All economic entities require protection. The problem of insufficient protection of Russian employees and employers is particularly relevant. The employee is protected from dismissal and bullying, first of all, by his/her usefulness to the employer and competitiveness on the labour market. The security of the employee is enhanced by such components of his human capital as education, skill, work experience, reputation, potential of mobility, etc. Formal institutions called to protect employees in Russia are not sufficiently effective. Informal institutions (traditions, customs, habits), being deeply authoritarian, suppose a high degree of personal dependence of the employee. As a result, in the new private sector, especially in small business, the majority of employees have almost no rights. The people working in the public sector enjoy greater social protection, but less security against poverty. Particularly poorly protected on the labour market are older people and disabled persons. The employer also requires protection against bad workmen who can cheat him at hiring and during work, abuse position, steal, blackmail, sell important information to competitors. The risks of investing in the improvement of employees’ professional skills is great. This article lists the factors allowing to reduce the risk of good workers being enticed away by competitors. Some conclusions are confirmed by the results of the sociological research conducted by the author in 2003, 2010 and 2011. The main reason for vulnerability of the subjects of labour relations, in addition to their possible lack of competitiveness, lies in the shortcomings of the institutional environment which governs these relations.