It is often said in the media that the government is fighting undocumented workers and the State Labor Service is fining businesses. Indeed, in order not to pay taxes, some employers do not register employees, and when the inspection of regulatory bodies comes - they try to get out in different ways.
They usually claim that the employees are under a civil contract, on probation or training. However, such employees are also required to be properly registered.
Before we wrote about appealing the fines of the State Labor Service, and about contracts with employees in the restaurant business, and now let's talk about why the State Labor Service fines business.
Why are businesses fined at all?
The Labor Code prohibits the admission of employees to work without concluding an employment contract. When an inspection comes from the State Labor Inspectorate and finds an employee at the enterprise who has not concluded an employment contract, the employer will be forced to pay a fine of 10 minimum wages (today it is UAH 60,000) for each unregistered employee.
Despite this, the business still does not register employees, because it is: expensive to pay taxes; difficult - from the point of view of administration, especially for small business; and sometimes the workers themselves do not want it - they have debts or do not want to lose the right to a subsidy.
To determine whether a person has the right to be at your company, the inspectors of the State Labor Service ask to provide documents confirming the employment relationship.
Such documents are: employment contract, order or directive of the director on hiring, as well as notification to the State Tax Service on hiring an employee. It should be noted that the notification of the State Tax Service must be sent the day before the actual admission of the employee to work, so to say that the employee has just gone to work - will not work and the inspector will still be able to impose a fine.
How is the business trying to circumvent the formal employment requirement?
Civil law contracts.
One of the options for replacing labor relations is the conclusion of a civil contract (JRS) with employees. In this case, the relationship between the employee and the employer is regulated not by the Labor Code, but by the Civil Code and the contract. It is possible to conclude a JRS when a specific result is singled out from the work assigned to the employee. The advantage of JRS is also that taxes are charged on the amount of remuneration paid, rather than the minimum wage, which is very profitable for one-time work. In addition, the conclusion of the JRS is not required to notify the tax.
Below are the signs of JRS:
- The main reason for concluding the JRS - performing a certain job (collecting a certain amount of vegetables / fruits) or achieving a certain result (preparation of a legal opinion on the circumstances of the case). Therefore, it is better to specify in the contract what you expect from the contractor.
- The organization of work is entirely the responsibility of the JRS contractor, it is not subject to the rules of internal labor regulations. That is why the JRS should not write about its subordination and working hours from 9 am to 6 pm.
- Payment to the contractor is made for the specific work performed.
Of course, the conclusion of the JRS is not a violation of labor law and during the inspection of the State Labor they can be provided to the inspector. However, inspectors are quite skeptical about such agreements and can still impose a fine, and you will have to prove your case in court. In addition, it is important whether the employee confirms the information contained in the contract.
Unemployed workers on probation.
Very often, when the State Labor Inspectorate finds undocumented workers, the employer indicates that this worker is on probation and therefore he is not officially employed. Indeed, the law provides for the right of the employer to set a probationary period for the employee when concluding an employment contract.
However, during the probationary period, all the same procedures are applied to the employee as when hiring.
That is, to confirm the existing employment relationship with the employee who is on probation must provide: employment contract, order or instruction of the director on hiring, notification to the State Tax Service on hiring an employee.
There are also cases when inspectors meet an undocumented employee at the enterprise, and employers indicate that the employee is an intern, and therefore it is possible not to sign an employment contract with him.
In part, they are right - during the internship, the employment contract is not concluded. However, when inspecting the State Labor Inspector, the employer must provide the following evidence that the employee has completed the internship: internship agreement; individual internship program; internship order.
The order must specify the terms and place of the internship (structural unit), specialty (qualification) or profession (qualification level) of the intern, the internship regime, as well as his supervisor.
Also, not everyone can be an intern. The current legislation provides for internships for only two categories of employees: students of higher and students of vocational schoolswho acquired a profession and unemployedwho undergo professional training, retraining and advanced training.
So, if you have already decided not to register your employees under a traditional employment contract - do it right: prepare all the necessary documents, and if necessary, provide them to the inspector.