. Define the categories of persons authorised to approve such terms, provide for the necessary legal and financial approval procedures, and ensure that decisions are properly documented.
- Refine the wording of employment contracts. Compensation clauses should unambiguously define the grounds and procedure for payment, its amount, and the conditions for its provision. In doing so, the statutory restrictions must be taken into account, including those established by Article 349.3 of the Labor Code of the Russian Federation for certain categories of employees.
- Take into account the consequences of amending contractual terms. An employer cannot arbitrarily withdraw from previously agreed compensation. Any amendment to such terms must follow the established procedure.
- Assess risks before assuming obligations. When agreeing on additional guarantees, their financial implications and the applicable statutory restrictions should be taken into account, without relying on the possibility of subsequently evading payment by reference to its economic inexpediency or alleged abuse by management or employees.
Thus, Resolution No. 59-P of the Constitutional Court of the Russian Federation dated 13 October 2026 once again confirms that lawful provisions of employment contracts on additional compensations are binding and may be enforced in court. For employers, this means that such provisions require more careful evaluation both at the stage of negotiating and concluding the employment contract and upon its termination. Once the relevant obligation has been assumed, unilateral refusal to perform it may result in the court-ordered recovery of the severance payment.