Bill of the Ministry of Social Policy. Not only FOPs, not only IT.

In recent weeks, heated discussions in the media and social networks have not subsided bill of the Ministry of Social Policy and how the State Labor Service will fine employers who register employees as self-employed persons. Society split into two camps. Some say that FOPs are evil and an internal offshore that needs to be shut down. Others talk about the freedom of contract and the fact that the economy, in particular, the entire IT industry, rests on FOP employees. The other day The Minister of Social Policy notedthat the bill will not affect the IT industry and this business can sleep peacefully. And who will be affected by the bill then? 

And what is it about?

The draft law should amend the Labor Code and establish specific features under which a contractual relationship with an individual can be considered employment, and in the presence of which a fine can be obtained from the State Labor Service for an undocumented employee.

That is, the bill is aimed not only at the IT industry, but at any contractual relationship between a conditional employer and an individual, regardless of whether it is a sole proprietorship or a sole proprietorship.

In Ukraine, the conclusion of civil law agreements (CPA) between an employer and an individual is quite common. JRS uses agricultural, construction, restaurant and other businesses.

JRS is a convenient tool when you need to involve a person for one-time or short-term work, or for a specific project.

For example, why should an agricultural producer employ an employee for two weeks during the harvest period, or a construction company for painting facades, if it takes a few days? Why hire a cleaner who comes twice a week at a convenient time to wipe the windows in the office?

Indeed, it is not entirely logical to employ such persons, but it is possible to formally enter into an agreement with them, in which to determine the specific work, specific result and payment, and then pay all taxes.

Now such relations are semi-legal in nature, because in the case of an inspection of the State Labor Service, you can get a fine, as for an undocumented employee. However, the employer can go to court and prove that he has entered into a civil contract for the performance of specific one-time work.

If the bill proposed by the Ministry of Social Policy is adopted, it will be impossible to appeal the fine of the State Labor Service in court, because the possibility of concluding such agreements will be significantly reduced.

For example, a company makes repairs and needs to hire a person to install wiring in the office. The company cannot pay in cash, so it wants to do everything officially. The work will be performed in several stages, first - wiring, the next stage - the installation of boxes, sockets and lamps. Each stage is paid by a separate act, ie there will be at least two payments. In fact, the work is performed by an electrician under the supervision of a customer. The work is performed in the customer's premises and from the customer's materials.

If we analyze the bill of the Ministry of Social Policy, the above-described relations fall under the signs of labor, at least on four points. Therefore, the company, which had to bring electricity to the office, would have to issue such electricity to the state under an employment contract. Because if in such a situation the company is checked by the State Labor Inspectorate, the probability of receiving a fine is 100%.

What will a business do that wants to work in such cases, at least officially? The answer is simple - they will look for options to receive cash and will pay in envelopes.

What should the government offer in such a case? Current standards that would take into account the needs of the market in hired labor. The bill limits the ability of businesses to attract workers for individual projects on a contractual basis.

Here are some obvious shortcomings of the bill proposed by the government. Linking to the frequency of payments (two or more) is unreasonable, because for a long time (one year) the contractor may be involved in the work several times. The worker can officially receive money from one customer, and from others to receive cash, and then payments from such one customer and will be the only source of income for the worker. Therefore, it is also wrong to be tied to a single source of income. Contractors usually perform work in the customer's premises and from his materials. Therefore, to claim that the performance of work in the customer's premises is a sign of labor relations, again, is unfair.

Of course, it is necessary to fight against shadow employment, but not by such methods.