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The question is now off the table of how an employment contract differs from an independent contractor agreement

The question is now off the table of how an employment contract differs from an independent contractor agreement

LEGAL DIGEST \ 22.03.2018

The Russian Supreme Court has issued a reminder of the main differences between an employment contract and an independent contractor agreement (“ICA”).

  1. 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.
  2. 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.
  3. 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.
  4. 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.

Acsour