– Good day! Americano, please.
- Yes of course.
- You have delicious coffee and a good coffee shop. Have you been working here for a long time?
- Yes, for more than a year…
This is how the labor inspector can start communicating with your employee. During such conversations, the inspectors learn a lot of interesting things about the institution, including undocumented employees. They record all staff evidence and then use it to justify fines for unemployed workers. In 2018, such a fine reaches 112 thousand UAH per employee.
Why are JRS so popular?
To avoid fines from the State Labor Service, but at the same time save on taxes on the salaries of subordinates, restaurateurs often enter into service agreements with employees. These agreements are also called civil law (JRS).
If you need help in choosing a contract, we are ready to provide advice and make a quality contract with staff
The benefit is obvious, as the payment of the single social contribution (22%), personal income tax (18%), military tax (1.5%) is required not from the minimum wage, but from the amount of remuneration for the JRS. As there are no requirements for the minimum amount of remuneration for JRS, it can be as much as UAH 100.
Another advantage of the JRS over the employment contract is the absence of an obligation to notify the tax office about the hiring of the employee. If the company hires someone, the employee can start work no earlier than the next day after the company notifies the tax office of hiring this employee.
No government agencies need to be notified of the conclusion of the JRS. Some use it and enter into a JRS without a date. The date is entered when the controllers arrive.
Some restaurateurs think that all restaurant staff can work for the JRS and that these agreements will be enough for labor inspectors to check. Whether this is true, and whether all restaurant professions can be adapted to the JRS, will be discussed below.
Employment contract vs JRS. What's the difference?
There are several key points that distinguish JRS from an employment contract.
- The name is not important, but it also matters.
The fact that a contract is not called an "employment contract" but a "service contract" does not mean that it is inherently so. The supervisory authorities and the court assess the content of the contract and take into account the real relationship between the parties.
In some clients we have seen different variants of JRS names. There were even "employment agreements". This name will be very much liked by controllers and with very high probability will become the basis for imposing of the penalty.
Concepts such as "employer", "employee", "salary", "day off", "sick leave", etc. should also be avoided.
- The king himself.
Unlike an employee, a JRS contractor has much more freedom. He organizes his work himself and does not obey the rules of internal labor regulations. Therefore, the contract should not contain conditions on the subordination of the employee and regulated working hours from 10:00 to 18:00.
Also, work on the JRS should be performed irregularly - banquet service, etc.
- What do they pay for and when?
The employee receives a salary for the fact that he is at work and performs his duties. Terms of salary payment are defined in the law.
For JRS, the contractor receives a reward for the service provided or for the result of the work performed. The customer pays for such works on the basis of acts in terms which the parties determine for themselves.
Restaurant professions and JRS
Not every restaurant profession can be adapted to the JRS. There are employees who have only employment contracts. These include, in particular, the administrator. He works constantly, in compliance with the schedule of the institution, he has no specific materialized result of work.
There are professions with which not everything is clear. This is a waiter, a bartender. There are also works that can be legally performed on the basis of the JRS.
We offer to understand specific examples.
In the vast majority of cases, we do not recommend our clients to conclude a JRS with bartenders and waiters. Such work is systematic. They work all day at work, and it is difficult to single out the result of such work. Of course, you can write that the bartender should make 100 cocktails, and the waiter - to clean 20 tables, but such wording may be questioned by regulatory authorities.
Example, Odessa Administrative Court of Appeal in its decision from 04/19/2018 sided with the State Labor in a dispute with FOP-owner of the cafe on the nature of the work of the bartender and waiter: "The work of citizens under the above civil law agreements is not legally independent, but is carried out within the activities of the catering institution with the systematic performance of labor functions inherent in for the work of a waiter and a bartender ". The dispute ended with a fine for the employer in the amount of 960 thousand UAH.
Of course, there may be exceptions. If the waiter or bartender serves the banquet for only a few hours, then the contract can specify the specific amount of work that he must perform.
If the cleaner does not work regularly, but cleans at a convenient time for her, it is quite justified to enter into a contract with her for the provision of cleaning services. You can pay the cleaners for certain work: window cleaning, furniture cleaning, general cleaning, washing dishes, etc.
The legality of this format of cooperation is confirmed by the courts. Ternopil District Administrative Court by its decision of 06/19/2018 canceled the fine of the State Labor Inspectorate in the amount of 192 thousand UAH and motivated its decision by the fact that “In accordance with the content of the contract concluded between the parties for the performance of works (provision of services) by an individual, it follows that the contractor is not subject to the rules of internal labor regulations of the Customer. Also, in accordance with the terms of the Agreement, the executor independently, at own discretion defines concrete time and duration of performance of works (rendering of services) on cleaning ».
Cooperation with the chef can also be issued by the JRS, if he prepares meals on the basis of individual orders. For example, at the JRS, a cook may come to prepare desserts or certain preforms for dishes that will later be used by other staff in a cafe or restaurant.
A civil contract can both help save money and be the basis for a considerable fine for work without an employment contract. It is definitely not necessary to go to extremes and transfer all employees to work on the JRS. The development of the contract should be approached carefully: to analyze in detail the nature of the work, to correctly determine the procedure and conditions of payment, to agree on the time of their implementation and other important points of the contract. And then your business will be successful, and you will sleep peacefully.
Andriy Gevko, lawyer
partner of the law firm Bargen