Legal status of an individual entrepreneur: features, pros and cons

Procedure for termination of activities

The algorithm of actions that need to be performed in the process of terminating business activity differs depending on whether the entrepreneur acts as an insurer in relation to other individuals or not.

It is considered that an entrepreneur acts as an insurer of individuals if he:

• acts as an employer, that is, makes payments to employees under an employment contract;

• and (or) is a party to a civil contract obligated to pay remuneration for which insurance premiums are calculated (for example, he has entered into an agreement with an individual for the provision of paid services for advertising the entrepreneur’s products).

Such rules are established in paragraph 4 of Article 1 of Federal Law No. 27-FZ of April 1, 1996 “On individual (personalized) accounting in the compulsory pension insurance system” (hereinafter referred to as the Law on Individual Accounting).

If the entrepreneur does not act as an insurer in relation to other individuals, then the algorithm of actions in the process of terminating business activity is as follows:

1) receive a certificate from the Pension Fund of the Russian Federation stating that the entrepreneur is not an insurer of other individuals;

2) close the current account used in business activities;

Situation: is it necessary to notify the tax office and funds about the closure of the bank account of an individual entrepreneur?

No, it is not necessary, except for the case when the account was opened abroad.

Previously, the following authorities were required to be notified of the closure of any bank account.

1. Pension Fund of the Russian Federation and the Social Insurance Fund of Russia. This obligation was abolished on May 1, 2014 (clause 1 of article 5, part 2 of article 6 of the Federal Law of April 2, 2014 No. 59-FZ “On amendments to certain legislative acts of the Russian Federation in terms of reducing the time frame for registering legal entities persons and individual entrepreneurs in state extra-budgetary funds and invalidation of certain provisions of the Federal Law “On Insurance Contributions to the Pension Fund of the Russian Federation, Social Insurance Fund of the Russian Federation, Federal Compulsory Medical Insurance Fund”).

2. Tax office at the place of residence of the entrepreneur. This obligation was canceled on May 2, 2014 (subparagraph “b”, paragraph 1, article 1, part 1, article 7 of the Federal Law of April 2, 2014 No. 52-FZ “On Amendments to Parts One and Two of the Tax Code of the Russian Federation and certain legislative acts of the Russian Federation").

Now the closure of a bank account must be reported only if the account was opened abroad (Part 2 of Article 12 of the Federal Law of December 10, 2003 No. 173-FZ “On Currency Regulation and Currency Control”). In such a situation, a notification must be submitted to the tax office at the place of registration of the entrepreneur in the form approved by order of the Federal Tax Service of Russia dated September 21, 2010 No. ММВ-7-6/ [email protected] This must be done within a month from the date of account closure.

If an entrepreneur violates the deadline or form of notification, he may be subject to administrative liability in the form of a fine in the amount of 1,000 to 1,500 rubles. (Part 2 of Article 15.25 of the Code of Administrative Offenses of the Russian Federation). If an entrepreneur does not notify the inspectorate at all, he may be fined from 4,000 to 5,000 rubles. (Part 2.1 of Article 15.25 of the Code of Administrative Offenses of the Russian Federation).

3) register the fact of termination of activity as an entrepreneur (submit documents to the registration authority for the purpose of making an entry in the Unified State Register of Individual Entrepreneurs);

4) pay insurance premiums.

If the entrepreneur is the insurer of other individuals, then upon termination of business activities, the following actions must be taken:

1) submit information about the insured persons to the Pension Fund of the Russian Federation;

2) pay the insurance premiums accrued in relation to the insured persons;

3) resolve personnel issues;

4) close the current account used in business activities (notifying the tax office and funds is not required);

5) register the fact of termination of activities as an entrepreneur (submit documents to the registration authority for the purpose of making an entry in the Unified State Register of Individual Entrepreneurs);

6) pay insurance premiums assessed against the entrepreneur.

Situation: is it necessary to submit any documents to remove a person who is ceasing to operate as an entrepreneur from being registered in extra-budgetary funds?

No no need.

It is enough just to register the fact of termination of activity as an entrepreneur.

After this, the tax inspectorate independently informs the territorial bodies of the Pension Fund of the Russian Federation and the Social Insurance Fund of Russia about the loss of the status of an entrepreneur by a person (clause 9 of the Rules for submitting to the registration body by other state bodies information in electronic form necessary for the state registration of legal entities and entrepreneurs, as well as for maintaining unified state registers of legal entities and entrepreneurs, approved by Decree of the Government of the Russian Federation of December 22, 2011 No. 1092).

Within five days from the moment of receiving information from the inspection, the territorial bodies of the Pension Fund of the Russian Federation and the Social Insurance Fund of Russia remove the person from the registration of policyholders (paragraph 2, paragraph 2, article 11 of the Federal Law of December 15, 2001 No. 167-FZ “On Mandatory Pension insurance in the Russian Federation", clause 1, part 2, article 2.3 of the Federal Law of December 29, 2006 No. 255-FZ "On compulsory social insurance in case of temporary disability and in connection with maternity").

Situation: is a person terminating his activities as an entrepreneur obliged to appoint a liquidation commission and comply with other requirements of Article 63 of the Civil Code of the Russian Federation?

No, you don't have to.

The rules of Article 63 of the Civil Code of the Russian Federation do not apply to the procedure for terminating activities as an entrepreneur. They regulate the procedure for liquidation of a legal entity. Therefore, an entrepreneur does not need to:

• appoint a liquidation commission or liquidator;

• publish a message in the press;

• notify all your creditors in writing;

• draw up and approve an interim liquidation balance sheet and notify the tax office about this;

• pay off debts with creditors;

• draw up and approve the final liquidation balance sheet.

Liquidation of individual entrepreneurs by court decision

An individual is forced to terminate his activities as an individual entrepreneur in the following cases:

• when an individual entrepreneur is declared bankrupt;
• if a decision on forced liquidation is made;
• on the basis of a sentence, resolution or ruling of the court, if in connection with it the entrepreneur is sentenced in the form of a ban on the right to engage in certain activities within a specified period, or even deprivation of the right to engage in business.

Termination of the status of an individual entrepreneur also occurs in the event of expiration or cancellation of a document that gave an individual the right to temporarily reside in the territory of the Russian Federation. As well as the expiration of the validity period of a certificate or permit giving the right to temporary residence in the territory of the country of this citizen. Thus, the entrepreneurship of foreign citizens ends.

An individual entrepreneur who cannot satisfy the demands of all his creditors within three months from the date the deadline for fulfilling monetary obligations is recognized as bankrupt. It should be noted that in order for the arbitration court to declare a business entity bankrupt, it is necessary not only to have debt, but, firstly, the amount of the individual entrepreneur’s debts must exceed 10,000 rubles, and secondly, his property should not be enough to satisfy all requirements creditors.

Forcibly, by a court decision, closure of business activities may occur upon the application of the registration authority or supervisory authority (for example, the prosecutor's office, antimonopoly committee, etc.) that the individual entrepreneur systematically violates the law, or is not located at the specified place of registration, and also, that he has lost the status of a temporary resident citizen. In this case, the registering authority enters information about the liquidation upon entry into force of the specified judicial act.

Other legal grounds for termination of individual entrepreneurs

In addition to the above reasons, an entrepreneur may also lose his status if his period of stay in the country has expired. This implies the refusal of the authorized body to extend the permit for temporary stay and residence in the Russian Federation.

The legislator establishes the expiration of documents allowing to stay and reside in the country as grounds for terminating business activities. This can happen if an individual refuses to renew such documents on his own initiative, or misses the deadline for the restoration of documents, as well as if the renewal is refused. Refusal to issue such documents occurs only in cases established by law, if there has been a violation by the given citizen of the law and rules established for foreign citizens or stateless persons.

Such legal consequences, leading to the deprivation of an individual’s right to engage in entrepreneurial activity, are established by a court verdict, resolution or ruling in case of violation of legal norms by an individual entrepreneur. These judicial acts may limit the conduct of certain types of activities for some time, or generally deprive an entrepreneur of the right to conduct business for the period established in such a judicial act.

If such situations arise, the question arises of how to close a business activity, and whether it is necessary to appear in person at the authorities to formalize the loss of individual entrepreneur status. In practice, even if the business entity has not taken any active actions, the certificate is automatically canceled, or the registration of the termination of the entrepreneur upon the entry into force of judicial acts, or notification of the Federal Tax Service that the specified person has lost the right to stay in the country, occurs by adopted judicial act.

Notification of the Pension Fund of the Russian Federation and the Social Insurance Fund of Russia

Situation: is it necessary to notify social and pension insurance funds about the termination of activities as an individual entrepreneur?

No no need.

This requirement was previously in force, but as of January 1, 2015 it was canceled.

Previously, such a requirement was established in paragraph 3 of part 3 of Article 28 of the Federal Law of July 24, 2009 No. 212-FZ “On insurance contributions to the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, the Federal Compulsory Medical Insurance Fund” (hereinafter referred to as the Law about insurance premiums).

The law required written notification of termination of activities as an individual entrepreneur to the Pension Fund of the Russian Federation and the Social Insurance Fund of the Russian Federation. They control the payment of insurance premiums (Part 1, Article 3 of the Law on Insurance Contributions).

A written notice of termination of activities had to be submitted to the territorial authority of each of the funds. Messages were submitted within three working days from the date of the decision to terminate activities. For violation of the notice period, the organization could be charged a fine of 200 rubles. for each document not submitted (Article 48 of the Law on Insurance Contributions).

The law did not establish any requirements for the content of messages, so they could be sent in free form, indicating all the necessary information.

Acquiring legal status as an individual entrepreneur

The right to open a company is associated with the need to undergo state registration of the business owner as an individual entrepreneur and register him with the Federal Tax Service of the Russian Federation.

Passing state registration as an individual entrepreneur is a sufficient condition for acquiring the status of individual entrepreneur

To do this, it is necessary that the person’s legal capacity is not limited in relation to opening his own company:

• he must reach the age at which entrepreneurial legal capacity begins;
• a potential individual entrepreneur should not hold the position of a state or municipal employee, judge, etc.;
• a citizen should not be limited in the ability to engage in business by a court decision;
• a person should not be recognized as partially or completely incompetent on the basis, for example, of a medical report about his mental disorder.

Registration is carried out at the place of residence and is a mandatory and sufficient condition for acquiring the official status of an individual entrepreneur. The procedure must be completed in the division of the Federal Tax Service of Russia serving the corresponding territorial entity.

Acquisition of legal status as an individual entrepreneur by a minor

In Russia, not only persons who have reached the age of 18 have the right to become entrepreneurs, but also minor residents of the country. But to do this they will need to comply with legal requirements.

Russian legislation allows minor citizens to register as individual entrepreneurs if there are grounds for recognizing them as legally capable

The right to register an individual entrepreneur for minors arises if there are grounds for declaring him legally competent:

1. Entering into a legal marriage (in case of divorce, legal capacity is retained).
2. Emancipation (recognition of full legal capacity by the court or guardianship authorities in the absence of parental consent).
3. Consent of both parents, adoptive parents or guardian to conduct business activities.

The minor must additionally attach one of the following documents to the standard set of papers:

1. A notarized copy of the marriage.
2. The decision of the guardianship and trusteeship authorities to recognize the teenager as legally competent.
3. A court decision on the onset of full legal capacity.
4. Notarized written consent of legal representatives. If permission to conduct business was provided by only one of the parents (adoptive parents), the following is additionally provided:
   death certificate of the second parent (if one of the parents has died),
5. a court decision declaring a citizen missing (if the location of one of the parents has not been established),
6. birth certificate without information about the father (if the child was raised in a single-parent family).

In any case, a teenager cannot apply for registration as an individual entrepreneur until he turns 14 years old. This is justified by the fact that Art. 28 of the Civil Code of the Russian Federation prohibits persons under 14 years of age from entering into transactions related to commercial activities. And to register with the Federal Tax Service and register a company, you need a passport, which can be obtained no earlier than the specified age.

Submission of information about insured persons to the Pension Fund of the Russian Federation

The entrepreneur (policyholder) is obliged to submit the following information about employees (insured persons) to the territorial body of the Pension Fund of the Russian Federation:

• information about each insured person listed in subparagraphs 1–10 of paragraph 2 of Article 11 of the Law on Individual Accounting;

• information on accrued and paid insurance premiums in general for all insured persons working for the entrepreneur (paragraph 13, paragraph 2 of Article 11 of the Law on Individual Accounting);

• information about periods of work and (or) other activities included in the insurance period, which were acquired by all insured persons working for the entrepreneur before their registration in the individual (personalized) accounting system (paragraph 14, paragraph 2, article 11 of the Law on Individual Accounting) ;

• information contained in the register of insured persons (clause 2.1 of article 11 of the Law on individual accounting, part 4 of article 9 of the Federal Law of April 30, 2008 No. 56-FZ “On additional insurance contributions for the funded part of the labor pension and state support formation of pension savings").

The listed information must be submitted within a month from the date of the decision to terminate activities as an entrepreneur, but no later than the day when the entrepreneur submits documents to register the fact of termination of activities (paragraph 5, paragraph 2, article 9, paragraph 3, article 11 Law on Individual Accounting).

Attention: if the entrepreneur does not provide the necessary information to the territorial body of the Pension Fund of the Russian Federation or submits it after submitting documents to the inspectorate, negative consequences will arise

Firstly, most likely, it will not be possible to register the fact of termination of activity as an entrepreneur (resolutions of the FAS Central District dated November 26, 2012 in case No. A14-745/2012 and FAS Volga District dated November 3, 2011 in case No. A12- 4595/2011). The inspectorate has the right to refuse registration if it does not receive evidence that the applicant has submitted information about the insured persons to the Pension Fund of the Russian Federation (subparagraph “c”, paragraph 1, article 22.3, subparagraph “h”, paragraph 1, article 23 of the Federal Law dated August 8, 2001 No. 129-FZ “On state registration of legal entities and individual entrepreneurs”; hereinafter referred to as the Law on State Registration).

Secondly, there will be a risk that a sanction will be applied to the entrepreneur in the form of a recovery of 10 percent of the amount of payments due to the Pension Fund of the Russian Federation for the reporting period (paragraph 3 of Article 17 of the Law on Individual Accounting).

Example from practice. The inspectorate refused to register the fact of termination of the person’s activities as an entrepreneur. The court considered the refusal to be lawful, since the entrepreneur did not provide the necessary information to the Pension Fund of the Russian Federation

Citizen O. applied to the inspectorate in order to register the termination of activities as an entrepreneur. The inspectorate considered that the applicant had not submitted all the necessary documents and refused registration.

Disagreeing with the inspection’s conclusion, citizen O. went to court with the following demands:

• invalidate the inspection decision;
• oblige the inspectorate to register the termination of the entrepreneur’s activities.

The court found that the inspection sent a request to the territorial body of the Pension Fund of the Russian Federation in order to obtain information about whether the applicant provided information about the insured persons. The body of the Pension Fund of the Russian Federation issued a certificate to the inspectorate regarding the failure to provide it with the necessary information about the employees of the entrepreneur O.

A document confirming the submission of information to the territorial body of the Pension Fund of the Russian Federation is one of the documents on the basis of which the registration of termination of activities as an entrepreneur is carried out (subclause “c” of paragraph 1 of Article 22.3 of the Law on State Registration). Since the inspection has not received evidence of the submission of such information, the refusal to register is considered lawful (subparagraph “h”, paragraph 1, article 23 of the Law on State Registration). As a result, the court did not satisfy the applicant’s demands (resolution of the Federal Antimonopoly Service of the Ural District dated July 26, 2012 No. F09-5709/12 in case No. A60-39155/2011).

Situation: does an entrepreneur need to submit information about insured persons to the Pension Fund of the Russian Federation if he does not act as an insured in relation to other individuals?

Information about the insured persons themselves does not need to be provided, since there are no such persons.

However, it makes sense for an entrepreneur to contact the territorial body of the Pension Fund of the Russian Federation in order to obtain a certificate confirming the absence of insured persons. This should be done within a month from the date of the decision to terminate activities as an entrepreneur, but no later than the day when the entrepreneur submits documents to register the fact of termination of activities.

Since the law does not establish the procedure for issuing a certificate of absence of insured persons, it makes sense for an entrepreneur to clarify the method of obtaining it at a specific branch of the Pension Fund of the Russian Federation.

Subsequently, the certificate will need to be submitted to the inspectorate to register the fact of termination of activities as an entrepreneur (subclause “c” of paragraph 1 of Article 22.3 of the Law on State Registration).

However, termination of activity can be registered without such a certificate. The fact is that an inspection that has not received a certificate from the applicant must independently request the necessary information from the Pension Fund of the Russian Federation. However, if this request is made, the risk of denial of registration will increase. In order to protect yourself as much as possible from such a refusal, it makes sense for an entrepreneur to obtain a certificate himself from the territorial body of the Pension Fund of the Russian Federation, and then submit it to the inspectorate.

Is it possible to close an individual entrepreneur with debts?

This is perhaps the very first question that “failed” entrepreneurs ask during consultations. The problem here is that, unlike the closure of a company, with the liquidation of which its debts “disappear” (not always, however, everything can be reversed), for an individual entrepreneur everything is more complicated. His obligations received in the status of an individual entrepreneur will be transferred to him as an individual, and he will be liable for them with all his property.

Moreover, if it is possible to close an individual entrepreneur with debts to counterparties, no one will check, then this will not be possible with debts to the budget - the tax office takes this extremely seriously. Or rather, they will allow you to close it, but the debts will have to be paid later within the time limits established by law. And in any case, an attempt to close an individual entrepreneur with debts is, in fact, an attempt to evade fulfillment of obligations with the corresponding risks of punishment.

The only legal way to close an individual entrepreneur with debts that cannot be repaid is through bankruptcy.

Calculations of insurance premiums for employees

An entrepreneur acting as an insurer in relation to other individuals is obliged to submit to the territorial bodies of the Pension Fund of the Russian Federation and the Social Insurance Fund of Russia a calculation of accrued and paid insurance premiums (Part 15 of Article 15 of the Law on Insurance Contributions). This can be done any day before submitting documents to register termination of activities as an entrepreneur. It is advisable to submit the calculation to the territorial body of the Pension Fund of the Russian Federation simultaneously with information about the insured persons.

Attention: if an individual submits a calculation of accrued and paid insurance premiums after the tax office has registered the termination of activities as an entrepreneur, such a person may be fined.

The entrepreneur is obliged to promptly submit calculations for accrued and paid insurance premiums (Clause 3, Part 2, Article 28 of the Law on Insurance Contributions). If a person submits a calculation after registering the fact of termination of activities as an entrepreneur, the deadline for submitting the calculation will be considered violated (appeal ruling of the Kursk Regional Court dated April 9, 2013 in case No. 33-826-2013).

The sanction for such a violation is a fine in the amount of 5 percent of the amount of insurance premiums accrued for payment for the last three months of the billing period. Moreover, the fine is collected for each full or partial month from the day established for the submission of the calculation (i.e. from the day preceding the day of submission of documents for registration). The total amount of the fine cannot be less than 1,000 rubles, but cannot exceed 30 percent of the amount of insurance premiums accrued for payment for the last three months of the billing period (Part 1 of Article 46 of the Law on Insurance Contributions).

Situation: can an entrepreneur be held administratively liable for violating the deadline for submitting a calculation of accrued and paid insurance premiums?

No, they can't.

Despite the fact that the Code of the Russian Federation on Administrative Offenses provides for liability for violating the deadline for submitting a calculation (Part 2 of Article 15.33 of the Code of Administrative Offenses of the Russian Federation), it is impossible to attract an entrepreneur to it. An entrepreneur is excluded from the number of officials to whom liability is applicable on this basis (note to Article 15.33 of the Code of Administrative Offenses of the Russian Federation).

The calculation must be made for the period from the beginning of the billing period (i.e., from the beginning of the calendar year) to the day the calculation is submitted, inclusive. If a person registered as an entrepreneur after the beginning of the current calendar year, then the calculation must be made for the period from the date of registration (such a day is indicated in the registration certificate) to the day the calculation is submitted, inclusive (Part 3 of Article 10 of the Law on Insurance Contributions).

The calculation can be submitted in the form of an electronic document (subject to the requirements of Part 10 of Article 15 of the Law on Insurance Contributions and the Decree of the Government of the Russian Federation dated July 7, 2011 No. 553 “On the procedure for completing and submitting applications and other documents necessary for the provision of state and (or) municipal services, in the form of electronic documents").

If the calculation shows that the entrepreneur has not paid the amount of insurance premiums in full, he must do this within 15 calendar days from the date of submission of the calculation.

If the amount actually paid exceeds the amount indicated in the calculation, the entrepreneur can obtain a refund of the resulting difference according to the rules of Article 26 of the Law on Insurance Contributions.

Dismissal of employees

Since a person ceases to act as an entrepreneur, the task arises of terminating employment contracts with employees. The basis for termination is the fact of making a decision to terminate business activities (clause 1, part 1, article 81 of the Labor Code of the Russian Federation).

The territorial body of Rostrud (hereinafter referred to as the employment service body) at the place of residence of the entrepreneur must be notified in writing about the possible dismissal of employees. This must be done no later than two weeks before the termination of employment contracts (clause 2 of article 25 of the Law of the Russian Federation of April 19, 1991 No. 1032-1 “On employment in the Russian Federation”).

It is advisable to view the notification (message) form on the website of the territorial office of the employment service. If a sample notification is not provided on the website, the message can be submitted in any form, making sure to indicate the position, profession, specialty (along with qualification requirements) and terms of payment for each specific employee.

The procedure for terminating each employment contract will depend on its terms.

Situation 1. The employment contract provides for a notice period for dismissal, as well as the payment procedure and the amount of severance pay.

In such a situation, the entrepreneur is obliged to fulfill the terms of the agreement (Part 2 of Article 307 of the Labor Code of the Russian Federation). For example, if the contract stipulates that upon dismissal due to termination of activities as an entrepreneur, the employer must pay the employee severance pay in the amount of 30 thousand rubles, this obligation must be fulfilled.

Situation 2. The employment contract contains a condition that the dismissal of an employee on the basis of clause 1 of part 1 of Article 81 of the Labor Code of the Russian Federation is carried out according to the general rules of labor legislation.

In this case, the entrepreneur must be guided by the general norms of the Labor Code of the Russian Federation established for organizations (appeal ruling of the Orenburg Regional Court dated June 5, 2012 in case No. 33-3059/2012).

In particular, the entrepreneur must personally and against receipt warn the employee of the upcoming dismissal. Moreover, this must be done at least two months before dismissal (Part 2 of Article 180 of the Labor Code of the Russian Federation). It is advisable to notify the employee in the coming days after making the decision to terminate activities as an entrepreneur. If an entrepreneur fires an employee without warning, he will have the right to go to court with a claim for compensation for forced absence and compensation for moral damage (paragraph 2 of article 234, part 9 of article 394 of the Labor Code of the Russian Federation). At the same time, the mere fact of such dismissal will not prevent the registration of termination of business activity. In other words, the inspectorate will not be able to refuse registration solely on the basis that the entrepreneur fired an employee in violation of the rules of Article 180 of the Labor Code of the Russian Federation.

Upon termination of the employment contract, you will need to pay the employee severance pay in the amount of average monthly earnings (Part 1 of Article 178 of the Labor Code of the Russian Federation). In addition, the employee will retain his average monthly salary for the period of employment, but not more than two months from the date of dismissal (including severance pay).

Situation: is it possible to fire an employee before two months have passed after notice of dismissal? The employment contract provides that if a decision is made to terminate activities as an entrepreneur, the employer dismisses the employee according to the general rules of the Labor Code

Yes, you can.

An entrepreneur will have the right to dismiss an employee ahead of schedule if the following conditions are met (Part 3 of Article 180 of the Labor Code of the Russian Federation):

• the employee will give written consent to terminate the employment contract before the expiration of two months from the date of notice of dismissal;

• the employer will pay the employee additional compensation in the amount of average earnings, calculated in proportion to the time remaining before the expiration of the two-month period from the date of notice of dismissal.

In this case, the employee will retain the right to payments listed in Part 1 of Article 178 of the Labor Code of the Russian Federation.

Situation 3. The employment contract does not contain conditions regarding the notice period for dismissal, and also does not regulate the payment procedure and the amount of severance pay.

As a rule, the courts come to the conclusion that in such a situation the entrepreneur should not warn the employee about the upcoming dismissal and pay him severance pay (ruling of the Supreme Court of the Republic of Khakassia dated September 8, 2011 in case No. 33-2135/2011, cassation ruling Khabarovsk Regional Court dated July 9, 2010 in case No. 33-4591).

According to the majority of courts, the general norms of the Labor Code of the Russian Federation do not apply in this case. For example, in the ruling dated March 14, 2012 in case No. 33-1720/2012, the Krasnoyarsk Regional Court indicated: “The provisions of Article 180 of the Labor Code of the Russian Federation, which provides for the employer’s obligation to warn the employee about the upcoming dismissal in accordance with paragraph 1 of part 1 of Article 81 of the Labor Code Code of the Russian Federation personally and against signature at least two months before dismissal, cannot be applied to the situation under consideration, since they are directly aimed only at legal entities (organizations).”

However, sometimes the courts take the opposite position: if the employment contract does not regulate the notice period for dismissal and the procedure for paying severance pay, the rules of Articles 178 and 180 of the Labor Code of the Russian Federation apply. For example, in the appeal ruling dated May 2, 2012 No. 33-4377, the Kemerovo Regional Court referred to the following: “... upon termination of an employment contract in connection with the termination of the entrepreneur’s activities, a dismissed employee is paid severance pay in the amount of the average monthly salary, and he also retains the average monthly salary for the period of employment, but not more than two months from the date of dismissal (including severance pay).”

Since there is no single position, an entrepreneur can independently choose one of two behavior options.

1. Dismiss an employee according to the rules established for organizations. In this case, the entrepreneur will protect himself to the maximum extent from further disputes with the employee. However, the entrepreneur will have to bear the material costs of paying severance pay.

2. Do not notify the employee of dismissal two months before termination of the contract and do not pay severance pay. In such a situation, the entrepreneur will save time and money. At the same time, the risk of a dispute with the dismissed employee will increase. But, even if the employee goes to court, negative consequences for the employer may not occur. After all, the court hearing the dispute may take a position favorable to the entrepreneur.