HR AND PAYROLL IN RUSSIA

Webinar 17 April 2014 WHAT DO YOU NEED TO KNOW ABOUT HR AND PAYROLL IN RUSSIA?

DOING BUSINESS IN RUSSIA AND HR IN RUSSIA: TRENDS

GLOBAL HR AND PAYROLL IN RUSSIA

OVERVIEW OF THE DRAFT LEGISLATION REGARDING SECONDMENTS IN RUSSIA

QUESTIONS AND ANSWERS

2 DOING BUSINESS IN RUSSIA AND HR IN RUSSIA: TRENDS

Dr Daniel Thorniley President at DT-Global Business Consulting GmbH ECONOMIC AND BUSINESS OUTLOOK

2013 saw business slowdown for many companies . Which sectors did better? . How were sales? The crisis in 2014 - starting with a weaker rouble and then events in Crimea - again hit sales and business. How do executives judge business now and the market outlook? . What is happening with consumer demand? . When are companies introducing price rises? . What is happening in the supply chain and distribution? What is the outlook for GDP growth this year and next 5 years? What will happen to inflation and the rouble?

HUMAN RESOURCES AND TALENT MANAGEMENT

Background to Russian HR:

. They were great, once - are they still? . What are Russian skill sets? . How do you find talent - and how do you retain them? . What do Russian staff want: is it just money? . What about management style challenges? How are companies compensating for the rouble fall? What are average salary levels? What do you pay top staff?

GLOBAL HR AND PAYROLL IN RUSSIA

Deborah Williams – Global Head of HRP, TMF Group Alex Medlock – Sub-Regional Director CIS, TMF Group

6 WHAT APPROACH FITS YOUR COMPANY GROWTH?

1. Know the services available in the 2. Know your Supplier market/country

Large ERP/BPO

Managing M&As in international payroll Relationship Service Delivery Operational Management Management Service Delivery

Experts in ‘the last mile’

3. Know your population and cost, map it to your chosen provider HRP SERVICES – LOCAL TRENDS AND DEVELOPMENTS (1)

HR transformation projects . Change of focus of HR to strategic issues: recruitment; retention; compensation; learning; performance . HR tactical or administrative tasks outsourced: payroll; . HR administration; time management TMF Group is involved in a number of such projects . Change management . Review of “as is” model and gap analysis with Target Operating Model . Data migration and configuration of payroll system . Interfaces: global HR system; ERP; client bank . Outsourcing

Resourcing implications for TMF Group . Group level: PMO; system solutions; service delivery; IT infrastructure . Local level: project management; analysts; programmers, process specialists; service delivery

HRP SERVICES – LOCAL TRENDS AND DEVELOPMENTS (2)

Financial services outsourcing . Recent increase in interest among foreign-owned banks to outsource payroll . In Q1 completed go-live for a 2000+ employee European-owned bank based in Moscow . Project involved building templates to facilitate data migration from previous provider using proprietary software (Direct Pay) plus gap analysis and rectification work . Dedicated team to support on-boarding and servicing such projects Acquisitions Existing client recently completed an acquisition of a new business in Russia with offices in Moscow and St Petersburg . TMF Group originally engaged to provide both payroll and HR administration so was involved at an early stage – alignment of HR policies; client bank; data migration . Client also requested that TMF Group provide HR administration services for the acquired company; to facilitate this, TMF Group opened a new office in St Petersburg in January 2014 – now 7 HRP specialists and expected to grow

OVERVIEW OF THE DRAFT LEGISLATION REGARDING SECONDMENTS IN RUSSIA

Evgeny Ulumdzhiev, Head of Employment and Incentives, Russia, Linklaters CIS

10 CURRENT POSITION

. Secondment: the temporary transfer of an employee from one organisation to another for a certain period. While on secondment, the employee remains employed by the first organisation that will continue to pay their salary, but day-to-day control transfers to the organisation to which the employee has been seconded. . In Russia, there is currently no law regulating secondment arrangements.

. There is a risk that a secondee may, as a matter of fact, become the host’s employee, despite the parties’ intentions. MARKET PRACTICE

. Service agreements: a service provider (a seconding entity) undertakes to provide certain services (e.g. drilling, , payroll etc.) to the client (a host) without specifying that in fact they provide personnel. . If a substance-over-form approach is taken, the risk may still materialise.

DRAFT LEGISLATION

. Draft bill: prohibition of any use of secondment arrangements, except where such arrangements are used for seconding (1) an agency worker or (2) an employee between members of the same group of companies/affiliated entities. . Expected to be passed by May 2014. . Implications for HR: work permits, working time forms, form of secondment agreement. QUESTIONS AND ANSWERS Disclaimer Whilst we have taken reasonable steps to provide accurate and up to date information in this publication, we do not give any warranties or representations, whether express or implied, in this respect. The information is subject to change without notice. The information contained in this publication is subject to changes in () laws in different jurisdictions worldwide. None of the information contained in this publication constitutes an offer or solicitation for business, a recommendation with respect to our services, a recommendation to engage in any transaction or to engage us as a legal, tax, financial, investment or accounting advisor. No action should be taken on the basis of this information without first seeking independent professional advice. We shall not be liable for any loss or damage whatsoever arising as a result of your use of or reliance on the information contained herein. This is a publication of TMF Group B.V., P.O. Box 23393, 1100 DW Zuidoost, the ([email protected]). TMF Group B.V. is part of TMF Group, consisting of a number of companies worldwide. Any group company is not a registered agent of another group company. A full list of the names, addresses and details of the regulatory status of the companies are available on our website: www.tmf-group.com. © April 2014 TMF Group B.V.