Differences between a GPC agreement and a labor agreement: pros and cons for the parties

Every successful company hires employees sooner or later. If you fill them out improperly, you can be subject to sanctions and owe the employee a large sum. The law offers several options for formalizing relations with employees, from which the employer can choose the appropriate one. First, let's understand the terms.

An employment contract is a written agreement between an employee and an employer, which specifies the rights and obligations of each party. The employer guarantees the employee a place to work, timely salary and conditions that comply with the Labor Code of the Russian Federation. And the employee, in return, fulfills his direct work responsibilities and follows the company’s rules.

GPC agreement (decoding - civil law) - an agreement between the contractor and the customer, under which they do not enter into an employment relationship. This agreement defines the work and its result, for which the performer receives remuneration. Examples of a GPC agreement: contract, provision of services, author's agreement.

Subject of the contract: labor function / result

The subject of labor relations is the personal performance by an employee of his direct work duties for a salary . The labor function is defined in job descriptions in accordance with the qualifications and specialty of the employee. This is a workflow that runs every working day.

The subject of civil law relations is the result of the work or service of the performer . The customer must receive and accept the result within the period specified in the contract. In this case, the work process itself is not important for the customer, although, if desired, he can establish intermediate control.

The contract specifies a list of works that the contractor must complete within the agreed period. The contractor may involve other performers in the task if the contract does not provide for independent execution.

The basis on which the contractor receives remuneration is a bilateral act of work performed.

3. Documentation: work book or contract

To begin an employment relationship with an employee, you need to prepare a number of documents :

• employment contract;
• employment history;
• personal card;
• hiring order.

To work with a contractor, you only need to enter into a written GPC agreement . Each party leaves signatures on it. After the end of cooperation, the contract is closed with an act of completion of work (services rendered).

How to conclude a contract with an employee

The GPA is concluded in writing between the customer and the contractor. An individual entrepreneur’s contract with an employee based on a standard form, based on the characteristics of the services ordered.

Download a Sample Individual Entrepreneur Agreement with an Employee (25.8 KiB, 2,931 hits)

The sequence of how to register an employee under a civil contract is as follows:

1. Indicate the date of conclusion and the name of the document.
2. Enter the details of the customer.
3. Describe the nature of the proposed work.
4. The amount of remuneration is fixed.
5. Enter information about the performers.

At the end of the document, the parties put signatures, and upon completion of the work, the acceptance certificate is signed.

For the period of validity of the document, the performer is recognized as part of the workforce, however, such employment under a civil law contract is not considered personnel records management and is not recorded according to labor law.

Mutual responsibility of the parties: employer and employee, customer and contractor

The employer is obliged to make the following payments in favor of the employee:

• average earnings for the period during which he was illegally deprived of the opportunity to work;
• compensation for damage to health and property;
• compensation for moral damage
• interest for late wages.

The employee, in turn, bears financial responsibility to the organization within the framework of his monthly earnings. For violation of discipline, he may be subject to a reprimand, reprimand or dismissal.

The customer of work or services is obliged to compensate the contractor for losses caused by improper performance of duties. The performer is responsible to the customer in the same way.

The contractor cannot be brought to disciplinary liability.

Internal labor regulations

Each full-time employee works at a time agreed with the operating hours of the organization itself . Therefore, he is obliged to work according to the company's rules. Come and leave work at the appointed time, have lunch and rest, and take technical breaks. Absence from work without a good reason is permitted only on non-working days: holidays and weekends established by the staffing schedule.

The full-time employee remains under the control of the employer throughout the working day.

Persons working under GPC agreements are not required to obey the customer’s internal rules . They do not obey the officials of the organization and its regulations.

The contractor can work at night, when the entire staff of the organization is resting, and sleep well during working hours. Weekends also do not affect the work process in any way. The main thing is to submit the result of the work on time.

Working conditions: workplace and materials

According to the employment contract, the employer provides the employee with proper working conditions . It highlights the work area, computer, tools, uniform, materials and instruments. Conducts safety training.

According to the GPC agreement, the customer is not responsible for the contractor’s workplace . The contractor himself selects and equips his workplace. The customer can transfer tools and materials for the work to the contractor, and then this is written in the contract. If there is no such clause in the contract, the contractor works with his own tools and materials.

Remuneration: regular or one-time

Employees on staff regularly receive salaries in the agreed amounts . According to the rules of the Labor Code of the Russian Federation, salaries must be transferred at least twice a month - an advance payment and the main part. For failure to comply with payment deadlines, the employer issues compensation to the employee. It is charged for each overdue day as 1/300 of the refinancing rate.

If an employee works properly and fully performs his functions, he cannot be paid a salary below the minimum wage. In 2020, the minimum wage increases to 12,130 rubles.

Employees under a GPC contract will receive remuneration when they provide the customer with the result of the work performed . So the contractor can receive payment even once every six months, if such a period was required to complete the order.

The GPA can include the delivery of work in stages or the payment of advances. Then the customer will pay regularly, after accepting part of the work performed.

Personal income tax and insurance premiums

The employer acts as a tax agent in both cases . He withholds and pays 13% to the tax office on a monthly basis from the salaries of employees working under any type of contract.

This does not apply to contracts concluded with individual entrepreneurs. Entrepreneurs pay taxes themselves. To avoid tax claims, ask the individual entrepreneur for documents about his status.

Both types of employees may qualify for tax deductions. True, contractors can apply to the customer for it only while the contract is in force.

For employees under an employment contract, the employer pays monthly insurance contributions in the amount of 30% of the salary - to the Pension Fund of the Russian Federation, the Social Insurance Fund and the Federal Compulsory Compulsory Medical Insurance Fund. Additionally, he is obliged to transfer contributions for insurance against accidents and occupational diseases at the rate applicable to the organization.

For employees under a GPC agreement, contributions must also be paid, but in a smaller amount . Contributions to the Social Insurance Fund in case of temporary disability or maternity are not accrued, and contributions for injuries are paid only if this is provided for in the contract. So 27.1% of the salary is transferred to the Federal Tax Service.

Contributions to the Pension Fund are paid in any case, and under any agreement, the pension savings of the employee or performer grow.

GPC and employment contract - the difference in the table

Here is a summary table: we have identified the parameters by which the two types of contracts differ from each other. Compare and decide when to enter into an employment contract and when to work according to the Civil Code.

How does a civil law contract differ from an employment contract?

Labor relations and the employment contract, as well as the status of the employee, imply a number of characteristic features. If at least one of these signs is present in the relationship for the performance of work, it is impossible to draw up a civil contract:

• personal performance of work, impossibility of involving any other persons (partners, relatives);
• work on the company’s staff, which involves, among other things, maintaining a work record book and filling out personnel documents;
• performing specific functionality (work according to the position in accordance with the approved staffing table, by profession), and not one-time tasks;
• strict compliance with the organization’s rules related to internal labor regulations, including adherence to working hours and rest periods (for example, an established work schedule and an agreed vacation period), as well as the possibility on the part of the company to subject an employee to disciplinary action for failure to comply with these rules (remark , reprimand or dismissal);
• payment of wages twice a month not lower than the minimum wage;
• providing the employee with all necessary tools and materials to perform the work;
• provision of guarantees and compensations provided for by labor legislation, for example, annual leave, overtime pay, sick pay, etc.

GPC agreement: pros and cons

A GPC agreement is more beneficial for the employer, since it is easier to formalize work with a contractor than to hire an employee. And the costs for this are lower. For an employee, a GPC contract, on the contrary, is inferior to a labor contract due to the lack of guarantees and compensation. Let's look at the features for each side.

GPC agreement: advantages for the employee

Ease of design . To work under the GPC, you do not need a work book, a medical examination or a package of documents. For registration, provide the customer with a passport, INN and SNILS.

Low management control . The performer himself chooses what time to work and what time to rest. The main thing is to get the agreed result on time. The customer can control the work step by step.

Also, according to the GPA, the performer does not obey internal orders and instructions from management.

You can work in several places . Thanks to a free schedule and registration without a work book, under a GPC agreement you can work in several places at the same time.

Continuous work experience . The customer transfers insurance premiums to the Pension Fund and Compulsory Medical Insurance. Work experience while working under the GPA continues to be taken into account.

Employment without qualifications . The contract stipulates the result and its level. At the same time, the contractor’s qualification level does not have to be met if this requirement is not specified in the contract.

Possibility to attract assistants . The contractor under the GPC agreement is not obliged to do all the work himself. He can delegate the work and part of his remuneration to subcontractors, but is obliged to provide a high-quality result. But the contract may require the task to be completed independently, in which case you will have to work on your own.

GPC agreement: disadvantages for the employee

Lack of records in the labor record . The work book of the GPC contractor remains empty, making it more difficult for him to confirm his work experience. To do this, you can show the new employer the GPC agreement, the certificate of completion of work and the characteristics from the customer.

Unprofitable vacation . The phrase “He who doesn’t work, doesn’t eat” applies to the contractor under a GPC agreement. He receives reward not for the work process, but for the result. Therefore, it is not so profitable to get sick, go on vacation and relax on weekends and holidays.

Difficulties with lending . If a performer works only under GPC agreements, banks are not always ready to issue him a loan or mortgage. The reason is that income cannot be predicted. If you find creditors, the percentage will not be as favorable as for workers under an employment contract.

Lack of social guarantees during pregnancy or illness . Employees under an employment contract are insured in case of temporary disability or maternity. In case of illness, the employer will pay benefits for the entire period of sick leave.

Full-time employees are also paid for temporary disability to care for a sick child or grandfather, during follow-up treatment after hospitalization, or for prosthetics.

Full-time employees receive all benefits provided by law in the event of pregnancy and childbirth. Their amounts depend on average earnings.

GPC performers are not paid sick leave. Pregnant employees under GPC contracts will not receive anything from the customer in excess of the contract amount. Benefits will have to be registered with the social security authorities, and their size will be minimal, even if, according to the contract, the monthly income was 300 thousand rubles.

Lack of average earnings . To calculate any social benefits, the employee’s average earnings over the previous two years are important. When working under the GAP, contributions to the Social Insurance Fund are not paid, which means that the employee’s remuneration does not increase the average earnings.

During the subsequent transition to an employment relationship, earnings during work under the GPA are not taken into account. Sick leave, maternity and other benefits will be less than that of colleagues.

Lack of compensation in case of bankruptcy of the customer . If the customer goes through bankruptcy proceedings, contract employees will not be able to be included in the number of creditors, unlike full-time employees.

Possibility of terminating the contract at any time . The customer may terminate the contract at any time without giving reasons. But the contractor has the opportunity to go to court and recover his remuneration if the work was completed but not paid.

Liability for damage and poor performance . Employees under employment contracts are subject to disciplinary and financial liability. Material is limited to average monthly earnings. And if the damage is caused by the performer, he compensates for it in full.

According to the GPA, the contractor is responsible for meeting deadlines, and violation of them is subject to a fine. If the result of the work suffers before the work acceptance certificate is signed, the contractor is also responsible for this.

Vulnerability in case of an accident . If during the work for which the contract is concluded, the contractor is injured, he will not be able to receive benefits from the customer for the duration of treatment. If your GPC work is traumatic, write down in the contract a provision for sick leave benefits in case of injury.

No bonuses under the collective agreement . The employer can assign additional payments to full-time employees that increase their comfort and loyalty. This is financial assistance, payment for trips to resorts, payment for treatment, compensation for mortgage expenses, a voluntary health insurance agreement, etc. GPC workers are deprived of all these bonuses.

As you can see, the GPC agreement has more disadvantages than advantages in comparison with an employment contract. But this does not mean that such design should be abandoned. Instead of social guarantees, you get independence, a free schedule and the opportunity to combine jobs. Because of this, many people prefer to work under contract contracts.

Advantages of the GPC agreement for the customer

Possibility to refuse to conclude a contract . An employer cannot refuse to employ a candidate if there is no reason to do so. Applicants cannot be screened out based on skin color, race, location or age. The only measure is the employee’s business qualities.

According to civil law, the customer can refuse any applicant as a contractor without explaining the reasons. For example, if a company does not want to work with people over 55 years of age or citizens without registration in the city.

Ease of termination of the contract . The employment contract is concluded for an indefinite period. This makes it difficult to fire an unwanted employee. You need to give notice of layoffs at least two months in advance, and you need to pay compensation during the period of searching for a new job.

The contract with the contractor under the GPC agreement is always concluded for a clear period; after this period, the contract does not need to be renewed.

Unlimited number of contractors . The number of employees under an employment contract is limited by the staffing table. If the employer’s staffing schedule is established by higher authorities, it cannot be changed arbitrarily. Therefore, you need to adhere to the limit.

The customer can enter into a GPC agreement with employees whose positions are not on staff. This means that an unlimited number of employees can work outside the organization.

Saving on insurance premiums . For employees under an employment contract, the employer is obliged to pay personal income tax of 13% and insurance contributions to the Social Insurance Fund, Pension Fund and Federal Compulsory Medical Insurance Fund - 30% of the salary. Plus, it is necessary to make contributions in case of work-related injuries and occupational diseases at the rate for the main activity.

With a GPC agreement you can save a lot. When working with individual entrepreneurs and self-employed people, the customer does not have to pay either personal income tax or contributions. And according to the GPC agreement with individuals, a personal income tax of 13% and insurance premiums are provided. There is no need to pay accident insurance premiums if this condition is not specified in the contract.

Savings on the social package . An employee under a GPC agreement only needs to pay for the result. During the period of his vacation, illness or maternity leave, no compensation needs to be paid. And significantly more money is spent on full-time employees.

Saving on workplace organization . Typically the contractor works remotely. Therefore, he does not need an equipped workplace, uniform and tools.

The customer purchases consumables and tools if this is specified in the contract. If there is no such condition, the contractor purchases at his own expense.

Disadvantages of the GPC agreement for the customer

Registration of relations under a GPC agreement for the customer is almost a complete advantage. You can save money and organize your work conveniently. But there is still a drawback - limited control.

It is more difficult to monitor a remote employee, and it is almost impossible to understand the progress of a task. There is a risk that you will wait six months and not get results. To avoid troubles, provide for stage-by-stage delivery of work in the contract.

Concept and types of civil contracts with an individual

The key criterion for determining the nature of the contract is the branch of law within whose jurisdiction the transaction relates. Any agreement is considered civil law, the relations of the parties to which are regulated by the norms of civil legislation of the Russian Federation, primarily by the Civil Code (Civil Code) of the Russian Federation. Moreover, the status of persons (legal, individual or individual entrepreneur) does not matter.

There are at least four types of GPC agreements:

• property (purchase and sale, barter, donation);
• contracts, the subject of which is the performance of work;
• provision of services;
• copyright (licensed), which specifically stipulates the transfer of copyright to a newly created or existing object in respect of which these rights are applicable. Copyright is a separate branch of civil law.

However, in the context of the differences between a civil law contract and a labor contract, only a part of civil law contracts is of interest, the subject of which is the performance by an individual for a legal entity or individual entrepreneur of work, the provision of services or the creation of works of art to order.

Relations between the parties to a civil contract are regulated by the Civil Code of the Russian Federation

Differences between a GPC agreement and a labor agreement

The main difference is that labor relations are regulated not by civil law, but by labor law, for which the main regulatory act is the Labor Code (LC) of the Russian Federation.

The difference between a GPC agreement and a labor agreement (table)

Risks of retraining the GPA into an employment contract

The basis for re-qualifying a GPC agreement into a labor agreement may be:

• assignment to the performer of a position, qualification, rank in accordance with the organization’s staffing table;
• vesting the performer with a labor function;
• reference to internal regulations, job descriptions, operating hours;
• payment is not for the result, but for the process of work;
• employee social insurance;
• providing the employee with working conditions;
• guarantees provided for by labor legislation;
• the essentially long-term nature of the relationship, when a GPC agreement is regularly concluded with the same contractor and with the same type of functions assigned to him.

From 2013 to 2021, I collaborated under a GPC agreement with a federal news site. Our contract was concluded for a year with the possibility of automatic renewal. In fact, I reported to the curator who was responsible for my region, and I had to update the news in the regional feed between 9:00 and 17:30 local time. All this, according to the law and existing judicial practice, was enough to reclassify my contract as an employment contract.

Re-qualification of a GPC agreement into a labor agreement is possible in the following options:

1. With mutual consent of the parties based on a written statement from the performer.
2. On the recommendation of the State Labor Inspectorate (SIT) or another authorized body, for example, the prosecutor's office.
3. By the tribunal's decision. Both the performer and the supervisory authority have the right to file a claim in court.

The court can reclassify the GPA into an employment contract

A separate argument in favor of reclassifying the GPA into an employment contract can be the terms used in its text that relate exclusively to the field of labor law.

Stop words for the GPC agreement (table)

Risks of a civil contract (video)

Consequences of requalification of a GPC agreement into a labor agreement

Retraining the GPA into an employment contract has a number of financial consequences for the customer, who overnight becomes an employer. Relations are considered labor relations not from the date of re-qualification of the contract, but from the moment of its conclusion. And if the contract was in force for a long time, then the employer is obliged to compensate the employee in full for everything that was underpaid during this time, in particular vacation pay. And as a plus, you have to pay penalties for the entire delay. Arrears and penalties will also have to be paid to the Social Insurance Fund - according to the amount of insurance contributions for the entire period for which they were not paid - that is, for the entire period of civil law relations reclassified as labor relations.

Separately, the employee may demand compensation for moral damages; the amount of compensation is determined by the court.

But that's not all. You will have to pay a fine for violating labor laws. In this case, in Art. 5.27 of the Code of Administrative Violations (CAO) of the Russian Federation provides for a separate punishment.

Evasion from registration or improper execution of an employment contract or the conclusion of a civil contract that actually regulates labor relations between an employee and an employer - entails the imposition of an administrative fine on officials in the amount of ten thousand to twenty thousand rubles; for persons carrying out entrepreneurial activities without forming a legal entity - from five thousand to ten thousand rubles; for legal entities - from fifty thousand to one hundred thousand rubles.

Art. 5.27 of the Code of Administrative Offenses

In 2021, there are known examples where even GPAs were reclassified into employment contracts, the executors of which were individual entrepreneurs. This is possible when an individual entrepreneur works with only one customer and regularly receives approximately the same amounts from him for the same set of works or services. In this situation, problems for an individual entrepreneur may also arise through the bank where he has a current account. If there is a suspicion that labor is actually being carried out under the guise of entrepreneurial activity, this account may be blocked.

The GPC agreement is like a time bomb (video)

Pros and cons of a GPC agreement for both parties

For each party to the GPC agreement, this type of relationship involves both pros and cons. A common feature is that the contractor under the GPA is less socially protected than the employee under an employment contract, and the customer has less leverage over the contractor and the result of his work.

Advantages of GPA for the customer:

1. Strictly prescribed deadlines for completing work and the procedure for receiving it.
2. There is no obligation to provide the performer with a workplace, equipment, tools, or special clothing.
3. Savings on part of social contributions.
4. There is no obligation to provide the contractor with social guarantees and bear the associated costs.
5. Pay for results, not for time worked.
6. There is no obligation to cover the contractor's costs in connection with the performance of work, if it is not specified in the terms of a specific contract.

Disadvantages of GPA for the customer:

1. Inability to control the quality of work during its implementation.
2. Inability to bring the performer to disciplinary liability.
3. The risk of reclassification of the contract into an employment contract.

Pros for the performer:

1. Ability to work for several customers at once. There is no need to coordinate this moment with any of them. And they themselves are interested in the contractor having other projects, since this partly insures against the risk of the relationship being recognized as an employment relationship.
2. The ability to freely manage your time.
3. There is no obligation to comply with work hours, service and job descriptions, internal regulations, or subordination.
4. Payment is for work done, not for time worked, the possibility of staged payment and prepayment, including one hundred percent.
5. Work under a GPC agreement is included in the insurance period for a future pension.

A GPC agreement often looks attractive against the backdrop of an employer who is on duty at the checkpoint with a stopwatch

A friend of mine who lives in Chelyabinsk recently quit a company where she worked as an accountant on staff for many years and began working with one-time customers under GPA contracts. The main reason, she said, was that the key indicator on which her employer’s salary depended was the hours the employee spent in the office. She has two small children, so she has to go to matinees, parent-teacher meetings, and stay home if one of them is sick. The employer demanded that on the days when she needed to leave early or come later, she took leave at her own expense for the whole day. And it turned out that she still did the entire amount of work assigned to her, but received less money for it. When she got tired of it, she left work. And now, thanks to civil law relations, I was able to achieve a reasonable balance between work and personal life.

However, the opportunity to manage personal time more freely is not excluded in employment relationships. I myself worked for two years in the editorial office of a newspaper, where the correspondents themselves determined the working day and could not appear at the editorial office for months at all. The bosses only required them to always be in touch and submit texts planned for publication to the editors on time. In the same editorial offices where management meets and sees off workers with a stopwatch at the entrance, there is a saying that if a journalist arrived 15 minutes after the start of the working day, he was late, and if two hours later, he was on an editorial assignment. Since a correspondent's job involves spending a fair amount of time outside the editorial office meeting with sources, attending press conferences and other events, it's easy to grab an hour or two to solve personal problems during working hours.

Disadvantages for the performer:

1. Lack of protection from labor laws.
2. The risk of termination of the contract by the customer at any time without any additional compensation.
3. Lack of payment for regular vacation, maternity leave, sick leave and insurance coverage in the Social Insurance Fund, which affects the amount of sick leave and maternity leave.

Re-qualification of a GPC agreement into an employment contract

Replacing an employment contract with a contract, although profitable, is risky. The law protects the interests of the employee, and the replacement of one contract with another leads to their infringement. If during the trial it turns out that the GPC agreement actually regulates the labor relations of the employer and employee, labor legislation will be applied to them (Article 11 of the Labor Code of the Russian Federation).

This also creates problems for conscientious employers. Many people work under GPC agreements, especially freelancers, and this is normal practice for work of an episodic nature. At the same time, even performers who have made presentations for the company several times can be recognized as employees and require requalification of the contract.

The name of an employment contract alone does not make it civil law: the content is more important. The Plenum of the RF Armed Forces issued a resolution in May 2021. It paid a lot of attention to the distinctive features of labor relations:

1. An agreement was concluded between the parties on the personal performance by the employee of a labor function predetermined in the contract under the control and direction of the employer.
2. The employee is subject to the employer’s internal regulations: instructions and instructions from management, labor regulations, and work schedules.
3. The employer provides proper working conditions.
4. The employee receives regular payment for performing a job function, and not the result of the work.
5. The employee's position is included in the staffing table and integrated into the employer's organizational structure.
6. The employer provides the employee with regular days off, rest on holidays and annual leave.
7. The employer pays the employee's work travel expenses.
8. The employer regularly makes payments to the employee, which are his only or main income.
9. The employer provides materials and tools for the contractor to perform the work.

The procedure for requalification of contracts is regulated by Art. 19.1 Labor Code of the Russian Federation. Civil law relations can be recognized as labor relations by:

• the customer upon a written application from the contractor;
• the customer, following an order from the State Labor Inspectorate (GIT) that was not appealed in court to eliminate violations of Art. 15 Labor Code of the Russian Federation;
• court as a result of the direct appeal of the performer;
• court as a result of a meeting on materials received from the State Tax Inspectorate and other authorized bodies and persons.

For example, Ship LLC entered into a GPC agreement with an individual on October 1, 2021. In December 2021, the court recognized the contract as an employment contract. Starting from October 1, 2021, the employment contract will come into force. From this date, the employee is entitled to all guarantees and compensation provided for by the Labor Code of the Russian Federation.

Only a court can reclassify an expired GPC as a labor license.

In the event of transformation of the GPC into a labor one, the organization will be held accountable for understating the base for insurance premiums. For the entire period of validity of the civil contract, additional contributions to the Social Insurance Fund and penalties on them will be calculated. The employee will be able to demand compensation and benefits from the company for all overtime, unused vacations and sick leave. Additionally, they may be required to recover compensation for moral damages for delays in payments.

If the employee’s salary during the period of work under the GPC was lower than the minimum wage for the constituent entity of the Russian Federation, he will have to pay extra.

Among other things, the employer can be held administratively liable and given a fine of 10 to 20 thousand rubles, and the organization itself - a fine of 50 to 100 thousand rubles. For repeated violations, officials face disqualification, and legal entities face an increased fine of 100 to 200 thousand rubles.

Additionally you will need:

1. draw up personnel documents: orders and personal cards;
2. make a record of work in the work book;
3. include the employee’s position in the staffing table if it is not there;
4. draw up an employee’s working time sheet, starting from the day the GPC agreement is concluded.

Let's figure out who can go to court with an application for recharacterization of the contract and what to do about it.

Judicial practice and civil law relations

Cases involving persons who have entered into a civil contract with each other have long been nothing new in Russian courts. In this case, the plaintiff is the employee and his main requirement is that this document be recognized as an employment contract. The main criterion that determines the success of a decision in favor of the plaintiff is the term of the civil law agreement.

The court also takes into account the relationship between the employer and the contractor, the terminology of the contract and the wording specified in it. At the same time, the presence (or absence) of acts of work performed, the presence in the enterprise documentation of documents on the activities of a temporary employee (time sheets, orders of material liability) are subject to consideration.

During the course of the proceedings in court, it may become clear that the employee performed official duties in the employer's organization. That is, he:

• had a personal workplace,
• received consumables, equipment, various inventory to achieve the desired result of their activities,
• completely obeyed the established work schedule.

Further, the plaintiff usually says that the drawing up of a civil contract was initiated by the employer so that he could evade fulfilling his duties. In view of this, the court finds itself on the side of the employee and decides to reclassify the civil contract into an employment contract. This court decision automatically obliges the defendant to fulfill all the obligations and conditions specified in the Labor Code of the Russian Federation.

Claims from tax authorities

Since 2021, the Federal Tax Service has been administering insurance premiums. She is interested in requalifying the GPC contract as a labor contract for the purpose of additional calculation of insurance premiums in case of temporary disability and in connection with maternity.

Most often, the tax office goes to court when an organization enters into a GPC agreement with an individual entrepreneur or self-employed person. Since these categories pay personal income tax and insurance premiums on their own, the organization does not assume the obligations of a tax agent and saves on taxes and contributions.

Recently, a fraudulent scheme has spread. In order to reduce payments, employers offer employees to register as individual entrepreneurs or self-employed and enter into a GPC agreement with them. In order to assess additional taxes, the Federal Tax Service applies to the court with a claim to recognize the GPC agreement as an employment contract.

Example: during an on-site inspection, the Federal Tax Service found out that the organization was working with individual entrepreneurs under GPC agreements in order to understate the tax base and receive benefits for personal income tax and VAT. At the same time, individual entrepreneurs were its employees and performed labor functions. In this regard, the tax authorities reclassified the contracts as employment contracts and assessed additional VAT, income tax, personal income tax, fines and penalties to the company. The executing entrepreneurs did not agree with this and filed a lawsuit. The courts of three instances rejected the entrepreneurs because the individual entrepreneurs worked in the organization’s office 40 hours a week, performed labor functions and did not pay rent. At the same time, individual entrepreneurs received monthly remunerations regardless of the amount of work performed.

So even the disagreement of the performers to requalify the contract does not protect against risks.

It is easier to defend your position if the GPC agreement is concluded with an individual, and not an individual entrepreneur or self-employed person, especially with the support of an employee. In court, he must declare that he himself wanted to enter into a GPC agreement with the organization, and not an employment agreement. Citizens have the right to freely dispose of their work and independently choose the procedure for registration - an employment contract or a civil law contract.

There are a number of other court decisions where employers were able to defend the GPA and prevent retraining. The tax authorities were not helped by their arguments. For example:

• The GPC agreement provided for work and services that were assigned to full-time employees of the company and corresponded to their job functions.
• Over the course of several months, an organization enters into an agreement with the same individual to perform one type of work or service.
• The performer who worked under the GPC agreement was later included in the organization’s staff.

The presence in the GPC agreement of one or two circumstances that are not typical for this type of relationship does not prove their labor nature. Evidence can only be a combination of several signs of an employment relationship.

In disputes between legal entities and the tax office, the Federal Tax Service often wins. At the same time, even drawing up an agreement with an individual entrepreneur or self-employed person does not always become a decisive factor.

A striking example: the court recognized the contract concluded by the employer as not a civil contract, but a labor contract, since it immediately provided for many factors indicating the labor nature of the relationship. These include personal performance of clearly defined job duties for a long period of time, compliance with internal work regulations and safety precautions. During this entire period, the performer receives a fixed remuneration twice a month and bears financial responsibility.

Structure of drawing up a civil agreement

Hiring under a civil contract consists of signing a document that must be drawn up in accordance with established requirements.

The very structure of this agreement practically coincides with the structure of the employment contract and includes certain clauses.

1. Subject of the agreement. This paragraph must indicate the work to be performed by the employee and the final result expected from the employee’s activities.
2. Duration of the agreement. This section consists of indicating the period given to the contractor to complete the work (basically, this paragraph characterizes the civil contract as a one-time document).
3. Duties, responsibilities and rights of both parties. The very essence of this clause is that the employee undertakes to complete his work on time and present the employer with the final (expected by the employer) result. In turn, the employer guarantees to accept the result of the subordinate’s work and pay for his work. In addition, the employee has the right to involve third parties in his work, whose payment is not the responsibility of the employer.
4. Conditions for making possible changes or termination of a civil agreement. Here it should be indicated that the contract is terminated upon expiration of the period allotted for completing the work to achieve the desired result.
5. Details of both parties.

Documents for concluding a civil agreement

At the time of signing a civil legal agreement, the employee must have the following documents with him:

• passport or any other document that proves his identity}
• a copy of your taxpayer identification number (it is advisable to take the original of this certificate with you)}
• certificate of pension insurance}
• a document confirming education, qualifications or the presence of the necessary special knowledge (at the request of the employer).

FSS claims

Contributions for injuries at work and occupational diseases are still administered by the Social Insurance Fund. Therefore, the fund is also interested in requalifying contracts, especially in organizations with high tariffs.

The FSS is extremely vigilant, so it often goes to court even in cases where the contract does not contain obvious signs of an employment relationship. Because of this, they are less and less able to reclassify the contract.

The contract must be drawn up carefully and competently. Any mistake increases the FSS’s chance of winning a legal dispute.

In one of the latest examples, the territorial branch of the FSS of the Russian Federation conducted an on-site inspection of the company and, as a result, assessed additional insurance premiums, penalties and a fine. The company entered into GPC agreements with the drivers, and the court reclassified them as labor contracts.

The fund believed that contracts with drivers are similar to fixed-term labor contracts; payments under them are a hidden form of salary and are subject to contributions.

The arguments were as follows:

• drivers received working transport and a garage;
• drivers received a regular salary in a fixed amount;
• the contract did not specify a specific scope of work (the parties were not interested in the result, but in the process);
• workers performed a labor function, and not one-time tasks.

The society tried to challenge the position of the FSS in court and received support in three instances. The courts proceeded from the fact that the contracts contained features characteristic of GPD: the presence of a specific type of service (driving a vehicle on the instructions of the customer), a fixed amount for the result of the service, the involvement of drivers as needed and not on an ongoing basis, no payments in the absence of orders .

However, in another similar case, the court satisfied the demands of the Social Insurance Fund for additional contributions.

The Supreme Court found that the organization entered into contracts with individuals to perform permanent, rather than one-time, work. It did not define a specific scope of work, and the relationship between the parties was of a long-term nature: for several years the contract was drawn up with the same person. In addition, the company provided the performers with a workplace, equipment and tools, and the work they performed regularly was paid twice a month. The staffing table contained a position with labor functions similar to the work performed by the contractor under the contract.

The court considered these circumstances sufficient to re-qualify the contract.

The FSS has a letter that it prepared for its territorial branches. The letter provides practical recommendations on the distinction between a civil process contract and an employment contract. These recommendations are still relevant today.

Risks of the parties: what to pay attention to

Theoretically, concluding a civil contract brings more benefits to the employer than to the employee. In practice, in many cases this is true, because:

• the company is not obliged to pay taxes, insurance premiums, sick leave, vacation pay, etc.;
• only the actual amount of work is paid (non-working time, breaks and other downtime are not compensated);
• “dismissing” such an “employee” is much simpler: there is no need to pay severance pay, there is no obligation to work 14 days while he can find another job.

For the employee himself, these advantages can be automatically presented as disadvantages. However, it also has advantages:

• more flexible schedule;
• lack of obligation to comply with labor instructions and other regulations;
• the ability to choose between different customers in order to find a more profitable job, etc.

That is, his risk is that there is no pension provision, no official length of service, no sick leave, maternity leave, vacation pay, etc. And the only significant risk for the employer is that his “employee” may sue to officially recognize the relationship as labor rather than civil . In addition, the Federal Tax Service and the labor inspectorate are also indirectly not interested in formalizing a civil contract: no taxes or contributions are received into the budget.

Therefore, when signing such a document, it is important to ensure that the service provided cannot really be recognized as a permanent employment relationship. Usually we are talking about the criterion of time: the longer the cooperation lasts, the more it resembles the relationship between the employee and the employer.

The lawyer's comment can be seen here.

Orders and claims from regulatory authorities

Dissatisfied employees can contact the State Labor Inspectorate (SIT) with a complaint against the employer. The GIT can learn about violations of the organization not only from employees. Government agencies can report this: the prosecutor’s office, the police, the Federal Tax Service, and so on. If the State Tax Inspectorate finds out that the employer is hiding behind a civil process agreement instead of a labor agreement, it will issue him an order to eliminate the violation. The employer can either comply with it or try to appeal it in court.

There is no point in going to court if there really is a violation. If there is doubt about the nature of the relationship, the court interprets it as a labor relationship (Part 3 of Article 19.1 of the Labor Code of the Russian Federation).

Until January 1, 2014, the State Labor Inspectorate could not independently go to court with a demand to recognize the relationship as an employment relationship. Now the State Tax Inspectorate can conduct an inspection, prepare materials based on its results and take them to court with a claim to re-qualify the contract. In this case, the opinion of the employee himself is not taken into account. In this case, the court will study all the information and make a decision.

GIT does not often go to court to re-qualify contracts with individual entrepreneurs. The status of an entrepreneur implies greater security when working with customers and the possibility of not complying with internal regulations.