Services
Contractor conversion in Russia
Move people in Russia from civil-law (ГПХ) contracts onto proper employment through EOR, and reduce the risk of reclassification under Article 19.1 of the Labor Code.
Figures reviewed by Görkem Tan, CPA, Gini Finance · Updated
- ТК РФ compliant path Local employment contracts framed under the Labor Code of the Russian Federation
- SFR & NDFL Social Fund contributions and personal income tax handled in the employment setup
- Secure data handling Employment data encrypted and handled under Gini Talent privacy practices
The risk
Many foreign companies pay people in Russia under civil-law (ГПХ) contracts while managing them like employees. Russian courts and the tax authority look at the substance of the relationship, and Article 19.1 of the Labor Code allows a civil-law contract to be recognised as employment. The result can be back-dated insurance contributions, NDFL corrections and claims from the person.
Signs the relationship looks like a job
- Fixed working hours set by your company
- Work for one client only, over many months
- Your laptop, accounts and email address
- A manager who assigns tasks and reviews the work
- A fixed monthly payment rather than payment per result
One sign alone does not decide it. Several together usually mean the person should be employed.
Conversion in practice
- Review. How the person works today: scope, exclusivity, tools and reporting line.
- Fit. Whether employment through EOR fits the activity and the payment route.
- Proposal. The monthly cost with salary, insurance contributions and the EOR fee apart.
- Cutover. The ГПХ contract ends on an agreed date and the employment contract starts the next day.
- Registration and first pay run. Tax and insurance registration, then pay at least twice a month.
What to prepare
- The current ГПХ contract and any amendments
- A short description of the work and who manages it
- Recent payments and how they were made
- The planned salary and start date
What conversion does not change
It corrects the relationship from the start date onward. Past periods are not automatically cleared; discuss them with your tax adviser before the cutover.
Questions companies ask
What is the risk of keeping people on civil-law (ГПХ) contracts?
If someone works like an employee — fixed hours, one client, your tools and your manager — the relationship can be reclassified as employment under Article 19.1 of the Labor Code. That can bring back-dated insurance contributions, NDFL corrections and claims from the person.
Does conversion clear past periods?
No. Conversion corrects the relationship from the start date onward. Discuss earlier periods with your tax adviser before the cutover.
Request an EOR proposal for your team in Russia
Tell us the role, headcount and start date. We review whether the engagement fits before we send a proposal.