21.07.08

In 2007, several arbitration courts ruled that paying foreigners in hard currency over-the-counter was an illegal monetary transaction. They claimed employers were responsible for such violations. The courts based their decisions on Federal Law N 173 “On Currency Regulation and Currency Control,” which states that the exchange of Russian currency benefits the non-resident at the expense of the residents.

All foreigners are considered to be non-residents unless they have resident permits. This is established by Federal law N 173. Most currency transactions with non-residents can only be carried out through accounts in authorized banks, with few exceptions. Since these exceptions do not specifically include paying non-residents in hard Russian currency, courts have ruled that employers who do so are violating currency legislations.

However, these decisions contradict the norms of Russia's labor legislation, which applies equally to both residents and foreign citizens (as stated in Article 11 of the Labor Code). Other court decisions have ruled that currency legislation does not directly oblige non-residents to open and use Russian bank accounts in order to receive wages in rubles, for instance.

The courts have also confirmed that the standards established by labor legislation apply to dealings with foreign citizens, unless otherwise stipulated by international agreement. According to articles 131 and 136 of the Labor Code, wages are either paid to workers in Russian currency at the place of work, or are transferred into an authorized bank account specified by the worker under the terms of the contract governing the worker's employment.

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