Choices for formalizing a business relationship between a Company and an individual in Belarus

Compliance with legal norms and managing lawful relations between a Company and an employee is a key to a successful business.

While searching for new employees, employers often ask how to formalize business relations with Belarusian or foreign nationals.

The most common forms of this relationship are based on the Civil Code—where a civil law agreement is executed between the parties—and on the basis of Labor Code, where the parties conclude an employment agreement.

Let’s consider each option separately:

A civil law agreement is a document where it is stated that one party undertakes to perform certain work according to the instructions of the other party, and the employer undertakes to accept the result of the work and pay for it accordingly.

A civil law agreement is one-off agreement and is used for the fulfillment of a specific amount of work or services.

Issues relating to civil law agreements are governed by the Civil Code of the Republic of Belarus.

Please note: The Company is subject to an administrative penalty for concluding a civil law agreement with an individual if this is done purely to substitute an employment agreement.

Because replacing labor relations with ones from civil legislation is prohibited, inviting foreigners to work in Belarus under a civil law agreement is not currently allowed. There are some exceptions specified in the legislation (for example: when a foreigner is invited to Belarus for a period not exceeding 90 days to give a course of lectures, to carry out the installation of equipment or to provide training services for personnel operating this equipment, etc.)

A labor or employment agreement is an agreement between an employee and the employer, according to which an employee undertakes to perform work in compliance with the staffing table, and an employer undertakes to provide the employee with the work stipulated in the employment agreement and ensure the conditions and remuneration in accordance with labor law. These agreements are governed by the Labor Code.

Labor relations can be established for an indefinite (i.e. permanent) period when the work is performed on a permanent basis. Such a relationship may also be terminal if the work is temporary.

A contract is one type of terminal agreement and is one of the most common forms of employment. It is important to note that, unlike other terminal labor agreements, a contract may be concluded to perform permanent work.

A contract is an employment agreement that is concluded for a specified period of time and contains special features compared to the general norms of labor legislation (according to the Decree of the President of the Republic of Belarus of July 26, 1999 No. 29 “On Additional Measures to Improve Labor Relations, Strengthen Labor and Performance discipline “).

The present article mentions three specific time frames: one-off, permanent, and temporary.

Questions about the difference between these is often raised. This is best illustrated through an example: a Company needs to develop and install software. The following situations are possible:

  1. The Company needs to develop, install, and support the software in the future. There is no engineer posi-tion on the list of staff members. The position should be included in the staffing table and the employee should be hired on the terms of a permanent employment agreement or contract.
  2. The Company only needs to develop and install the software without future support. The position of a software engineer is on the list of staff members, but this employee is taking a training course. A new em-ployee should be hired on the terms of a temporary labor agreement for the duration the other employee is absent.
  3.  The Company only needs to develop and install the software. There is no engineer position in the list of staff members. An employee could be hired on the terms of a temporary labor agreement for the time re-quired to perform this work, or he can be entrusted to execute this work by a civil law agreement as a one-time job. In this case, the employer is exempt from the need to perform several actions that are inherent to labor relations.

At the same time, the individual (the “contractor”) and the Company (the “client”) must keep in mind the following:

  • When the civil law agreement is signed, the activities of the contractor may be recognized as entrepreneur.
  • Services performed by an individual may be subject to licensing, following the list of activities for which special permits are required.

To avoid disputes in the future, the decision of which relationship structure to use should be based on a comprehensive analysis and understanding of the upcoming legal relations between the Company and the individual.

The detailed difference between civil law agreements, labor agreements, and, contracts is presented in this table.
It describes the features of each type of relationship and will help you navigate the pros and cons.

 

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* The article is for informational purposes only. For a complete understanding of labor and civil law, please contact the original sources or our experts. While preparing the article we were using and referencing to the following sources of information: the Labor Code of the Republic of Belarus, Decree No. 29, Decree No. 5, Civil Code of the Republic of Belarus, Decree No. 180, Decree No. 314, Instructions No. 40, Law No. 138-XIII, Provisions No. 530, and the Tax Code of the Republic of Belarus, Law of the Republic of Belarus “On External Labor Migration”
** Please consider that some amendments to articles of the Belarus Labor Code mentioned above will take effect starting from 2020.

Our expert

Alena Agafonova
HR-documentation specialist, Minsk
+375 / 17 / 290 25 57