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Legal support of labor relations and relations with individual entrepreneurs

We will help you to draft employment contracts that will fully comply with legal regulations and protect the interests of the company. Legarithm lawyers have significant experience in creating the most optimal systems of relationships with permanent employees and individual contractors.

Legal consultation on labor law

Does “hiring de jure independent contractors, but de facto employees” sound familiar? Most likely you have decided to hire independent contractors (registered as individual entrepreneurs in their country of residence) as developers for your company registered in the United Kingdom, Estonia, Delaware, California or any other jurisdiction subject to service agreements. Have you bypassed the system, got rid of a huge number of social guarantees that the state obliges you to provide to employees? Of course, yes, but at the same time are you sure that in the near future the local labor market supervisor will not ask you why there is only one employee of the company performing the role of director? We do not suggest you abandon your usual work models, but we recommend that you update them in a more thoughtful configuration by contacting experts.

In the EU, the most common is the definition of an employee according to the following characteristics, derived in the decision of the European Court of Justice:

  1. Execution of services
  2. A certain period of interaction
  3. Relationships of subordination, the presence of which is the most important part of the test
  4. Necessity of payment

In its turn, the state of California has established even more stringent requirements, enshrining the principle of reversal regulation, so, in accordance with the law active as of 01/01/2020, if the company cannot prove that an individual: 1.free from control by the employing entity in connection with the performance of work , both in accordance with the contract and de facto; 2. performs work that goes beyond the usual for the employing entity; 3. is attracted to independent activities of the same nature as the work performed – then there is a presumption of the existence of an employment relationship.

The rules regarding the separation of employees from independent contractors are tightening around the world and it is especially important always to be one step ahead so as not to become a subject of penalties from the authorities. Legarithm lawyers will help you with this issue, contact us via chat for advice.

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