The current requirements for employee registration and the amount of mandatory contributions, unfortunately, inspire some companies to optimize their staffing. Common methods for this include conclusion of civil law contracts with self-employed individuals and individual entrepreneurs. Let's consider the risks of this approach.

Tax authorities pay attention to companies that systematically engage several individual entrepreneurs (hereinafter referred to as IEs) and/or self-employed individuals for functions having no defined assessment parameters. In this case, personal income tax may be additionally charged. For example, the Ruling of the Supreme Court of the Russian Federation dated February 27, 2017, No. 302-КГ17-382 states that the systematic engagement of individual entrepreneurs is a sign of evading the duty of a tax agent (there is no other economic sense in this).

There is a risk of litigation from an actual employee engaged under an individual entrepreneur agreement, who may disagree with the application of the provisions of Article 782 of the Civil Code of the Russian Federation regarding the possibility of unilateral termination of a service agreement. For example, an individual in a status of an entrepreneur provides services to a single customer, follows the rules of the internal code of conduct, schedule, etc., meaning the relationship is clearly of employment nature. Consequently, if the employer terminates such legal relations, it will have to prove in court (1) non-recurrent nature of assignments, (2) procedure for determining the scope of services and payment for them, which differs from the payment procedure under an employment contract, (3) voluntary fulfillment of obligations by the entrepreneur on payment of taxes and other mandatory fees, (4) absence of subordination and complete independence in determination of the method and procedure for engagement into entrepreneurial business. Judicial practice on this issue is contradictory and depends on the circumstances of the specific case.

If in the first category of disputes one will have to face an additional charge of taxes in a foreseeable amount, in the second category, in addition to reinstatement in a job, compensation for forced absence, unused leave, and moral harm, the employer risks to pay a penalty under Article 236 of the Labor Code of the Russian Federation, as interpreted by the Resolution of the Constitutional Court of the Russian Federation No. 16-П dated 11.04.2023, i.e., after expiry of 15 days after the date of charge of the required payments and until the actual execution of the court decision on the recovery of funds.