The Ministry of Social Policy of Ukraine has submitted a new draft of Act of Ukraine "About Amendments to Certain Legislative Acts of Ukraine on Strengthening Protection of Employees' Rights and Countering the Use of Undeclared Labor".
According to the Ministry, the adoption of this document will improve the protection of the rights of employees and limit the practice of employers to optimize taxation by concluding contracts with individual entrepreneurs.
This document intended to define more clearly the criteria’s that will characterize a person as an employee. In case that three of which coincide it can be argue that the employer did not sign an employment contract with the person. In particular, there are seven such criteria (attributes) established, namely:
- two or more times remuneration was paid in the interests of another person;
- performance of work on behalf and under control of the person in whose interests the work is performed (services are provided) or the person authorized by him/her;
- remuneration is the only source of income of the person or amounts to 75 percent or more of its income within the last 6 calendar months;
- work is performed at the workplace of the customer and in compliance with the rules of its internal work schedule;
- person performs works (renders services) similar to those performed by the customer's regular employees;
- organization of working conditions is ensured by the person in whose interests the work (services provided) is performed or by a person authorized by him/her;
- duration of working hours and rest time shall be determined by the person in whose interests the work is performed (services are provided) or by a person authorized by him.
Despite the significant liability of the employer for failure to sign an employment contract with employee (30 min. wages in 2019 = 125,190.00 UAH), this draft of the Act of Ukraine creates significant risks for those companies that work closely with individuals-entrepreneurs. In particular, it can create significant inconveniences for the IT sphere, media, and retail and so on.
Please note that Deiak Law Firm provides qualified advice and legal support in particular on the application of labor law.
