Is it possible to terminate the employment agreement with the employee at the initiative of administration associated with the change of ownership and restructuring of a legal entity?

No, it is impossible. General conditions for termination of the employment agreement at the initiative of administration are stated in article 33 of the Labor Code of the RF. The full list of instances for a unilateral termination of labor relations is given in this article without the reference to restructuring and change of ownership of a commercial company.

Pursuant to clause 2 article 29 of the Labor Code of the RF, should the company's owner be changed, and equally it be restructured (consolidation, merger, split-up, split-off, transformation) the labor relations continue with the employee's consent. In such a case, a legal ground for termination of the employment agreement at the initiative of administration is possible only if the number of the staff or the manning table are reduced provided that the procedure for termination of an employee is met in full (transfer to another job upon his consent, ascertainment of his preemptive right to keep this job, timely notice on upcoming redundancies, etc.) Let's note that the change of ownership does not envisage restructuring of a legal entity: neither the form of ownership and organizational structure, nor the structure of assets are changed as a result of the employment of a new principal. It means that the said conditions are not legal grounds for termination of the employment agreement at the initiative of administration. In such a case, should the rights of the employee be violated, then pursuant to article 210 of the Labor Code of the RF he has the right to appeal against the actions of the management in court which will decide the issue on his reinstatement in employment. Should such reinstatement in employment not be possible in compliance with the law, then the court, upon adjudicating the dismissal unlawful, may obligate the liquidation commission to pay an average wage to the employee for the entire period of forced absenteeism along with rendering assistance in finding new employment.

Thus, should the number or manning table be reduced in the course of restructuring, labor relations may be terminated (clause 1 Article 33 of the Labor Code of the RF). However, there are exceptions as well. Namely, pursuant to clause 14 of the Decree of the RF President dated 14.06.92 "On Measures to Support and Reorganize Insolvent State Enterprises (Bankrupts) and Application of Special Procedures Thereof" a new owner acquiring an ex state-owned company at an auction under an independent management and possession, shall acquire the right to appoint and dismiss the employees, including the company's principal.