The difference between a GPC agreement and a standard employment contract
Companies and individual entrepreneurs can employ individuals both under employment agreements and draw up a civil employment contract. At first glance, these agreements appear to be similar, but there are differences between them.
A business entity may enter into a civil law agreement with a specific person or group of persons. An employment contract is concluded only with a strictly defined one person.
Its difference from an employment agreement is that the parties are defined as the customer and the contractor. That is, the company acts as the customer, and the person involved is the contractor. These agreements are subject to civil legislation, but the Labor Code of the Russian Federation does not regulate them.
In this regard, it is more profitable for a business entity to enter into a contract or provision of services, because it gets the opportunity to save money on wages. And the position of an individual in these relations is much worse than in labor relations due to the lack of guarantees. For example, under a civil contract agreement, vacation is not provided for the employee.
However, entities need to carefully enter into civil contracts.
Indeed, if controversial situations arise, an individual can, through the court, re-qualify the concluded agreement as an employment contract. For example, a contract has been concluded for the provision of driver services for a month. Since the work is periodic in nature and does not imply a final result, this agreement can be translated into an employment contract. Attention: another difference between a civil contract and an employment contract is its focus on obtaining the final result, the description of which is written in its content.
Therefore, such an agreement is of a one-time nature. And standard employment contracts, as a rule, are concluded for an indefinite period, and they reflect not the result, but the action that the employee must perform. Thus, the GPC agreement is aimed at achieving a certain result. Its completion is recorded by an act of work performed or services rendered. This act must be signed by both parties - both the customer and the contractor. If there are any disagreements, they should be reflected in the act, but after that it must still be signed.
What is GPC?
This agreement is considered a legal transaction; it can also terminate certain rights, for example, those specified in the agreement establishing the rules for the provision of services. The contract itself is regulated by Art. 153, 154 and paragraph 1 of Art. 420 GK. It is concluded between an individual and a legal entity. It must define the relationships that will be associated with the final product of the activities of both parties; one of them acts as a performer, and the second as a customer.
The contract must comply with the rules of the Civil Code of the Russian Federation; it is not identical to the labor contract and has a number of subtleties that must be taken into account. The main feature of the GPC agreement is the ability to prescribe various requirements and points that do not violate the laws of the Russian Federation, as this is done, indicated in Art. 421 Civil Code.
Pros and cons of a civil law agreement with an individual
Currently, civil contracts with individuals are very popular among business entities. Let us consider in more detail the negative and positive aspects of such agreements.
Pros and cons for the employee
| pros | Minuses |
| The minimum package of documents for registration of this agreement is a passport, SNILS, INN. | A civil contract is not reflected in an individual’s work record book. |
| There is no strictly established daily routine; the performer independently determines how to work, the main thing is to meet the deadline for completing the work or providing the service. | The norms of the Labor Code of the Russian Federation do not apply to him, therefore an individual is not provided with sick leave, vacations, or the opportunity to receive additional payment on holidays and weekends. |
| These payments are still subject to deductions for compulsory types of insurance, so this period is included in the length of service. | If an individual decides to terminate such an agreement early, then he may be subject to penalties, penalties, as well as compensation for damages due to failure to comply with the terms of the civil agreement. |
| A contractor can find work even if he does not have the appropriate level of education; having professional skills is sufficient. | Possibility of exclusion when signing a contract for insurance of the performer against accidents. |
| The remuneration is paid immediately after the completion of the work or within the terms established by the contract. |
Pros and cons for the employer
There are the following positive and negative sides for the customer company when a GPC agreement is executed.
| pros | Minuses |
| The GPC agreement is aimed at a specific result, therefore it clearly defines the timing and scope of work that must be performed. | There is no possibility of monitoring the work during its implementation. The customer can only put forward requirements for the quality of the final result. |
| The customer is given the opportunity to use tools and materials belonging to the contractor for the agreed work. | When drawing up a civil contract, only civil liability is applied, and disciplinary measures against the contractor are excluded. |
| Reduce your expenses on mandatory payments to the budget (the GPC agreement does not include taxes on contributions to the Social Insurance Fund). | A civil contract with an individual can be reclassified as an employment agreement through the court, and this will entail an appropriate punishment for the company. |
| Reduced labor costs due to the absence of the need to fulfill social guarantees for individuals. | |
| Payment of remuneration under the contract is carried out immediately for the work performed, and is not obligatory periodic. | |
| Possibility to refuse reimbursement of additional expenses. | |
| No need to adhere to staffing schedule |
Main types of GPC
A GPC agreement can only be drawn up between a legal entity and an individual.
The following GPCs are distinguished:
| Type of GPC | Description |
| Work agreement | Here the parties are the customer (legal entity) and the contractor, who can be an individual. The responsibility of the second is to fully complete the tasks assigned to him, and the first is obliged to pay for the work performed. In addition, the contractor must provide a guarantee that the task will be completed on time and delivered on time. The contractor reserves the right to involve other persons in the work with whom the customer does not need to formalize a contract. The main condition is the completion of the assigned task within a clearly defined time frame. Based on the results of acceptance of the result, a special act is drawn up, which must be signed by all participants in the legal relationship. The amount of payment for work and the algorithm for performing actions are initially specified by the GPA. |
| Service agreement | The parties to the contract are also the contractor and the customer. The first one undertakes to carry out the work described in the document, and the second one undertakes to pay for the actions and results. The general provisions of the work contract also apply to this type; in fact, the transaction differs only in the type of activity of the contractor. |
| Author's order | In this case, the parties to the agreement are the author and the customer. The responsibility of the first becomes the creation of a work of literature, science, painting, etc., and the second is obliged to pay for the result if it fully meets the requirements of the task. In addition, the contract must include the deadline for delivering the result, the amount of work done and the payment algorithm for it. |
Any of the listed options is paid, so the customer is obliged to transfer the amount agreed upon by the parties upon completion of the actions. A distinctive feature of this type of legal relationship is the receipt of a finished result separately from the work.
Re-qualification of GPC agreements into employment contracts
Since a GPC agreement has many advantages for an employer compared to a labor agreement, they can enter into exactly this type of agreement with their employees. However, judicial authorities most often side with workers, forcibly converting civil agreements into labor agreements.
Several signs have been identified that can be used to determine that a GPC agreement is actually an employment agreement:
- If job descriptions have been established for the performer and he is familiar with them, this is an employment relationship;
- The contractor is obliged to comply with the customer’s rules of procedure, to begin and finish work at the time strictly designated by him;
- The contract states that wages are paid on a regular basis and specifies the specific days on which they are paid.
- The contract stipulates the obligation to pay insurance premiums - although this is an indirect sign, since contributions may be transferred to the contractor. In fact, this is considered in conjunction with the rest of the agreement.
- The work for which the GPC contract has been issued corresponds to the position on the staffing table. For example, if there is a seller of goods on the staffing table, then it is not advisable to draw up a GPC agreement with the sales manager.
Types of GPA
A GPC agreement can be concluded with an individual:
- Contract. The parties are the customer and the contractor. The customer gives the contractor a task, the result of which he undertakes to accept and pay for at the cost established in the agreement. The contractor guarantees the completion and delivery of the task within the framework of the contract within a certain period. At the same time, it is permissible to involve other persons (subcontractors), the only important thing is compliance with deadlines and the quality of the work performed.
The result of acceptance of the work is an act signed by both parties. The amount and procedure for payment must be strictly specified in the GPA.
- For the provision of services . Parties to the contract are the customer and the contractor. The contractor is obliged to provide services in accordance with the terms of the agreement, and the customer is obliged to pay for them. All general provisions that are valid for a contract are applicable to such an agreement.
- Author's order. The author, on the one hand, and the customer, on the other, enter into an agreement that the author agrees to create a work of art, literature, science, etc. and transfer it to the ownership of the customer. The customer is obliged to accept it and pay. The agreement stipulates the deadline for delivery, the amount and procedure for payment.
In each case, the contract is of a compensatory nature, i.e. an individual receives remuneration for work or services. The difference from other types of contractual relationships is that the contractor receives a result that is separate from the work itself.
What should a GPC agreement contain?
When drawing up this agreement, it is necessary to exclude from it any concepts used in the Labor Code. Also, the words “Salary”, “Vacation”, “Employee”, “Employer” and the like should not be used anywhere in the text of the document.
Preamble to the treaty
In this part of the contract, you need to describe each party to the agreement - who exactly is the contractor and who is the customer. It is also necessary to indicate here the persons who have the right to make decisions on behalf of each party. If a company acts as one party, its name is written down in full.
Before the agreement is signed, it is better for each party to request documents from the other - a power of attorney to perform actions, an extract from the Unified State Register of Legal Entities. With their help, you can determine whether the power of attorney is still valid, whether the company and its director are still valid, etc.
Subject of the agreement
The subject of the contract is the performance of any specific work or provision of services. The agreement must indicate that the work must be performed on the instructions of the customer, and the final result will be his property.
Attention: if one of these points is not specified, then such a GPC agreement is re-qualified as a purchase and sale (when the customer does not indicate a specific list of works), or a contract for the provision of paid services (if there is no result of the work and it is not transferred to the customer).
As a rule, as a result of a contract, the customer receives something. Therefore, it is necessary to describe the final result in detail.
There may also be a situation where the purpose of the contract is not to create a new product, but to carry out work on an existing one (for example, repairing a building). Then the original item is described here, as well as the work that needs to be done.
Deadline
This section is one of the essential ones when concluding an agreement. If the deadline is not established, the contract cannot be considered concluded.
The parties must determine the following terms and fix them in the contract:
- Work start day;
- Day of completion of work;
- Deadlines for completing intermediate stages - if the amount of work is significant, then stage-by-stage delivery of results can be established.
Each of these dates can be defined as follows:
- Specific date - i.e. the exact day and month in which work must begin and be completed.
- Specific event - the beginning and completion of work is determined by the occurrence of an event;
- Completion period - work or services must be provided within a certain period of time. Their start date can be set either by a date or by some event.
Quality of work
Since the conclusion of a contract implies that work will be carried out to create a new thing or change an existing one, the contract must include the parameters that the final result should have, or what functions it should perform.
This section also includes information about the warranty period, during which the customer has the right to put forward demands on the contractor for the quality of work, and the contractor has the right to correct identified deficiencies free of charge.
Attention: it is also necessary to establish a procedure for correcting defects. For example, a period is specified here during which the contractor must eliminate the identified deficiencies. Or the customer can correct the defects at his own expense, but the contractor is obliged to compensate for all costs incurred.
In the same paragraph it is possible to indicate the actions that the customer has the right to take if the contractor does not correct the deficiencies on time.
Work order
This section records the customer's requirements for the work procedure. This is expressed in the indication of regulatory documents, GOSTs and similar acts. If the ordered work is unique, then you can fully indicate the entire process of its execution.
One of the important conditions is who will provide equipment or materials for the work. If all this is provided by the customer, then it is necessary to indicate the procedure for their transfer, return, and the responsibility of the contractor for their loss or damage.
If the customer is against involving subcontractors in the work, then a prohibition must be indicated. Or you can specify a specific list of who can be invited.
Cost of work
The price for performing work or services can be set as a fixed amount, a tariff based on the time the work is completed or by volume, or a final estimate. It is necessary to indicate whether this contract price includes the contractor’s expenses for the purchase of materials, transportation services, and any other costs.
If VAT is used in the calculations, then it must be immediately included in the cost of the work, highlighting the amount of the tax in a separate line.
Payment procedure for work
In this section it is necessary to indicate exactly how the customer will pay for the work performed (cash or in kind), as well as in cash or by bank transfer. When making non-cash payments, it is recommended to indicate the event at the moment of which the payment is considered completed - when funds are written off from the customer’s account, or when funds are credited to the contractor’s account.
This paragraph may also indicate the condition for making an advance payment. Then it is necessary to indicate the deadline for its payment and amount, as well as in what period of time the final payment is made.
Attention: payment may be provided for each stage of work completed. Then it is necessary to determine these stages, as well as the amount and timing of payment.
Acceptance of work results
In this section, it is necessary to describe in detail the procedure according to which the contractor will transfer the work and the customer will accept it. It is possible to establish a condition under which third-party specialists will be involved to determine the quality of work.
In this section, it is advisable to describe the following points:
- How exactly the contractor will notify about the completion of work;
- How long does it take for the customer to accept the result?
- Who is responsible for damage to the result before the acceptance procedure;
- Where will the delivery and acceptance of the result take place?
- How long does it take to assess the quality of performance?
- Does the contractor have the right to sell the result of the work to third parties if the customer does not accept it?
Responsibility of the parties
In this section it is necessary to introduce penalties that will be applied to the customer or contractor if he violates the provisions of the agreement. Most often, the punishment is written here for the fact that the customer does not pay for the accepted work on time, or if the contractor does not complete the necessary work on time.
It is recommended to indicate the amount of the fine for each violation, and you can indicate it as a percentage of the contract amount, or as a fixed amount.
Change and termination of the agreement
In this section it is necessary to write down the conditions on the basis of which it is possible to change the terms of the agreement or terminate it. This section can include the possibility of unilateral termination of the agreement if one of the conditions is violated. A list of such conditions must also be indicated in the section.
Dispute Resolution
This section sets out how the parties will resolve claims arising against each other - through litigation or through an exchange of claims. If the second method is chosen, then until the necessary exchange of claims has been made, it will not be possible to transfer the case to court.
Also, it is necessary to describe in detail the procedure for submitting claims and responding to them. If you indicate that the dispute is being resolved through court, then you need to indicate its location or name.
Final provisions
In this section, it is necessary to specify the period of validity of the agreement, as well as by what means legally significant messages are exchanged.
Comments on the document “Agreement for the provision of legal services-2”
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In what cases can a civil law contract be reclassified as an employment contract?
A civil law contract can be forcibly reclassified as an employment contract if:
- The text of the contract includes conditions characteristic of labor relations or indicating them (provisions on regular wages, vacation, social guarantees, sick pay, personal performance of work, work schedule and subordination to labor regulations, information about position, specialty, profession, etc. .);
- the implementation of work under a civil law contract is permanent and not one-time in nature;
- there is no document confirming the fact of performance of work under a civil contract (if its execution is mandatory as required by law);
- the contract was renegotiated several times after its expiration;
- remuneration is paid on the same basis as full-time employees, according to the tariff schedule, at least twice a month.
