The Russian Supreme
Court has issued a reminder of the main differences between an employment
contract and an independent contractor agreement (“ICA”).
- The purpose of an ICA is to perform a specific task over a
certain period of time, while an employment contract provides for an employee
to have a number of job duties which he/she performs on a regular basis throughout
the duration of his/her employment contract.
- The subject matter of an ICA is one-time work where the result of the
service is important. An employment contract regulates work of an employee
within the scope of his/her job duties.
- An
employee with whom an employment
contract has been concluded becomes a member of company’s staff; he/she is
subordinated to the employer and follows the company’s internal regulations.
The service provider under an ICA
retains his/her autonomy.
- Risks that arise in the course of work lie with the
service provider when an ICA is concluded and with an employer when an
employment contract is concluded.
When an employment contract is disguised as an
ICA, a company may face the following consequences:
- an
unscheduled audit by the State Labour Inspectorate;
- the
ICA may be recognised to be an employment contract;
- a
fine of RUB 10,000
to RUB 20,000 for officers and RUB 50,000 to RUB 100,000 for
legal entities.
Acsour recommends that its clients pay close attention
when they conclude ICAs.
