Is it possible to work without an employment contract?
Labor law rules determine that the basis of labor relations is the execution of an employment contract between the parties. The provisions of legislative acts do not define the concept of informal employment.
But based on their content, it can be established that the type of relationship between the employer and the employee is when an employment contract is not signed between them, entries are not made in the work book, and wages are issued unofficially.
Therefore, an employee hired in this way is not considered an employee of the company, is not included in its payroll, contributions are not paid to him, and as a result, this period is not counted as part of the length of service that gives the right to receive a pension.
Current regulations stipulate that working with an employee without drawing up an employment contract is not allowed. This is a serious offense both on the part of the employer and on the part of the employee himself.
Important! If this fact is revealed, liability measures are applied to these entities. Therefore, working without an employment contract is prohibited by law. See how to officially hire an employee.
Advantages and disadvantages of hiring an employee without an employment contract for the employer
In most cases, the initiative for informal employment comes from the administration of the company or individual entrepreneur. This is due to the fact that this situation is most beneficial for the employer.
The following advantages of not concluding a formal employment contract with employees can be highlighted:
- An opportunity to save in such a situation on paying insurance premiums to the Pension Fund and social insurance. In case of unofficial registration. The employer does not make any contributions to salaries, so these funds remain with him. The savings in this situation amount to more than 30% of labor costs, which is a significant amount.
- There is no need to follow all the stages of hiring and dismissing an employee; therefore, time is reduced and the procedure for an individual’s hiring and dismissal is simplified. With such employment, an employee can be fired immediately for an unreasonable refusal to carry out an assignment.
- If there is a shortage of workers, the administration can attract existing employees without complying with the standard length of the working week, paying them remuneration based on an oral agreement, which is often less than the options established by law (for example, double pay for weekends).
- If a company experiences interruptions in operations, then in such a situation the company management does not pay for downtime, which also saves the company money.
- In the absence of official employees, the company does not keep personnel records, which allows the employer to reduce the composition of its reporting.
- With such employment, the employer has the opportunity not to fulfill social guarantees to the employee, which are defined in the Labor Code of the Russian Federation. Therefore, he may not pay for sick leave, vacations, etc. This also allows him to reduce his expenses.
In addition to the advantages of such employment, there are also negative aspects, which include:
- If an employee causes damage to the employer, he cannot be held liable; it implies the existence of a concluded agreement between the parties.
- There is always a risk that such relationships between the company and its employees will become known to the competent authorities, and working without an employment contract will become the responsibility of the employer in accordance with the law.
