Employers often have a question: how can labor relations be regulated by concluding a civil law contract (a contract for work, a contract for the provision of services for a fee, etc.). Often, many of them do not see the difference between an employment contract and a civil law contract. However, if you look closely, it turns out that the difference between them is quite large.
An employer (organization) can formalize its relations with an employee, for example, by a contract for the provision of paid services. Under such a contract, the former has many more rights and fewer obligations.
However, if the contract, called a contract for the provision of services for a fee, contains all the essential conditions of an employment contract (for example, the working hours and rest time, etc.), then the employee, if necessary, will have the opportunity to prove in court that this civil law contract is in fact an individual employment contract. And this, in turn, is a completely different scope and nature of rights and obligations for both parties.
When concluding a contract for the provision of services, civil law relations will arise between the parties. Consequently, the person providing services under this contract has no rights and guarantees in accordance with the Labor Code of the Republic of Kazakhstan. The downside for potential employees is the fact that such work will not be counted towards their work experience, such an employee, or more precisely the Contractor, will not have the right to paid leave, sick leave, compensation, etc.
Differences between an employment contract and a civil contract
Let us consider the example of a civil law contract concluded in the form of a contract for the provision of services for a fee.
Terms and Conditions | Employment contract | Civil contract |
Reason for occurrence | It is the basis for the emergence of labor relations, which are regulated by labor legislation, mainly the Labor Code of the Republic of Kazakhstan. | It is the basis for the emergence of civil law relations, which are regulated by civil law legislation, mainly by the Civil Code of the Republic of Kazakhstan (in particular, Chapter 33 of the special part of the Civil Code of the Republic of Kazakhstan). |
The essence of relationships | The employee is obliged to perform work in a certain specialty, qualification or position, while obeying the internal labor regulations. The advantages are that the Labor Code of the Republic of Kazakhstan establishes the duration of working hours, weekends and holidays, as well as vacation. | The contractor under a civil law contract must perform specific work (in this case, provide a specific service) at his own risk. The advantage is that the contractor decides when it is best for him to perform his obligations under the contract. |
Ensuring the work is done | Labor legislation stipulates that the employer is obliged to provide the employee with the necessary working conditions, place of work, work tools, materials, etc. The employer is also obliged to ensure proper labor protection. | The contractor, initially, provides himself with everything necessary. The inclusion of a condition in a civil law contract on the customer's obligation to provide the contractor with a workplace, materials, etc. can only be by agreement of the parties. |
Payment for work | The employee receives a salary that cannot be lower than the minimum monthly salary established by the law of the Republic of Kazakhstan and must be paid regularly at least once a month and no later than the 10th day of each month following the reporting month. | Payment under a civil law contract can be of any amount (depending on the agreement of the parties) and is paid, as a rule, upon the provision of services. |
Labor discipline | The employee is obliged to comply with the rules of the work schedule (labor discipline). This provision is enshrined in Article 69 of the Labor Code of the Republic of Kazakhstan. | The contractor is not obliged to observe labor discipline. |
Guarantees and compensations | The employee has the right to rely on guarantees and compensation established by labor legislation in appropriate cases (for example, staff reduction, unused vacation, etc.). | The contractor cannot count on such guarantees and compensations. Except in cases where the condition of compensation or guarantee is included in the contract by agreement of the parties. |
Liability for breach of contract | For violation of the terms of the employment contract, the employee bears disciplinary and (or) material liability. The employer, in turn, bears material, administrative and other liability. | For violation of the terms of a civil contract, the parties bear civil liability, as provided in particular by civil legislation. |
Protection of violated rights | To restore their violated rights, an employee may contact the labor dispute commission, the state labor inspectorate, and the court. Workers also have the right to unite in trade unions to protect their rights, initiate collective labor dispute procedures, and declare a strike against their employer (Articles 12, 22, 298 of the Labor Code of the Republic of Kazakhstan). | To restore his rights, the performer can only apply to the court. |
Taxation | For an employee working under an employment contract, the employer is obliged to pay individual income tax, mandatory pension contributions, and also insure his civil liability in the event of harm to the life or health of the employee. | The customer of works or services under a civil law contract, if he is an individual, pays tax under Article 168 of the Tax Code of the Republic of Kazakhstan (income of an individual under civil law contracts concluded with a tax agent in accordance with the legislation of the Republic of Kazakhstan is subject to taxation). If the employer is a legal entity, then corporate income tax is paid (Articles 81 and 82 of the Tax Code of the Republic of Kazakhstan). |
Procedure for termination of the contract | An employment contract is terminated in cases stipulated by labor legislation - at the initiative of the employee, at the initiative of the employer, due to circumstances beyond the control of the parties, etc. | A civil law contract shall cease to be effective after:
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| Staffing schedule | The positions of employees hired under an employment contract are reflected in the staffing schedule. The employer must hire such employees, and not enter into civil law contracts with them. | Concluding a civil law contract with an contractor does not require making changes to the staffing schedule. |
| Compatibility | The law provides for restrictions on the total duration of working hours and on part-time work for certain types of work. | A contractor under a civil law contract may provide services to an unlimited number of customers. Work in another organization is not permitted if part-time work is expressly prohibited by law. |
| Licensing | Having a license is usually mandatory for the employer, but not for the employees themselves, who in certain cases must have certain qualifications. | In cases established by law, for licensed types of activities, the performer must have a license. |
Thus, we can come to the conclusion that each type of contract has its pros and cons. Only the parties can choose which of them to legalize their relations.