22.01.2021 — Supreme Court Clarified Conditions of Wage Increase to Employees during Corporate Bankruptcy

In one recent case the Supreme Court clarified that the employer’s bankruptcy does not necessarily limit the employees’ rights to wage increase and getting bonus payments. The Supreme Court clarified that even during bankruptcy the employer may increase employees’ salaries without the risk of such increase being invalidated as a suspicious transaction, provided that the increase is aimed at covering inflation or at compensating additional work and does not exceed the market rate, while the employee was not a controlling or an affiliated person of the company.

In the case considered by the Supreme Court, the bankruptcy manager of the company filed a lawsuit to challenge additional agreements to the employment contract on wage increase and payment of bonus to the employee. The lower courts granted the claim, pointing out that these agreements had been concluded during bankruptcy proceedings, and the employee, who was the company’s lawyer, should have been aware of the company’s insolvency.

However, the Supreme Court did not agree with this approach, stating that deterioration of the company’s financial situation and its bankruptcy do not limit the employees’ rights and benefits. Therefore, the employer, regardless of the bankruptcy proceedings, may still increase employees’ salaries and pay bonuses to its employees. However, a number of restrictions shall apply. In particular, the Supreme Court highlighted the following conditions for wage increase in such cases:

  • Wage increase is possible if carried out to compensate inflation or additional work performed by the employee;
  • The increase should not exceed the market rate of wages of similar employees;
  • The employee who received the additional pay should not be a controlling or an affiliated person of the employer.

For this reason, the Supreme Court remanded the case for a new trial, instructing the lower courts to additionally review the mentioned circumstances (see Decision of the Supreme Court of the Russian Federation dated 21 December 2020 No. 305-ЭС17-9623 (7) on the case No. А41-34824/2016).

19.01.2021 — Russian Government Approved Measures to Improve Business Climate in Construction

As part of transformation of the business climate in Russia, the Russian Government approved a road map in the construction sphere to reduce administrative barriers and improve construction procedures. The main purpose of the road map is to accelerate cadastral surveys and registration of real estate, to optimize designing and urban planning, as well as to increase the use of electronic communication between developers and state authorities during administrative procedures.

As part of key measures to improve business climate in the construction field, the Government proposed to widely implement electronic communication between the developers and state authorities, in particular, by introducing digital passports of construction objects and experimental regimes of construction-related state services in some regions (in particular, in Moscow).

The Government is also planning to optimize procedures for cadastral surveys and designing. In particular, the Government intends to accept documents for cadastral registration and registration of ownership rights directly on the construction site, to create digital passports for capital construction objects, etc. The Government is also planning to clarify the requirements for the content of the basic design and detailed design (operational) documentation, to provide for the possibility of using model design documentation and model design solutions to reduce the number of approvals to be obtained for them.

Moreover, the Government plans to adopt a number of amendments to regulations concerning electronic auctions of sale and lease of publicly owned land plots. At the same time, the deadlines for allocation of such land plots by the state to developers for construction purposes should be reduced (see Decree of the Government of the Russian Federation dated 19 January 2021 No. 48-р.).