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Even company co-founder is entitled to redundancy payments: a ruling from Russia

Written by
ALRUD, a confident Russian leader in labour and employment law.
The Moscow City Court has confirmed that a redundant employee is eligible to a third-month severance payment, even though he had founded another company.

A company dismissed an employee due to staff redundancy and, following the requirements of the law, paid him a severance payment for the third month of unemployment upon request. Subsequently, the employer discovered that the employee was a founder of another legal entity and concluded that the payment of the third severance payment was unlawful. The company filed a legal action to recover the payment from the former employee on the basis it was unjust enrichment. The first court supported the employer, ruling that the co-founder of a company cannot be considered unemployed, which means that he was not entitled to severance payments.

The Moscow City Court did not endorse this view, referring to the fact that the employee submitted all the documents required for receiving the severance payment, including the employment centre’s decision confirming the employee’s unemployment and his right to receive the additional severance payment, which had not been challenged or cancelled. Given these documents, the employer was obliged to make payments.

Source: Appeal ruling of the Moscow City Court, dated March 12th, 2020 No. 2-4518/2018

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Margarita Egiazarova
Senior Associate