Differences between an employment contract and a GPC agreement: how not to make a mistake when registering a “temporary” employee

Labor or civil law: is there a choice?

Let us say right away that Article 15 of the Labor Code directly prohibits the conclusion of civil contracts, which actually regulate not civil, but labor relations between the employee and the employer.
This means that any contract or service agreement that an organization enters into with a non-entrepreneur may sooner or later be abandoned under the close attention of regulatory authorities. At the same time, violations discovered by inspectors can result not only in a fine and arrears of contributions to extra-budgetary funds, but also in the disqualification of the manager (Article 5.27 of the Code of Administrative Offenses of the Russian Federation). Check the counterparty for signs of a shell company and the presence of disqualified persons

Therefore, when deciding on the method of registering “temporary” workers, you need to clearly understand by what criteria the concluded contract can be recognized as an employment contract. Below we will use specific examples to show what conditions cannot be included in a civil contract (and, accordingly, what cannot be demanded from the contractor).

Labor and civil contract

There really aren't many options. Any business, when interacting with individuals, is guided by the Labor Code (LC) or Civil Code (CC). Accordingly, employees can be registered either under an employment contract (ET) or under a civil law agreement (CLA). Let's start with definitions.

An employment contract (EA) is an agreement between an employee and an employer establishing mutual rights and obligations. According to the TD, the employee undertakes to personally perform the work required by the position he occupies. The employer, in turn, undertakes to provide the employee with work, provide him with the necessary working conditions and pay wages.

A civil law agreement (civil agreement) is a type of agreement in which the parties, without entering into an employment relationship, determine the result of work, property relations and other issues of interaction (contracts, paid services, copyright agreements, etc.).

Employment contract or GPC agreement: what is the difference?

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Details

The main criteria for recognizing a relationship as an employment relationship:

• internal labor regulations have been established;
• constant salary;
• the labor function is indicated (work by position, profession, specialty);
• systematic performance of the same work;
• equipped workplace;
• unspecified deadlines for the execution of the contract;
• mention of subordination to employees on staff;
• bonuses;
• granting leave;
• assignment on a business trip and guarantees associated with it.

For more information on this topic, read the article “GPC Agreement without errors: rules for registration, taxes and fees.”

For whom are these criteria important?

I. For the Federal Tax Service and the Pension Fund of Russia

The tax authorities are interested in recharacterizing the GPC agreement into a TD, as this leads to additional taxes. The most frequently considered situations are when a company enters into a GPC agreement with an individual entrepreneur. Employers are often cunning, wanting to save on personal income tax payments: they offer their employees to register as individual entrepreneurs and draw up a civil process agreement with them.

However, as judicial practice shows, the controllers’ arguments are not considered by the court in cases where there are no obvious signs of an employment relationship, and the employee himself declares in court that he intended to enter into a GPC agreement with the employer as an individual entrepreneur. Citizens have the right to manage their labor opportunities at their own discretion.

II. For labor inspection and Social Insurance Fund

Under the GPC agreement, remuneration is not subject to disability insurance premiums and contributions for insurance against industrial accidents and occupational diseases (except for cases where the agreement stipulates that such contributions are paid). It is interesting for two funds to recognize such relations as labor relations: FSS - for calculating contributions, penalties, and fines; labor inspectorate - to collect fines for violation of employee rights.

III. For the workers themselves

If the civil law contract in fact regulates the labor relations between the customer and the contractor, then the employee can file a claim in court to recognize the civil law contract as an employment contract. His motivation in this case is clear - to receive the guarantees and benefits required under the Labor Code. There is a high probability that the court will take into account the plaintiff’s arguments and re-qualify the contract. The most dangerous situation is when the employee himself goes to court.

To avoid controversial situations, the employer needs to correctly formulate the terms of the contract and competently build relationships with the contractor.

GPC agreement: risks of retraining into an employment contract

Art. 15 of the Labor Code of the Russian Federation does not allow the conclusion of GPC agreements, which actually regulate labor relations between the employee and the employer. The same article gives a clear definition of the concept of “labor relations”.

Labor relations are relationships based on an agreement between the employee and the employer on the personal performance by the employee for payment of a labor function (work according to the position in accordance with the staffing table, profession, specialty indicating qualifications; a specific type of work entrusted to the employee) in the interests, under management and control the employer, the employee’s subordination to the internal labor regulations while the employer provides working conditions provided for by labor legislation and other regulatory legal acts containing labor law norms, a collective agreement, agreements, local regulations, and an employment contract.

An individual who was a performer under the specified agreement has the right to apply to the court for recognition of the relationship as an employment relationship in the manner and within the time limits provided for the consideration of individual labor disputes.

In Art. 19.1 indicates several ways to reclassify civil law relations into labor relations:

• on the basis of a written application from an individual who is the executor under the contract,
• on the basis of an order from the State Tax Inspectorate that has not been appealed to the court;
• if the individual who is the executor under the contract applied directly to the court;
• based on materials sent by the State Tax Inspectorate, other bodies and persons having the necessary powers for this purpose in accordance with federal laws.

Pavel Orlovsky , Elba service expert

Operating mode not for the performer

Consider the following situation. To conduct a study of consumer demand for a new type of product, a trial batch of which the organization purchased, it was decided to hire a separate employee. His responsibilities included conducting presentation conversations with the organization's clients (according to the list provided by the organization) and preparing lists of people interested in purchasing new products for the sales department. Since this work was clearly temporary in nature, it was decided not to make changes to the staffing table, but to hire an employee on the terms of a civil contract. They found a specialist quickly, concluded an agreement, the terms of which stipulated the contractor’s obligation to comply with the internal work schedule of the organization: working hours from 10.00 to 19.00, lunch break from 13.00 to 14.00, days off - Saturday, Sunday.

Such a condition in a contract is a gross mistake, which with almost one hundred percent probability will lead to the reclassification of the relationship as an employment relationship. The fact is that the requirement for working hours is one of the main qualifying features of labor relations (Article and Labor Code of the Russian Federation). And such relationships are formalized by an employment contract. Those employees who work under civil law contracts (for example, under a work contract) are not subject to requirements to comply with the organization’s operating hours: they are free to manage their time as they please. For them, the most important thing is not to show up at the office at a certain time, but to do certain work within the period specified in the contract and hand it over to the customer (Article 702 of the Civil Code of the Russian Federation).

Draw up and print an employment contract

A consequence of this rule is also that the contractor under a civil contract cannot have overtime work or work on weekends/holidays, as well as night shifts. For an accountant, this means that the contract with the contractor cannot include provisions for any additional payments for such “deviations” from the work schedule.

Finally, the fact that the contractor does not obey the work schedule of the organization that “hired” him means that the organization should not keep any records of time worked in relation to him. So check that your contractors do not appear in your Time Sheets and other personnel documentation.

Legislative definition of an employment contract

The legislation thoroughly regulates all issues related to the employment contract. In Art. 56 of the Labor Code of the Russian Federation, an employment contract is defined as an agreement between the employer and the employee. Thus, a clear name is given to the parties.

It is clarified that within the framework of this agreement both parties have mutual responsibilities.

The employer must:

• Provide work for the designated job function.
• Provide necessary working conditions.
• Pay wages in full on time.

The employee undertakes:

• Personally perform a labor function in the interests, under the direction and control of the employer.
• Comply with internal labor regulations.

Not a salary, but a reward

Let's give another example. The organization rents space in a building built at the beginning of the 20th century. And due to the dilapidation of the wiring, the electrical network constantly breaks down. But management considers it unprofitable to keep an electrician on staff, so a specialist is hired for repair and restoration work under a contract.

On the eve of the celebration on February 23, the head of the administrative and economic department addressed the management with a request to pay the electrician a bonus in accordance with the Regulations on bonuses in force in this organization. The bonus was paid to the electrician on the basis of a general order for the organization, along with other male employees.

Finding such documents during an inspection also means a sure path to a fine. Moreover, there are several errors here. Firstly, local regulations in force in an organization apply only to its employees, who are not an electrician-contractor (Article 11 of the Labor Code of the Russian Federation). That is, by applying the rules of the Bonus Regulations to him, the organization actually recognized that he was an employee and, by its actions, reclassified the contract.

Secondly, such a premium is a violation of the contract. After all, according to it, the contractor receives a clearly defined amount of payment for an equally clearly defined amount of work (Article 709 of the Civil Code of the Russian Federation). And the basis for payment is the signing of the work completion certificate. Therefore, we can talk about a bonus in the case of a contractor only in one case: if he completed an additional amount of work and the customer accepted this work.

A consequence of the above is another rule: in a contract agreement, the payment of remuneration to the contractor cannot be timed to coincide with the payment of wages to full-time employees. The contractor can receive his money either in advance within the period fixed in the contract, or upon completion and acceptance of the agreed amount of work. Moreover, in the case of an advance payment, it is also highly recommended to associate the date of its issuance not just with this or that day (date), but with an event - for example, the completion of part of the work, or the conclusion of an agreement. For example, the following formulation is acceptable. “Payment for the work is made in two stages: 30 percent of the remuneration is paid no later than ten working days from the date of conclusion of this contract, the remaining part is paid no later than ten working days from the date the customer accepts the results of the work.”

The difference between an employment contract and a GPC agreement

If we draw a conclusion from the table, then it is most profitable for a person to conclude an employment contract with the company. Since in this case the employee provides himself with a full range of guarantees and benefits in accordance with the Labor Code. The contractor under the GPC agreement, on the contrary, cannot count on paid annual leave, bonuses, compensation and other preferences. And it turns out that the GPC agreement is primarily beneficial for business. But it's not that simple.

Dependents under contract

Let's continue the example with the electrician contractor. Having arrived at the organization on the occasion of another breakdown and inspecting the “front of work,” the electrician presented the organization’s management with a list of materials and tools that he would need to fix the problem. The manager immediately agreed to provide the electrician with everything he required, as long as the breakdown was fixed as quickly as possible.

However, such haste is also fraught with trouble. After all, the obligation to provide the employee with everything necessary for work is also one of the signs of labor relations (Article 22 of the Labor Code of the Russian Federation). In the Civil Code everything is different. As a general rule, the contractor performs all work using his own tools and components. This is called “performing work at the expense of the contractor” (Article 704 of the Civil Code of the Russian Federation). However, the legislator allows this rule to be changed. To do this, it is necessary to stipulate in the contract that the work can be performed “at the expense of the customer.”

Therefore, before complying with the contractor’s demands to provide him with tools and components, you need to make sure that your contract contains a provision for the work to be performed at the customer’s expense. If such a condition is not there, an appropriate additional agreement should be drawn up. This, by the way, is also useful for justifying the costs of payments under a contract before the tax authorities.

What are the differences between TD and GPA?

Every employer may be faced with the question of what kind of agreement should be concluded with a person - labor or civil law. At the same time, signing a GPA has long been considered one of the popular ways to optimize labor costs.

However, before formalizing cooperation, the employer should take into account the specifics of each of the agreements, since the law prohibits replacing labor relations with civil ones.

Table No. 1. Differences between TD and GPA.

Pros and cons of a civil contract

Most often, it is beneficial for the employer to enter into a GPC agreement, since the document eliminates a number of responsibilities. There is no need to think about organizing a workplace, paying insurance premiums, providing vacations and supervising an employee. This is convenient if one-time services are required: document translation, auditing, general cleaning, production of office furniture. It’s another matter when the employer deliberately or unintentionally misleads the contractor by concluding a GPC agreement with him under the guise of an employment agreement.

However, there are advantages for workers as well. A full-time employee is subject to the internal regulations of the company - for example, he must be at his workplace from 8.00 to 17.00, even if the tasks for the day have already been completed. The executor under the GPC agreement is his own master. It can work even at night, the main thing is timely and high-quality results. This path is most often chosen by “one-time” specialists: artists, photographers, finishers, carriers, and so on.

But we shouldn’t forget about the disadvantages: episodic work and lack of social guarantees. You will have to forget about paid sick leave and vacations, as well as a quiet, secure maternity leave. The customer has the right to impose a fine for poor quality work, and to challenge the sanctions will have to go to court. This also costs money.