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SOCIAL AND LABOUR RIGHTS OF "NEW" SELF-EMPLOYED PERSONS (AND IN PARTICULAR SELF-EMPLOYED PLATFORM WORKERS)
IN RUSSIA
OLGA CHESALINA, Max Planck Institute for Social Law and Social Policy (Munich, Germany)
https://doi.org/10.17589/2309-8678-2020-8-2-49-78
In the first part of the article, the business model of "work on demand" in Russia is described, and the nature and functions of platform providers with particular reference to labour disputes concerning the classification of platform workers are analysed. Furthermore, the author discusses options concerning the labour protection of platform workers. Taking into account that workers on demand are classified as self-employed in case law and in practice, the second part of this article reflects implications for tax and social law. Particular attention is paid to the tax holidays of2017-2019 and the tax on professional income. Hereby the access to social protection for self-employed persons in general, and for those self-employed who use privileged tax regimes in particular, is analysed. In the light of these reflections, the false incentives of the tax on professional income are investigated. Finally, some conclusions are offered, to explain the interrelationship between labour, social and tax law. Coordination of legislative measures and reforms in labour law, in social law and in tax law is seen as a way to improve the situation of workers on demand.
Keywords: platform work; work on demand; freelancer; special tax regimes; employment classification; informal work; social protection of self-employed persons.
Recommended citation: Olga Chesalina, Social and Labour Rights of "New"Self-Employed Persons (and in Particular Self-Employed Platform Workers) in Russia, 8(2) Russian Law Journal 49-78 (2019).
Table of Contents
Introduction
1. Platform Work in Russia: Implications for Labour Law
1.1. Business Model of "Work on Demand" in Russia
1.2. Labour Disputes Concerning the Classification of Platform Workers
1.3. Classification of Activity of Platform Providers
1.4. Options Concerning the Labour Protection of Platform Workers
2. Platform Work as Self-Employed Activity: Implications for Tax and Social Law
2.1. Between Combating Informal Work and Addressing the "New" Self-Employment
2.2. Digression: Social Protection of Self-Employed Persons in Russia
2.3. Special Tax Regimes
2.3.1. Tax Holidays of 2017-2019
2.3.2. Tax on Professional Income
2.3.2.1. Access to social Protection for Payers of the Tax on Professional income
2.3.2.2. False incentives of the tax on Professional income Conclusion: Interrelationship Between Labour, Social and Tax Law
Introduction
Platform work, as an expression of the platform economy, is exercised mainly in the form of crowdwork and work on demand via apps.' Crowdwork is a new form of employment that
uses an online platform to enable organisations or individuals to access an indefinite and unknown group of other organisations or individuals to solve specific problems or to provide specific services or products in exchange for payment.2
in the case of work on demand via apps, the execution of specific services, such as transport, cleaning and running errands etc. is offered to an indefinite number
' Valerio de Stefano, The Rise of the "Just-in-Time Workforce": On-Demand Work, Crowd Work and Labour Protection in the "Gig-Economy," International Labour Office, Conditions of Work and Employment Series No. 7' (2016) (Apr. 23, 2020), available at https://www.ilo.org/wcmsp5/groups/public/---ed_ protect/—protrav/---travail/documents/publication/wcms_443267.pdf.
2 Crowd Employment, Eurofound (Apr. 23, 2020), available at https://www.eurofound.europa.eu/ observatories/eurwork/industrial-relations-dictionary/crowd-employment.
of individuals through apps.3 This work is managed online and carried out offline, usually in terms of manual work, requiring task-specific skills. This article is devoted mainly to work on demand.
information from the platforms' internet sites operating in Russia, and publications related to this topic provide evidence that the number of platform workers and digital labour platforms are growing rapidly. For example, the number of persons registered within the platform "YouDo," which mediates different services online and offline - e.g. courier services, home repair, trucking, design, web development, legal assistance, and so on - has increased from about 1,000 in 20134 to 1,500,000 in 2020.5 Russia seems to be one of the largest providers of digital labour and talents for U.S. employers.6
Nevertheless, at the moment the main legislative focus lies not on the regulation of social and labour guarantees for platform workers, but on the electronic workflow and the digital signature.7 in December 2019, an article concerning electronic labour books (Art. 66.1) was added to the Labour Code of the Russia n Federation (herei nafter the LC).8 Until now, no official or other statistical data or comprehensive studies on digital labour platforms in Russia are available. There are only some publications concerning some characteristics of electronically mediated self-employment. For example, according to the studies of Shevchuk and Strebkov, what is typical for electronically mediated self-employment is a high level of education among those who provide it, as well as the fact that they carry out such activity as a side job.9 There
3 De Stefano, supra note 1.
4 СувороваН. Время фрилансеров: как новые сервисы меняют рынок труда // РБК. 5 апреля 2016 г. [Natalya Suvorova, Time of Freelancers: How New Services Change the Labour Market, RBC, 5 April 2016] (Apr. 23, 2020), available at http://www.rbc.ru/magazine/2016/04/56ead0539a79474e4031fc91.
5 You Do Home Page (Apr. 23, 2020), available at https://youdo.com.
6 John Horton et al., Digital Labor Markets and Global Talent Flows, Harvard Business School Working Paper 17-096 (2017) (Apr. 23, 2020), available at https://www.hbs.edu/faculty/Publication%20Files/17-096_813abb74-09c5-4ea6-989f-5ef03b2d7f31.pdf.
7 В Государственной Думе обсудили развитие цифровой экономики // Государственная Дума.
8 июля 2019 г. [The Development of the Digital Economy Was Discussed in the State Duma, The State Duma, 8 July 2019] (Apr. 23, 2020), available at http://duma.gov.ru/news/45599/; Olga Chesalina, Digital Platform Work in the Russian Federation, 33(1) Zeitschrift für ausländisches und internationales Arbeits- und Sozialrecht 18, 18 (2019).
8 Федеральный закон от 16 декабря 2019 г. 439-ФЗ «О внесении изменений в Трудовой кодекс Российской Федерации в части формирования сведений о трудовой деятельности в электронном виде» // Собрание законодательства РФ. 2019. № 51 (ч. 1). Ст. 7491 [Federal Law No. 439-FZ of 16 December 2019. On the Amendments to the Labour Code of the Russian Federation Regarding the Generation of information on Labour Activity in Electronic Form, Legislation Bulletin of the Russian Federation, 2019, No. 51 (Part 1), Art. 7491].
9 Andrey Shevchuk & Denis Strebkov, Entrepreneurial Potential in the Digital Freelance Economy: Evidence from the Russian-Language Internet in Entrepreneurship in Transition Economies 403 (A. Sauka & A. Chepu-renko (eds.), Berlin: Springer, 2017).
are no comprehensive studies (and only very fragmented information10) concerning the demographic (e.g. share of migrants or of women among platform workers) and other characteristics of platform workers (their motivation, amount of remuneration, combination of platform work with other employment activities, access to social protection) that show how algorithms and ratings work and whether any algorithmic discrimination occurs.
Yandex appears to be a dominant player in the field of services on demand with "Yandex.Taxi" in the field of transportation services11 and "Yandex.Eda" (subsidiary of Yandex.Taxi) in the field of food deliveries. As of January 2020, Yandex.Eda provided services in 31 cities of Russia and collaborated with more than 14,000 restaurants, processing more than a million orders a month.12 Uber entered the Russian market in 2013 and, in 2017, merged with Yandex.Taxi. A majority stake in the new joint firm (59 percent) is owned by Yandex.Taxi.13 At the end of 2018, Yandex.Taxi provided services in 18 countries and more than 300 cities. in July 2017, an agreement was signed between Yandex and Uber to merge the online taxi booking business in Russia, Belarus, Georgia, Armenia and Kazakhstan; 53.9 percent of the shares in the new enterprise belong to Yandex.14
1. Platform Work in Russia: Implications for Labour Law
1.1. Business Model of "Work on Demand" in Russia
Similar to other countries, Yandex and also other platforms (in Russian terminology -aggregator) pretend to be only an intermediary and a marketplace. While many platforms have a triangular structure (platform - client - worker on demand), Yandex. Taxi, or Yandex.Eda respectively, have adopted a "quadrilateral" structure; hereby, not every one of these four relationships is contractually regulated. Four-sided structures are not unique in the field of work on demand, e.g. Uber collaborates with drivers'
10 See Klemens Witte, Self-Exploitation or Working Time Autonomy? Yandex Taxi Drivers in Moscow, Expert Comment, Dialogue of Civilizations Research Institute (2018) (Apr. 23, 2020), available at https:// doc-research.org/wp-content/uploads/2018/10/Yandex-Taxi-drivers-in-Moscow_Download-file.pdf; Барышева А. «Для меня самое страшное - когда открывают дверь в белье»: как работают курьеры доставки еды // Москвич Mag. 18 марта 2019 г. [Anastasia Barysheva, "For Me, the Worst Thing Is When They Open the Door in Underwear": How Food Delivery Couriers Work, Moskvich Mag, 18 March 2019] (Apr. 23, 2020), available at https://moskvichmag.ru/gorod/dlya-menya-samoe-strashnoe-kogda-otkryvayut-dver-v-bele-kak-rabotayut-kurery-dostavki-edy/.
11 Max Seddon, Russian Ride Hailing Apps Power Up, Financial Times, 4 December 2017 (Apr. 23, 2020), available at https://www.ft.com/content/52e4db96-d678-11e7-8c9a-d9c0a5c8d5c9.
12 Болдов М. «Яндекс» // Открытие Брокер. 6 сентября 2019 г. [Mihail Boldov, "Yandex," Otkrytie Broker, 6 September 2019] (Apr. 23, 2020), available at https://journal.open-broker.ru/visit-card/yandeks/.
13 David Reid, Uber Takes Back Seat in Russia as Merger Approved, CNBC, 24 November 2017 (Apr. 23, 2020), available at https://www.cnbc.com/2017/11/24/uber-and-yandex-taxi-merger-gets-legal-approval-in-russia.html.
14 Boldov, supra note 12.
cooperative societies that employ the drivers (without own cars) themselves;15 the business structure of the delivery platform"Glovo" in Serbia is five-sided and involves -apart from clients - the platform, restaurants and other stores as partners, couriers, and a private employment agency which assigns couriers.16
Let us look in detail into the structure of Yandex.Taxi:
- The "Terms of Use of Yandex.Taxi" regulate the relationship between the platform and the user (the client), and not between the platform and the driver. The Terms of Use regulate that the service (the platform) offers the user an opportunity to place for free the information about his or her potential demand for services of transportation by taxi - or other services - and offers the opportunity to get information on offers of organisations providing the relevant services (hereinafter service partners or taxi services) and to search for such offers according to the parameters specified by the user;17
- in this structure, the taxi service companies are partners of the platform. However, they are not a taxi company in the literal sense, but organisations or individual entrepreneurs that provide transportation services among other activities like car repairs, car rentals, or information services. Between the partner and Yandex.Taxi, an agreement on the provision of access to the information service is concluded;18
- Between the partner and the driver, a car rental contract, a car sub-rental contract or a contract for paid services of vehicle driving is concluded. in Russia, drivers "on demand" in most cases do not even have their own vehicle. in other countries, the ownership of a car by Uber drivers indicates their economic independence.19 in Russia, in many cases the drivers only rent their car for working purposes, which causes high pressure to work more hours and to do more rides to make a profit.20 Drivers are de facto self-employed persons.
There are also no employment relationships in the case of food couriers; mostly a contract on the provision of services is concluded between the partner (delivery service) and the courier.21
Antonio Loffredo & Marco Tufo, Digital Work in the Transport Sector: In Search of the Employer, 12(2) Work Organisation, Labour & Globalisation (Digital Economy and Law) 23, 24 (2018).
This structure was discussed during the Reshaping Work Conference in Novi Sad (27-28 February 2020). The program is available at https://novisad.reshapingwork.net/program/.
Условия использования сервиса Яндекс.Такси [Terms of Use of Yandex.Taxi] (Apr. 23, 2020), available at https://yandex.ru/legal/taxi_termsofuse/.
Cf. Апелляционное определение Московского городского суда от 4 апреля 2019 г. по делу № 33-4939/19 [Appeal Ruling of the Moscow City Court of 4 April 2019 in case No. 33-4939/19].
Guy Davidov, The Status of Uber Drivers: A Purposive Approach, 6(1-2) Spanish Labour Law and Employment Relations Journal 6, 13 (2017).
Witte, supra note 10.
Рипа В. На кого на самом деле работают курьеры «Яндекс.Еды» и Delivery Club // vc.ru. 13 августа 2019 г. [Victoria Ripa, Who Yandex.Eda and Delivery Club Couriers Actually Work For, vc.ru, 13 August 2019] (Apr. 23, 2020), available at https://vc.ru/food/78214-na-kogo-na-samom-dele-rabotayut-kurery-yandeks-edy-i-delivery-club.
16
20
1.2. Labour Disputes Concerning the Classification of Platform Workers
Similar to other countries, also in Russia first legal disputes have arisen concerning the recognition of an employment relationship with drivers "on demand." The Russian peculiarity is that the claims are addressed not directly to the platform, but to the partners. The first decisions of national courts concerning the classification of platform workers for labour and social law purposes have been controversial. Whereas in many cases, for example in the case of Deliveroo riders in Spain22 or Uber drivers in France,23 their employee status has been recognised, in other cases platform workers have been classified as self-employed persons, for example in the case of Foodora and Glovo couriers in italy.24 in Russia, in all existing labour disputes courts25 dismissed claims concerning the existence of an employment relationship between the driver and the partner.
in one case, the driver claimed the existence of an employment relationship, payment of salary arrears, and non-pecuniary compensation. in this case, a contract for paid and professional services of vehicle driving for one year was concluded between the driver and the LLC "Argon-invest."The driver was logged in to the mobile applications of "Yandex.Taxi,""Gett Taxi" and "Uber."The driver was obliged to provide driving services on behalf of the company to persons who hailed rides through the mobile applications, work a certain number of hours per day and at least six shifts per week. The LLC "Argon-invest" was obliged to pay for the services, as well as an additional 30 percent if the driver had fulfilled his daily norm of working hours. The court denied the existence of an employment relationship between the driver and the principal, because it was not an employment contract but a contract on the provision of driving services that had been concluded; the driver was not given
22 Cf. Ruling of the 6th Social Court of Barcelona of 1 June 2018 in Alberto Barrio, Dispatch No. 20 - Spain -"Contradictory Decisions on the Employment Status of Platform Workers in Spain," Comparative Labor Law & Policy Journal (January 2020) (Apr. 23, 2020), available at https://cllpj.law.illinois.edu/dispatches.
23 Ruling of the Court of Cassation No. 374 FP-P+B+R+i of 4 March 2020 (Apr. 23, 2020), available at https://www.courdecassation.fr/iMG/20200304_arret_uber_english.pdf.
24 Ruling No. 26 of 4 February 2019, which partially reformed the judgment of the Court of First instance No. 778 of 11 April 2018 concerning Foodora riders, cf. Foodora Riders, Comment by Atty Marco Paoletti on the Judgment of the Court of Appeal ofTurin, ichino Brugnatelli, 11 February 2019 (Apr. 23, 2020), available at https://ichinobrugnatelli.it/en/foodora-riders-comment-by-atty-marco-paoletti-on-the-judgment-of-the-court-of-appeal-of-turin/; the ruling is available at http://www.lavorosi. it/fileadmin/user_upload/GiURiSPRUDENZA_2019/CdA_Torino-sent.-n.-26-2019.pdf; Judgment No. 1853 of 10 September 2018 concerning Glovo delivery couriers, cf. Antonio Aloisi, Dispatch No. 13 -Italy - "'With Great Power Comes Virtual Freedom': A Review of the First Italian Case Holding That (Food-Delivery) Platform Workers Are Not Employees," Comparative Labor Law & Policy Journal, 3 December 2018 (Apr. 23, 2020), available at https://cllpj.law.illinois.edu/dispatches; the ruling is available at https://cllpj.law.illinois.edu/dispatches.
25 it is to mention in this context that in Russia there are no labour courts. Labour disputes belong to the competence of ordinary courts.
orders to perform labour duties by the principal; the driver did not present enough proof of the existence of an employment relationship.26
in another case, the driver also lost his claim concerning the existence of an employment relationship. He had applied for a job offered by "Yandex.Taxi" and had been invited to an interview. As it turned out, no employment contract but a car rental contract with the company LLC "Spectr" was concluded. The driver got a car for his work and was informed about his work schedule (which was two days of work from 6 a.m. until 10 p.m., followed by two days of rest) and the amount of his remuneration. He was registered within the mobile application "Yandex.Taxi." Despite the fact that, according to the documents, the main activity of LLC "Spectr" is transportation services, maintenance and repair of vehicles, courier activities, rental and leasing of cars, the court came to the result that "Yandex.Taxi" and LLC "Spectr" provided only information services aimed at facilitating the matching of clients (passengers) and drivers, as well as assistance in connecting clients and drivers through the application "Yandex.Taxi." in the courts opinion, the fact that the driver used a car with the logo "Yandex.Taxi" did not indicate that he executed a labour function in accordance with an employment contract.27
Despite the fact that the Supreme Court of the Russian Federation in its Resolution of the Plenum of the Supreme Court of the Russian Federation28 refers to iLO Recommendation 198 of 15 June 2006 on Employment Relationships (para. 17 of the Resolution) and requires that the whole factual situation be taken into account (para. 17 of the Resolution),29 ordinary courts of lower instances often do not follow this approach and base their decisions on formal documentation30 concerning the existence of an employment relationship.
26 Апелляционное определение Московского городского суда от 12 апреля 2018 г. по делу № 3315213/2018 [Appeal Ruling of the Moscow City Court of 12 April 2018 in case No. 33-15213/2018].
27 Решение Ленинского районного суда г. Кирова от 6 декабря 2017 г. по делу № 2-4168/2017 [Ruling of the Leninsky District Court of Kirov of 6 December 2017 in case No. 2-4168/2017].
28 Постановление Пленума Верховного Суда Российской Федерации от 29 мая 2018 г. № 15 «О применении судами законодательства, регулирующего труд работников, работающих у работодателей - физических лиц и у работодателей - субъектов малого предпринимательства, которые отнесены к микропредприятиям» // Бюллетень Верховного Суда РФ. 2018. № 7 [Resolution of the Plenum of the Supreme Court of the Russian Federation No. 15 of 29 May 2018. On the Application of the Legislation Regulating the Labour of Workers Who Are Employed by Micro Enterprises - Individuals and Legal Entities -, by Courts, 7 Bulletin of the Supreme Court of the Russian Federation (2018)], para. 13.
29 The same requirement is laid down in the Decisions of the Constitutional Court of the Russian Federation of 19 May 2009 No. 597-О-О and of 17 February 2015 No. 237-О.
30 БережновA.A. Признаки трудовых отношений: некоторые теоретические и практические моменты // Трудовое право в России и за рубежом. 2019. № 3. С. 3-6 [Andrey A. Berezhnov, Attributes of Labour Relations: Some Theoretical and Practical Aspects, 3 Labour Law in Russia and Abroad 3 (2019)].
1.3. Classification of Activity of Platform Providers
As shown, courts in labour disputes consider the activity of platforms as an information service. Though the ruling of the Court of Justice of the European Union in the UberSpain case31 did not concern labour issues, the judges of the Employment Appeal Tribunal in the UK reflected in their decision concerning Uber drivers of 10 November 2017 the approach of the Court of Justice that Uber was more than just an intermediary.32 it seems that in Russia, this approach was overcome only in civil disputes concerning the compensation for harm to life and health in connection with the activity of platforms and this activity is seen as an activity in terms of a provision of transportation services. it would be desirable if this approach was adopted also in labour law.
Previously, in the event of a car accident with a client who had hailed a ride using a mobile application, in most cases only the driver (and in some cases also the partner) was held responsible for the compensation for harm to the life or health of the clients. in the recent Resolution, the Supreme Court of the Russian Federation33 has overruled such approach and defined the criterion for the responsibility in the field of passenger transportation, which has also been applied also to the platforms: The person whom the client is contacting for the conclusion of a contract for transportation of passengers and luggage, is responsible for the damage during the transportation if she or he has concluded a contract on his or her own behalf or from the circumstances of a contract conclusion (e.g. advertising, information on the internet, correspondence of parties), a bone fide customer could get the impression that he or she has concluded a contract directly with this person, and the actual carrier (the driver) is his or her employee or a third person, involved in the performance of the obligations for transportation (para. 3 of Art. 307, Art. 403 of the Civil Code of the Russian Federation (hereinafter the CC); Arts. 8, 9 of the Law of the Russian Federation of 7 February 1992 No. 2300-1). Currently, it seems that a uniform case law of lower courts in this category of civil disputes is being formed.34 in all analysed disputes, the courts hold that by offering taxi services and
31 Judgment of the Court of Justice of the European Union of 20 December 2017 in case C-434/15, ECLI:EU:C:2017:981.
32 Laetitia Cooke, 2018/9 Uber's Work Status Appeal Rejected (UK), 3(1) European Employment Law Cases 41, 44 (2018).
33 Постановление Пленума Верховного Суда Российской Федерации от 26 июня 2018 г. № 26 «О некоторых вопросах применения законодательства о договоре перевозки автомобильным транспортом грузов, пассажиров и багажа и о договоре транспортной экспедиции» // Бюллетень Верховного Суда РФ. 2018. № 8 [Resolution of the Plenum of the Supreme Court of the Russian Federation No. 26 of 26 June 2018. On Some Issues of the Application of the Legislation on the Contract for the Carriage of Goods, Passengers and Baggage by Road and on the Contract of Transport Expedition, 8 Bulletin of the Supreme Court of the Russian Federation (2018)].
34 Решение Ленинского районнога суда г. Оренбурга от 26 июля 2019 г. по делу № 2-4007/2019 [Ruling of the Leninsky District Court of Orenburg in case No. 2-4007/2019]; Апелляционное определение Московского городского суда от 4 апреля 2019 г. по делу № 33-4939/19 [Appeal Ruling of the
accepting orders from clients, Yandex.Taxi acts on its own behalf, which is evidenced by the respective text message sent by this company to the clients' mobile phones, giving information about the fee for the ride, about the driver and the vehicle.
Yandex.Taxi has insured all rides from 1 January 2017. According to the information on the Yandex.Taxi website, in case of a car accident during transportation the client and the driver can claim damages for harm caused to life and health. The maximum amount of compensation is 2 million roubles.35 if Yandex.Taxi, in fact, provide only information services, there is no reason to conclude such contracts. On the other hand, if all rides are insured, it is not clear why an insurance company is not involved as a third person in disputes concerning the compensation of damages in relation to harm caused to health.
There are a lot of factors that indicate that Yandex.Taxi and other platforms exercise some employer functions:
- Couriers and drivers are invited for interviews and asked for driving licences and other documents on behalf of the platform, which is comparable to a job application procedure;
- Platforms unilaterally set prices for the respective ride36 or delivery, as well as bonuses, which is comparable to the piecework and rewards system;
- The subordination element is manifested in different ways: drivers are kept uninformed about the trip destination before the beginning of the ride;37 the platform determines who will get orders;38 earnings of workers on demand depend on their ratings; the location of workers on demand is controlled via the use of GPs;
- Platforms can deactivate the mobile application and block access to it, which resembles dismissal.
Moscow City Court of 4 April 2019 in case No. 33-4939/19]; Апелляционное определение Омского областного суда от 15 января 2020 г. по делу № 2-2783/2019 [Appeal Ruling of the Omsk Regional Court of 15 January 2020 in case No. 2-2783/2019].
35 Ride Insurance, Yandex (Apr. 23, 2020), available at https://yandex.ru/support/taxi/insurance.html.
36 Табунов M. В Новосибирске бастуют водители «Яндекс.Такси» // РБК. 27 апреля 2018 г. [Maxim Tabunov, Drivers of"Yandex.Taxi" on Strike in Novosibirsk, RBC, 27 April 2018] (Apr. 23, 2020), available at https://nsk.rbc.ru/nsk/27/04/2018/5ae1612c9a79477223272663.
37 Турковская О. Забастовка вышла на следующий уровень: водители «Яндекс.Такси» требуют от клиентов отказываться от заказов // УЛПРЕССА. 28 января 2018 г. [Olga Turkovskaya, Strike Has Reached the Next Level: Drivers of "Yandex.Taxi" Require Customers to Withdraw from Orders, Ulpressa, 28 January 2018] (Apr. 23, 2020), available at https://ulpressa.ru/2018/01/28/zabastovka-vyishla-na-sleduyushhiy-uroven-voditeli-yandeks-taksi-trebuyut-ot-klientov-otkazyivatsya-ot-zakazov/; «Яндекс.Такси» считает, что бастующие водители в Ульяновске не правы // Аргументы и факты в Ульяновске. 23 января 2018 г. ["Yandex.Taxi" Believes That Striking Drivers in Ulyanovsk Are Not Right, AIF, 23 January 2018] (Apr. 23, 2020), available at http://www.ul.aif.ru/society/yandeks_taksi_ schitaet_chto_bastuyushchie_voditeli_v_ulyanovske_ne_pravy. Cf. Jeremias Prassl, Humans as a Service 55 (Oxford: Oxford University Press, 2018).
38 ЖирновА., Крайт В. Бойкот «Яндекс.Такси» // Телеканал 360°. 10 апреля 2018 г. [Alexander Zhirnov & Victoria Krait, Boycott of "Yandex.Taxi," 360TV, 10 April 2018] (Apr. 23, 2020), available at https://360tv. ru/news/tekst/taxi/.
The partner fulfils some employer duties, e.g. installing the mobile application on the mobile phone of the driver or courier, sometimes even setting up a timetable. Until April 2019, a courier had to contact his or her supervisor (from the partner company) and wait for permission from him or her in order to be able to take a break. Only after one of the couriers of Yandex.Eda had died in April 2019 after a 10-hour shift,39 new regulations were introduced, and now it is enough to click the "pause" button in the application to take a break.40 Some couriers mentioned that they were ordered to stay close to a restaurant while waiting for an order.41
Courts do not analyse a set of relationships (between the platform and the partner, between the platform and the driver, between the driver and the partner) but only a singular bilateral relationship between the partner and the driver. Due to the formal approach of the courts, both the platform and the partner company used to be able to escape tax, labour and social insurance responsibilities. if the driver does not register as an individual entrepreneur, it will lead to his or her liability in accordance with Articles 14.1 and 14.1.2 of the Code of Administrative Offences of the Russian Federation (carrying out an entrepreneurial activity without registration and without licence for transport services).
1.4. Options Concerning the Labour Protection of Platform Workers
Unlike in many other countries, in Russia the discussion concerning the classification of platform workers and labour guarantees for the latter is still in its infancy. There are only few proposals in the literature. For example, Lyutov underscores that scholars have to elaborate new approaches concerning the notion of"employment relationship" and the notion of"employment contract" that take into account the change of emphasis from the fact of the subordination of the employee in relation to the employer, to the fact of the economic dependence of a person irrespective of the form gainful activity.42 Another proposal is to raise the level of protection against unemployment among platform workers as these persons are
Курьер «Яндекс.Еды» умер после десятичасовой смены. В сервисе заявили, что намерены улучшить контроль над переработками // «Бумага». 19 апреля 2019 г. [A "Yandex.Eda" Courier Died After a Ten-Hour Shift. The Service Said They Intend to Improve Control on Overtime, "Bumaga," 19 April 2019] (Apr. 23, 2020), available at https://paperpaper.ru/papernews/2019/04/19/v-socsetyah-rasskazali-ob-umershem-posl/.
«Чтобы подобное больше не повторилось». В «Яндекс.Еде» рассказали, как защитят курьеров от переработок // Фонтанка.ру. 25 апреля 2019 г. ["For This Shall Never Happen Again.""Yandex.Eda" Told How to Protect Couriers from Overtime Work, Fontanka, 25 April 2019] (Apr. 23, 2020), available at https://www.fontanka.ru/2019/04/25/067/.
Сколько платят курьерам в «Яндекс.Еде»? // Яндекс. 23 сентября 2018 г. [How Much Do Couriers Pay in "Yandex.Eda?," Yandex, 23 September 2018] (Apr. 23, 2020), available at https://yandex.ru/ znatoki/question/work/skolko_platit_organizatsiia_iandeks_eda_a54a3dfe/.
Лютов Н.Л. Адаптация трудового права к развитию цифровых технологий: вызовы и перспективы // Актуальные проблемы российского права. 2019. № 6(103). С. 104 [Nikita L. Lyutov, Labour Law Adaptation to the Digital Technologies: Challenges and Perspectives, 6(103) Actual Problems of Russian Law 98, 104 (2019)].
39
40
41
at a greater risk of job loss.43 Zaitseva and Mitryasova propose to adapt the legal act that should regulate the access conditions of drivers to the platform such as the examination of their employment status and of their driving vehicles; limit drivers' working hours and regulate the number of rides per day and per week; provide for subsidiary responsibility of the platform for damages in the event of harm caused to the health and life of passengers.44 The above authors prefer to consider drivers on demand as economically dependent self-employed persons.45
in my opinion, the business model of platform work brings about a new form of dependence which is characterised by a mix of economic, algorithmic and personal dependence.46 Platform workers cannot be considered a homogeneous group. Some of them are genuine self-employed persons, while others are in-between employment and self-employment. Workers on demand are comparable to employees in need of social and labour protection. The following options concerning workers on demand (and also concerning crowdworkers who fulfil microtasks and operate in the low wage sector) can be discussed in labour legislation:
1. The first option - as a partial solution - is to apply the approach that platforms like Yandex.Taxi be considered as transportation companies and not mere information service providers; this approach has already been developed in disputes concerning the compensation for harm caused to life and health. Some countries have already shown intentions to change their transport laws and regulate the provision of transportation services through platforms, and to impose on these services the same rules as for taxis. On 3 July 2019, for instance, the Austrian Parliament passed the law on the reform of the Occasional Transport Service Act (Gelegenheitsverkehrsgesetz).47
Чиканова Л.А., Серегина Л.В. Правовая защита граждан от безработицы в условиях информационных технологических новаций в сфере труда и занятости // Право. Журнал Высшей школы экономики. 2018. № 3. С. 156 [Lyudmila A. Chikanova & Larisa V. Seregina, Legal Protection of Citizens Against Unemployment in the Context of Information Technology Innovations in the Field of Labour and Employment, 3 Law. Journal of the Higher School of Economics 149, 156 (2018)] (Apr. 23, 2020), also available at https://law-journal.hse.ru/data/2018/10/29/1141973785/чиканова.pdf.
Зайцева Л.В., Митрясова А.С. Труд водителей такси на основе интернет-платформ: отдельные вопросы правового регулирования // Вестник Томского государственного университета. 2018. № 435. С. 244 [Larisa V. Zaitseva & Angelina S. Mitryasova, Labour of Taxi Drivers on the Basis of Internet Platforms: Some Issues of Legal Regulation, 435 Tomsk State University Journal 239, 244 (2018)].
Id.
Olga Chesalina, Platform Work as a New Form of Employment: Implications for Labour and Social Law in New Forms of Employment: Current Problems and Future Challenges 153 (J. Wratny & A. Ludera-Ruszel (eds.), Wiesbaden: Springer, 2020).
Anna-Maria Bauer, Taxler bremsen Uber vorerst aus, Kurier, 25 July 2019 (Apr. 23, 2020), available at https://kurier.at/chronik/oesterreich/taxler-bremsen-uber-vorerst-aus/400561268; Naomi Hunt, Uber's Last-Ditch Petition to Avoid Taxi Rules, Metropole, 1 July 2019 (Apr. 23, 2020), available at https://metropole.at/ubers-last-ditch-petition-to-avoid-taxi-rules/; Taxi und Uber: Grünes Licht für einheitliches Gelegenheitsverkehrsgesetz, OTS.at, 3 July 2019 (Apr. 23, 2020), available at https://www. ots.at/presseaussendung/0TS_20190703_0TS0224/taxi-und-uber-gruenes-licht-fuer-einheitliches-gelegenheitsverkehrsgesetz.
43
44
45
46
Such reforms could ensure fair competition among transportation service providers and fair payment for drivers. Hereby the question arises as to whether only the platform should be qualified as employer, or whether also the partner should be considered as a co-employer.
2. The second option is to broaden the notion of "employee" and to treat workers on demand and certain crowdworkers as employees. Hereby the regulations concerning remote work (Ch. 49.1 of the LC) and the assignment of employees to third parties (Ch. 53.1 of the LC) can be applied to platform workers. Furthermore, it is necessary:
- to adapt the criteria for the existence of an employment relationship to the business model of platform work;
- to overcome the formal approach of the courts concerning the existence of an employment relationship based on documentary and formal evidence, and shift the focus on the factual relationship between the parties,48
- to provide for a shift of the burden of proof in labour disputes regarding the establishment of employment relationships. Most likely, courts in Russia will not qualify workers on demand as employees in the foreseeable future due to difficulties in the adjustment of the contemporary approach concerning the notions of "employee" and "employment relationship."
3. The third option is to regulate the labour of economically dependent workers in the Labour Code. This option can be taken into consideration in addition to the first approach or as a separate approach. Russian labour law is designed for standard employees working for a single employer and does not comprise intermediate categories between employees and self-employed persons such as "employee-like persons" or "workers." it is interesting to mention that the binary model (employee -employer) is typical for Eastern European countries (with the exception of Slovenia, which introduced the third category of "economically dependent persons" in 2013).49 Paradoxically, in Russia some de facto economically dependent persons - e.g. homeworkers - already fall within the scope of the LC and they have the status of employees. According to Article 310 of the LC, home workers are persons who enter into employment contracts to perform work at home, using materials, tools, and mechanisms provided by the employer or acquired by the homeworker at his own expense. By contrast, in Germany home workers are, in most cases, employee-like persons. Subcontracted home-based workers (homeworkers) were mentioned as an example of jobs that may be included in the category of dependent contractors
48 Саурин C.A. Проблемы защиты прав работников, занятых в неформальном секторе // Трудовое право в России и за рубежом. 2014. № 4. С. 49 [Sergey A. Saurin, Problems of the Protection of Rights of Workers Employed in the Informal Sector, 4 Labour Law in Russia and Abroad 48, 49 (2014)].
49 Tamas Gyulavari, Casual Work Laws in Eastern Europe in Festschrift Franz Marhold 449, 550 (E. Bramesh-uber et al. (eds.), Vienna: Manz, 2020).
within the frame of the 20th international Conference of Labour Statisticians.50 This means that, theoretically, also other categories of economically dependent persons could be included within the scope of Russian labour law.
One of the most important methodological features of Russian labour law is"unity and differentiation" of regulation.51 Strengthening the differentiation of regulation of employment relations is also common in the Russian Federation.52 At the time of its adoption, the Labour Code contained 15 chapters on the special features regulating the labour of certain groups of workers, while at present there are 22 such chapters in the LC. The Labour Code regulates the specifics of labour of certain categories of workers (the head of an organisation, military servicemen, workers of religious organisations, etc.) whose labour status not only causes numerous discussions, but really differs significantly from the "general" labour status of an employee. A separate chapter of the LC is devoted to the employment relations of homeworkers (Chapter 49). For these reasons, it is possible to introduce a chapter on "Special features regulating the labour of individuals providing services or work, including through platforms and mobile applications" into the LC. There are several reasons for this differentiation: the specifics of the performance of the labour function (the possibility to determine the labourer's working time and rest time); the specifics of the employer and of the "employer" function (the functions of the employer are allocated between the platform, the partner and the client); algorithmic control replaces "management and control" of the employer (which is exercised through a person). it is necessary to regulate in such a chapter the limitation of working hours per day and per week, the obligations of platform providers (and partners - if the latter will continue to participate in this business structure) in the field of occupational health and safety rules, the right to disconnect and the ban of deactivating a worker's mobile application without a justified reason.
if the binary concept of Russian labour law is not changed, all the above-described options presuppose the treatment of platform workers as employees and platform
50 International Labour Office, Statistical Definition and Measurement of Dependent "Self-Employed" Workers, 20th International Conference of Labour Statisticians, Geneva, 10-19 October 2018 (Apr. 23, 2020), available at https://www.ilo.org/wcmsp5/groups/public/---dgreports/—stat/documents/ meetingdocument/wcms_636042.pdf.
51 Коршунова Т.Ю., БочарниковаМ.А. Особенности правового регулирования трудовых отношений отдельных категорий работников: теоретические аспекты // Особенности правового регулирования трудовых отношений отдельных категорий работников: научно-практическое пособие [Tatyana Yu. Korshunova & Marina A. Bocharnikova, Specific Circumstances of Legal Regulation of Employment for Some Categories of Workers: Theoretical Aspects in Special Circumstances of Legal Regulation of Employment for Some Categories of Workers] 12, 14 (T.Yu. Korshunova (ed.), Moscow: lurisprudentsiia, 2015).
52 Лютов Н.Л. Трансформация трудового правоотношения и новые формы занятости в условиях цифровой экономики // Журнал российского права. 2019. № 7. С. 116 [Nikita L. Lyutov, The Transformation of Labor Relations and New Forms of Employment in the Digital Economy, 7 Journal of Russian Law 115, 116 (2019)].
providers (and probably also partners) as employers (co-employers). This means that the expansion of labour law will be achieved by a re-definition of the notions of "employee" and "employer." This option relates to the internal dimension of the employment relationship.53 Another, new approach would be the imposition of certain obligations on the platform providers (and partners) without classifying the latter as employers, and/or the introduction of certain labour rights for platform workers without classifying the latter as employees (introducing a new intermediate employment category) based on their economic or organisational dependence. This relates to the external dimension of the employment relationship and refers to the broader category of social and economic subordination.54
A possible option in the area of social insurance would be to involve third persons (other than employers - i.e. platform providers and partners) in the payment of social contributions for self-employed platform workers. in Russia, in the case of concluding a civil law contract for the provision of services or the performance of work, and under other specific types of civil law contracts, the principal has to pay pension and medical insurance contributions for any contractor who does not have the status of an individual entrepreneur (Art. 420 of the Tax Code of the Russian Federation (hereinafter the TC)). At the same time, an individual who does not have the status of an individual entrepreneur is not allowed to carry out an entrepreneurial activity systematically without the abovementioned status. As a consequence, any individual for whom the principal has to pay social contributions can only on an occasional basis provide services or work. This means that such contribution obligation does not rest upon the economic dependence of the contractor on the principal. in many European countries, economic dependence in the narrow sense -meaning that the contractor works mainly for one (single) principal or client - is usually used as justification for the imposition of a duty to pay social contributions; economic dependence indicates a need for social protection comparable to the situation of employees. it seems that the Russian approach to this issue is even broader than in many European countries, because such an obligation arises simply due to the fact that the contractor makes use of the labour. This approach is closer to the understanding of economic dependence as a structural dependence or, in other words, it refers to a structural weakness in the market.55 For this reason, in Russia it would be consistent - in the case of work on demand - to impose such an obligation on the platform and/or client, as workers on demand are, at least economically, dependent on the platform or the partner.
53 Adalberto Perulli, The Notion of Employee in Need of Redefinition in Festschrift Franz Marhold, supra note 49, at 703, 704.
54 Id. at 704.
55 Guy Davidov, Subordination vs. Domination: Exploring the Differences, 33(3) International Journal of Comparative Labour Law & Industrial Relations 365, 369 (2017).
in Russia, the same rules are applied to the contractor - irrespective of whether he or she is an individual, an individual entrepreneur or a legal entity: the contractor has to pay 22 percent towards pension insurance and 5.1 percent towards medical insurance (Art. 425 of the TC). On the one hand, organisations often conclude civil law contracts for the provision of services instead of employment contracts, because despite the obligation to pay insurance contributions, this is still more economically attractive than the conclusion of an employment contract. On the other hand, organisations can sidestep the regulation of Article 420 of the TC by concluding other civil law contracts that do not set the obligation to pay social contributions or by concluding contracts with individual entrepreneurs who have to pay social contributions for themselves. if two individuals (without a state registration as an individual entrepreneur) are counterparts, they often do not conclude a contract in written form but operate informally.
The effectiveness of the imposition of such an obligation to pay social contributions on the principal or the platform and/or the partner (effective enforcement) can be ensured only if, on the one hand, the differentiation concerning the payment of social contributions depending on the presence or absence of the status of individual entrepreneur is abolished. On the other hand, by contrast, a differentiation concerning the amount of social contributions to be paid by the principal would have to be introduced, providing low rates for principals in terms of individuals who do not run their own business.
2. Platform Work as Self-Employed Activity: Implications for Tax and Social Law
2.1. Between Combating Informal Work and Addressing the "New" Self-Employment
As mentioned above, workers on demand are considered as self-employed persons56 in practice and in accordance with the case law. The main problem is that self-employed persons in Russia can carry out entrepreneurial activities in their function as an individual entrepreneur only with a state registration. Platform work has become manifest in the main problem of informal self-employment in Russia.
informal employment is on the rise in Russia.57 According to Rosstat, the share of people employed in the informal sector increased from 12.5 percent in 2001 to 17.6 percent in 2005, and increased significantly further to 21.1 percent in 2016
56 It is very important to keep in mind that self-employment is a new phenomenon in Russia. In the Soviet Union independent contracting (as well as entrepreneurship in general) was completely illegal. This changed with perestroika.
57 World Bank Group, Modest Growth; Focus on Informality, Russia Economic Report, No. 41 (June 2019), at 26 (Apr. 23, 2020), available at http://pubdocs.worldbank.org/en/115001560108403019/ rer-41-english.pdf.
(15.4 million persons). The share of self-employed persons among this group is estimated to be between 25 and 50 percent.58 These self-employed persons mainly provide services for other individuals without a state registration as individual entrepreneur. The fiscal loss due to non-paid contributions by informal workers is estimated to be between 1 to 2.3 percent of the GDP.59 informality is driven by a lack of formal jobs and lack of creation of new work places in medium-sized and large formal enterprises.60 From 2008 to 2018, the number of working places in medium-sized and large formal enterprises was cut by almost 12 percent (4.6 million).61 The spreading of mobile, internet and cloud technologies favours the increase of the informal economy.62
On the one hand, the excessive spread of informal work causes a deficiency in the access to social protection for the self-employed, especially to pension insurance, and simultaneously threatens the sustainability of the social insurance system. On the other hand, the current legislative framework in the field of social protection and, in particularly, pension insurance contributes to the further rise in informal work:
- A part of the pension reform of 2018 was to increase the retirement age for men from 60 to 65, for women from 55 to 60 (in relation to the average life expectancy of 66.4 years for men and 77.2 years for women63);
- The abolishment of pension indexation due to inflation for working pensioners in 2016 has resulted in an increase of 5.5 million workers in the informal sector;64
- Working pensioners get only a very small number of pension points if they work after reaching pension age. The maximal amount is limited to 3 pension points per calendar year (subpara. 1 of para. 4 of Art. 18 of the Federal Law of 28 December 2013 No. 400-FZ "On insurance Pensions"65). By comparison, other employees who
58 World Bank Group, Modest Growth, supra note 57.
59 Id. at v.
60 Id. at 28.
61 Кувшинова О. Политика сокращения теневой занятости приведет к росту безработицы и снижению доходов населения // Ведомости. 22 марта 2017 г. [Olga Kuvshinova, The Policy of Reducing Shadow Employment Will Lead to Higher Unemployment and a Decline in Income of the Population, Vedomosti, 22 March 2017] (Apr. 23, 2020), available at https://lirt.hse.ru/data/2017/03/22/1169823 752/20170322-Vedomosti.pdf.
62 Id.
63 Life Expectancy in Russia, World Life Expectancy (Apr. 23, 2020), available at https://www. worldlifeexpectancy.com/russia-life-expectancy (data for 2018).
64 Соловьева О. Власти вынуждают граждан уходить в тень // Независимая газета. 10 июня 2019 г. [Olga Solovyova, The Authorities Force Citizens to Go into the Shadows, Nezavisimaya Gazeta, 10 June 2019] (Apr. 23, 2020), available at http://www.ng.ru/economics/2019-06-10/4_7595_shadow.html.
65 Федеральный закон от 28 декабря 2013 г. № 400-ФЗ «О страховых пенсиях» // Собрание законодательства РФ. 2013. № 52 (ч. 1). Ст. 6965; 2014. № 2 (ч. 1) [Federal Law No. 400-FZ of 28 December 2013. On Insurance Pensions, Legislation Bulletin of the Russian Federation, 2013, No. 52 (Part 1), Art. 6965; 2014, No. 2 (Part 2)].
are not pensioners get a maximum of 9.57 pension points for the year 2020 and 10 pension points for 2021;
- While the number of pension points is at least slowly growing in quantity, their value is not growing at all, it is frozen at the level of 2015 (Art. 26.1 of the Federal Law "On insurance Pensions");
- The very low level of unemployment allowance is disproportionate to the sanctions that can be imposed on unemployed persons and other groups.66
On the one side, the legislator is trying to combat the informal economy. On the other side, the legislator is trying to address the "new" self-employment and to introduce a new category of self-employed persons.
Since 2015, the introduction of the new legal category of the "freelancer" (samozaniatyi) has been actively discussed in Russia. There is no consensus among scholars and lawyers as to who should be covered by the new category of "freelancer." Scholars hold an entire range of views: from the broadest approach, namely that this category should cover all types of independent labour,67 to the narrowest, namely that this category refers only to individuals without registration as individual entrepreneurs who provide services or work for other individuals.68 According to another opinion, "freelancer" refers to owners of small and micro-enterprises, individual entrepreneurs, and persons employed by households (home-based workers).69
According to paragraph 1 of Article 23 (citizen's entrepreneurial activity) of the CC, a citizen shall have the right to engage in entrepreneurial activities without forming a legal entity from the moment of his or her state registration as an individual entrepreneur, with the exception of the cases listed in paragraph 2 of Article 23. On 26 July 2017, paragraph 2 of Article 23 of the CC was amended. According to new regulation in effect since 6 August 2017, certain types of entrepreneurial activity, in cases provided for by law, can be carried out by citizens without a state registration as an individual entrepreneur. At the moment, there are two laws that contain such regulations:
- Firstly, since 1 January 2017, in accordance with paragraph 70 of Article 217 of the Second Part of the Tax Code of the Russian Federation, certain categories of
66 Olga Chesalina, The Legal Framework of Unemployment Benefits in Russia in Labour Law Reforms in Eastern and Western Europe 469, 483 (T. Davulis (ed.), Brussels: Peter Lang, 2017).
67 ПопковаЖ.Г. Новая категория самозанятых лиц: проблемы правового статуса // СПС «Консуль-тантПлюс» [Zhanna G. Popkova, A New Category of Self-Employed Persons: Problems of Legal Status, SPS "ConsultantPlus"] (Apr. 23, 2020), available at http://www.consultant.ru/cons/cgi/online.cgi7req =doc&base=CJi&n=103016#069317631808603.
68 Rustem Sh. Davletgildeev & Lenara R. Klimovskaya, Legal Status of Platform Workers in Russia: Right on Unemployment and Social Assistance, 7(6) Humanities & Social Sciences Reviews 639, 640 (2019).
69 Абрамова ЕА. Кризисная самозанятость в России: классификация, структура и уровни развития // Современные наукоемкие технологии. Региональное приложение. 2012. № 4. С. 6-15 [Elena А. Abramova, Crisis Self-Employment in Russia: Classification, Structure, and Development Levels, 4 Modern High Technologies. Regional Application 6 (2012)].
self-employed persons were exempted from the payment of taxes if they do not hire employees and if they notify tax authorities about the aforementioned kinds of activities: tutoring, cleaning, housekeeping, services concerning supervision and the care of children, of sick persons, persons who have reached the age of 80 years, as well as other persons in need of constant external care according to the decision of a medical organisation. it was the first time that the law has defined the kind of activities that can be carried out without a state registration as an individual entrepreneur;
- The second case is regulated in the Federal Law of 27 November 2018 No. 422-FZ "On the Experiment of introducing a Special Taxation Regime 'Tax on Professional income'"70 (hereinafter the Law No. 422-FZ). According to paragraph 6 of Article 2 of the Law No. 422-FZ, individuals making use of the special tax regime "tax on professional income," are entitled to carry out entrepreneurial activity without a state registration as individual entrepreneurs, with the exception of such activities that require mandatory registration as an individual entrepreneur in accordance with federal laws.
it should be kept in mind that in Russia, the term "freelancer" is used by scholars, but is generally not used in the legislation in question, which refers to individual entrepreneurs and individuals without a state registration as"individual entrepreneurs."71 Nevertheless, since 2017 the Federal Tax Service has used the notion of "freelancer" in its explanations on the applications of new tax regimes, provided for in paragraph 70 of Article 217 of the TC and also the Law No. 422-FZ. At the same time, the Federal Tax Service in its comments (explanations on the applications) to paragraph 70 of Article 217 of the TC and also the Law No. 422-FZ uses the notion of "self-employed." According to the interpretation of the Federal Tax Service, based on the wording of the Law No. 422-FZ,"self-employed" is a very broad category, namely individuals, including individual entrepreneurs without employees. Nevertheless, such an interpretation is not completely correct, since the law does not actually introduce a new category but a new tax regime.
it is worth noting that it is not the first time that the new employment phenomenon has been regulated in the tax legislation (or in other fields of law). One example: temporary agency work has been resorted to in Russia since the 1990s, but in the LC it was regulated only in 2014. The second part of the TC, which came into force
70 Федеральный закон от 27 ноября 2018 г. № 422-ФЗ «О проведении эксперимента по установлению специального налогового режима «Налог на профессиональный доход»» // Собрание законодательства РФ. 2018. № 49 (ч. 1). Ст. 7494 [Federal Law No. 422-FZ of 27 November 2018. On the Experiment of Introducing a Special Taxation Regime "Tax on Professional Income," Legislation Bulletin of the Russian Federation, 2018, No. 49 (Part 1), Art. 7494].
Earlier in some laws, the terms"self-employment" and"freelancer" were also used in different meanings. For example, in Article 7 of the Law "On Employment in the Russian Federation" the notion self-employment is used as an activity opposite to individual entrepreneurship; at the same time, in Article 7.1-1 of the same Law this notion is used in a broad sense, including individual entrepreneurship.
on 1 January 2001, used the term "services involving the assignment of employees" for the first time in Russian legislation (subpa
ra. 4 of para. 1 of Art. 148, subpara. 18 of Art. 255, subpara. 19 of para. 1 of Art. 264, para. 7 of Art. 306) and regulated that the services involving the assignment of employees may be included in expenses associated with production and sales costs (subpara. 19 of para. 1 of Art. 264). This regulation caused lively discussions and brought about controversial case law with a view to whether such regulations should be interpreted as legalising temporary agency work.72
2.2. Digression: Social Protection of Self-Employed Persons in Russia
The Constitution of the Russian Federation guarantees the freedom of work and the freedom to choose the type of activity and profession (Art. 37).73 Nevertheless, the social law is strongly tailored to dependent employment. There are a lot of gaps concerning formal and effective access to social protection of self-employed persons in Russia.
There is only one uniform scheme for self-employed persons in Russia. in Article 419 "Payers of Social Contributions" of the TC distinguishes between "payers who make payments and other fees to individuals" (organisations, individual entrepreneurs, individuals without state registration as individual entrepreneur) and "payers who do not make payments and other fees to individuals" (individual entrepreneurs, lawyers, mediators, notaries engaged in private practice, arbitration managers, appraisers, patent attorneys and other persons engaged in private practice in the manner established by the legislation of the Russian Federation).
There are no special schemes for representatives of specific professions like advocates, notaries, detectives etc., such as is the case in Austria, for example.74 Despite the fact that these categories of self-employed persons in Russia do not have the status of individual entrepreneurs, they are insured in accordance with the same rules as individual entrepreneurs.75 in some cases, the amount of social contributions paid by a self-employed person depends on the tax regime chosen by the former.
72 Olga Chesalina, Temporary Agency Work in the Russian Federation, 28(1) Zeitschrift für ausländisches und internationales Arbeits- und Sozialrecht 34, 35 (2014).
73 See also Федорова М.Ю. Форма реализации права на труд как фактор дифференциации условий социального обеспечения (в контексте концепции свобода труда Л.Ю. Бугрова) // Вестник Пермского университета. Юридические науки. 2013. Вып. 3(21). С. 189 [Marina Yu. Fedorova, Form of a Right for Labour Realisation as a Factor of Social Security Differentiation (in L.Yu. Bugrov Concept of Labour Freedom Context), 3(21) Perm University Herald. Juridical Sciences 188, 189 (2013)].
74 Franz Marhold, Social Protection of Contingent Work: Austria and the Full Coverage Social Insurance System in Core and Contingent Work in the European Union: A Comparative Analysis 233, 236 (E. Ales et al. (eds.), Oxford and Portland, Oregon: Hart Publishing, 2017).
75 Куприян C.B. Обязательное социальное страхование лиц, самостоятельно обеспечивающих себя работой: автореф. дис. ... канд. юрид. наук [Sergey V. Kupriyan, Compulsory Social Insurance for Self-Employed Persons: Synopsis of a Thesis for a Candidate Degree in Law Sciences] 16 (Moscow, 2005).
a) Social insurance
in Russia, state pension insurance and medical insurance (Arts. 430, 431 of the TC) is compulsory for self-employed persons (with or without own employees). There are no minimum income thresholds regarding compulsory social insurance for self-employed persons.
Self-employed persons have to pay the entirety of their contributions to pension and medical insurance (lump sum amounts) themselves, while, in the case of employment relations, the employer pays the entirety of the contributions on behalf of the employees (without any participation of the latter). Self-employed persons without employees pay the following contributions in 2020 to pension insurance: if the yearly income is not more than 300,000 roubles, a lump sum amount of 32,448 roubles has to be paid. if the yearly income is more than 300,000 roubles, a lump sum amount of 32,448 roubles plus 1 percent of the payer's income above 300,000 roubles has to be paid. The lump sum contribution to medical insurance amounts to 8,426 roubles.
Only a small group of self-employed persons can, theoretically, be voluntarily insured in the social security insurance against accidents at work and occupational diseases, namely self-employed persons who work on the basis of a commissioning contract or a civil law contract on the performance of work and/or the provision of services, if this is agreed upon in the contract with the client and if, in the contract, the obligation of the client to pay social insurance contributions is provided for. This regulation has no practical relevance. Other self-employed persons cannot opt for social insurance against accidents at work and occupational diseases.
The self-employed can opt into social insurance covering temporary incapacity for work and maternity. Sickness benefits and maternity benefits for the self-employed are calculated on the basis of the minimum wage of 12,320 roubles (since 1 January 2020), while for employees these benefits are calculated on the basis of the employee's average wage (in 2019, in the whole of Russia the average wage was 37,900 roubles76). Self-employed persons will only get sickness benefits and maternity benefits if they paid social contributions during the previous year.
b) State Social Benefits and Social Assistance
in Russia, unemployment insurance was established in 1991, and in 2001 it was replaced by the system of state benefits, financed though the state budget. According to Article 3 of the Law of the Russian Federation of 19 April 1991 No. 1032-1 "On Employment in the Russian Federation," an unemployed person is entitled to unemployment benefits if he or she is a citizen of the RF, able to work, has no work
76 Аналитики подсчитали среднюю зарплату в России за 2019 год // Известия. 14 января 2020 г. [Analysts Have Calculated the Average Salary in Russia for 2019, Izvestia, 14 January 2020] (Apr. 23, 2020), available at https://iz.ru/963676/2020-01-14/analitiki-podschitali-sredniuiu-zarplatu-v-rossii-za-2019-god.
and income, is registered with the employment office in order to find a suitable job, is looking for work and ready to start it. The unemployment allowance is not means-tested. in case of former dependent employment, the amount of unemployment allowance is calculated as a percentage of the previous wage. On 1 January 2005, minimum and maximum ceilings for the unemployment allowance were introduced. in 2020 the minimum amount is 1,500 roubles per month and the maximum amount is 12,130 roubles per month.77
A self-employed person can claim unemployment allowance only in the minimum amount. The level of unemployment allowance for self-employed persons was the subject of constitutional control. The Constitutional Court of the RF in its Decision of 12 April 2011 No. 550-O-O came to the result that a differentiated approach to determining the level of unemployment allowance, on the one hand, for citizens who had been dependent employed persons and lost their jobs, and on the other hand, for all other citizens, including those who independently provided themselves with work, was based on the broad scope of discretion of the legislator in the field of "unemployment" and did not conflict with the Constitution of the Russian Federation (para. 3.3 of the Decision).78
According to the Federal Law of 17 July 1999 No. 178-FZ "On State Social Assistance,"79 families and citizens in need are entitled to means-tested social assistance if they have a per capita income below the subsistence minimum not by their own fault. The setting of conditions for means-tested assistance lies with the jurisdiction of the subjects of the Russian Federation and is established by the laws of the subjects of the Russian Federation (Art. 5 of the Federal Law "On State Social Assistance").
2.3. Special Tax Regimes
Over the last two decades, the legislator has been trying to fight the informal economy by introducing privileged tax regimes for self-employed persons (e.g. the simplified tax system, the patent taxation system). Of particular interest are the two latest measures: the "tax holidays" for special categories of self-employed persons and a tax on professional income.
77 Постановление Правительства Российской Федерации от 27 марта 2020 г. № 346 «О размерах минимальной и максимальной величин пособия по безработице на 2020 год» // Собрание законодательства РФ. 2020. № 14 (ч. 1). Ст. 2103 [Decree of the Government of the Russian Federation No. 346 of 27 March 2020. On the Minimum and Maximum Amounts of Unemployment Benefits for 2020, Legislation Bulletin of the Russian Federation, 2020, No. 14 (Part 1), Art. 2103].
78 Определение Конституционного Суда Российской Федерации от 12 апреля 2011 г. № 550-O-O // Вестник Конституционного Суда РФ. 2011. № 6 [Decision of the Constitutional Court of the Russian Federation No. 550-O-O of 12 April 2011, 6 Bulletin of the Constitutional Court of the Russian Federation (2011)].
79 Федеральный закон от 17 июля 1999 г. № 178-ФЗ «О государственной социальной помощи» // Собрание законодательства РФ. 1999. № 29. Ст. 3699 [Federal Law No. 178-FZ of 17 July 1999. On State Social Assistance, Legislation Bulletin of the Russian Federation, 1999, No. 29, Art. 3699].
2.3.1. Tax Holidays of2017-2019
For freelancers as listed in paragraph 70 of Article 217 of the TC "tax holidays" for three years have been introduced, which means that their income of the years 2017-2019 is exempt from taxation if they do not hire employees and if they notify tax authorities about the aforementioned kinds of activities.
This experiment failed. As of 1 January 2020, only 4,676 self-employed persons were registered with tax authorities.80 The taxpayers were aware that after the tax holidays they would have to register as individual entrepreneurs and pay the full amount of taxes. Furthermore, the short duration of the experiment did not contribute to the stability of their legal status.81 Moreover, the trust in the social state has only recently been seriously undermined by the raising of the retirement age as part of the pension reform 2018. On the one hand, since no legal sanctions for the violation of the obligation of freelancers to notify tax authorities were provided, most individuals had no incentives to register voluntarily and pay taxes in the foreseeable future.
it is interesting to note that during 2017-2018, persons who registered as self-employed in line with paragraph 70 of Article 217 of the TC did not pay social insurance contributions at all (Art. 422 of the TC). During 2017-2018, the executive authorities of the subjects of the Russian Federation paid medical contributions for persons covered by paragraph 20 of Article 217 of the TC according to the same rules as for the non-working population (Arts. 23, 24 of the Federal Law of 29 November 2010 No. 326-FZ "On Compulsory Medical insurance"82). Thus, access to medical insurance was not a reason that would have created an incentive to register as self-employed, since persons working in the shadow economy are also insured within the compulsory medical insurance system as "non-working population." Since 2019, freelancers as listed in paragraph 70 of Article 217 of the TC in accordance with the Federal Law No. 6-FZ have been obliged to pay medical insurance contributions for themselves.
80 Ежемесячная статистическая информация о представленных физическими лицами в налоговые органы уведомлениях об осуществлении деятельности по оказанию услуг физическим лицам для личных, домашних и (или) иных подобных нужд (по состоянию на 01.01.2020) // Федеральная налоговая служба [Monthly Statistical Information on Notifications Submitted by Individuals to Tax Authorities on the Implementation of Activities to Provide Services to Individuals for Personal, Household and/or Other Similar Needs (as of 01/01/2020), Federal Tax Service] (Apr. 23, 2020), available at https://www.nalog.ru/rn77/related_activities/statistics_and_analytics/selfemployed/.
81 Бурлак A.B. Социальное обеспечение самозанятых граждан: законодательные новеллы // Вестник Омского университета. Серия: Право. 2017. № 3(52). С. 129 [Alexander V. Burlak, Social Security of Self-Employed Citizens: Legislative Novels, 3(52) Herald of Omsk University 128, 129 (2017)].
82 Федеральный закон от 29 ноября 2010 г. № 326-ФЗ «Об обязательном медицинском страховании в Российской Федерации» // Собрание законодательства РФ. 2010. № 49. Ст. 6422 [Federal Law No. 326-FZ of 29 November 2010. On Compulsory Medical Insurance, Legislation Bulletin of the Russian Federation, 2010, No. 49, Art. 6422].
2.3.2. Tax on Professional Income
From 1 January 2019, in the Moscow and Kaluga regions, as well as in the Republic of Tatarstan, and from 1 January 2020 in St. Petersburg and further 18 regions a new tax regime - the tax on professional income - was introduced experimentally. The selection of regions for the experiment is not accidental; preference was given to regions with high-speed internet coverage and "rich" regions.83
in fact, the territorial scope of the application of the tax on professional income is much broader. Since the Law No. 422-FZ does not contain a definition of "the place of business carried out remotely," the place of such activity may be determined freely by the taxpayer (until the Law No. 422-FZ will be amended): this can be either the office site (or the residence) of the taxpayer or the location of the buyer or customer.84 The experiment will last until the end of 2028, which speaks in favour of the stability of the tax rate.
The primary addressees of the tax on professional income are platforms like "Yandex.Taxi" and platform workers in the area of delivery services.85 The personal scope is in fact much broader: This special tax regime can be applied by individuals, including individual entrepreneurs without employees, as long as their annual income does not exceed 2.4 million roubles.
Payers of the tax on professional income are exempted from payment of the personal income tax of 13 percent, of VAT and social contributions. This tax can be applied not only to the main activity but also to a side activity.
Two tax rates are provided for:
- 4 percent of the income from the sale of goods (works, services, property rights) to individuals;
- 6 percent of the income from the sale of goods (works, services, property rights) to individual entrepreneurs and legal entities.
2.3.2.1. Access to Social Protection for Payers of the Tax on Professional income
it has to be pointed out that, at the moment, cases where entrepreneurial activity can be carried out without a state registration are regulated in terms of tax law and not civil law. The problem is that if a self-employed person is not registered with the tax authorities as a payer of professional income tax, or if he or she does not fall within
Тропская C.C. Налогообложение самозанятых и цифровая экономика: налог на профессиональный доход // Финансовое право. 2019. № 5. С. 23 [Svetlana S. Tropskaya, Taxation of Self-Employed and the Digital Economy: Tax on Professional Income, 5 Financial Law 22, 23 (2019)].
Письмо ФНС России от 18 ноября 2019 г. № СД-4-3/23424@ // СПС «КонсультантПлюс» [Letter of the Federal Tax Service of Russia of 18 November 2019 No. SD-4-3/23424@, SPS "ConsultantPlus"] (Apr. 23, 2020), available at http://www.consultant.ru/document/cons_doc_LAW_338132/.
Самозанятые: банки хотят помогать самозанятым уплачивать налог на профессиональный доход // БУХ.1С. 27 февраля 2019 г. [Self-Employed: Banks Want to Help Self-Employed to Pay the Professional Income Tax, BUKH.1S, 27 February 2019] (Apr. 23, 2020), available at https://buh.ru/ news/uchet_nalogi/74151/.
83
84
the territorial scope of the Law No. 422-FZ, his or her legal status remains in limbo not only in tax law, but also in social law. This means that self-employed persons of this sort fall within the general regime of social security for the self-employed.
a) Medical insurance
The Law 422-FZ provides that taxpayers paying tax on professional income are exempted from the payment of social contributions. This is not entirely correct, because part of the tax on professional income (37 percent) is allocated to the financing of compulsory medical insurance for taxpayers (subpara. 3 of para. 1 of Art. 146 of the Budget Code of the Russian Federation) and insurance payments are made to the Federal Compulsory Medical insurance Fund. This is not the first time in Russia that the line between social contributions and taxes becomes blurred. This phenomenon has historical roots. For nine years, a unified social tax was levied in Russia (from 2002 to 2010); from 2011, it was replaced by social contributions. in accordance with the Federal Law of 3 July 2016 "On Amendments to First and Second Parts of the Tax Code of the Russian Federation in Connection with the Transfer to the Tax Authorities of the Competence to Administer insurance Contributions to the Compulsory Pension, Medical insurance and Social insurance Covering Temporary incapacity for Work and Maternity," the Tax Code was supplemented by Section Xi "insurance Contributions in the Russian Federation" (in force since 1 January 2017). According to Chapter 34 of Section Xi of the TC, insurance contributions are conditionally included in the system of taxes and fees established by the TC.86 Since 1 January 2017, the collection of social insurance contributions and control over the correctness and timeliness of the payment of insurance contributions was transferred from the Social insurance Fund of the Russian Federation to the tax authorities. At the same time, contributions are still paid to the social insurance funds, and the type of payment is defined as contributions.
As the rates of the tax on professional income are different for services provided to individuals (4 percent) and services provided to individual entrepreneurs and legal entities (6 percent), this means that there is also a difference in the amount of contributions to the compulsory medical insurance, depending on whom the services are provided to. On the one hand, if work or services are provided to entrepreneurs and legal entities, one can assume that a taxpayer operates for businesses, which justifies the difference in the tax rate. On the other hand, until now Russian legislation has provided the uniform social contribution rate for self-employed persons (with and without employees) if they pay social contributions for themselves, irrespective of who their contractual counterpart is.
Taxes and social contributions are different in nature and function. The specifics of social contributions lie in the individualised character of the latter, while taxes
86 imeda Tsindeliani et al., Tax System of the Russian Federation: Current State and Steps towards Financial Sustainability, 11(24) Sustainability 6994 (2019).
are generic.87 it is necessary to draw a clear distinction between taxes and social contributions (to medical insurance) and to abolish the unjustified differentiation in the amount of "contributions" to medical insurance for self-employed payers of the tax on professional income.
b) Pension insurance
According to amended Article 29 of the Federal Law of 15 December 2001 No. 167-FZ "On Compulsory Pension insurance,"88 payers of the tax on professional income, permanently or temporarily residing in the territory of the Russian Federation, can voluntarily enter into pension insurance relations in order to pay insurance contributions to the pension Fund of the Russian Federation for themselves.89 The amount of the minimum payment is equal to a fixed lump sum amount, determined in accordance with the TC (para. 5 of Art. 29 of the Federal Law"On Compulsory Pension insurance"; Art. 430 of the TC). it is not allowed to pay insurance contributions with retroactive effect. The lump sum amount is very high. Taking into account the required period for paying insurance contributions and an increased retirement age, most likely many taxpayers will prefer not to pay any social insurance contributions at all.
Like in other countries, platform work in Russia is often carried out as a side job.90 if a self-employed activity is carried out in addition to the main dependent job, social contributions are paid from this job. Since the pension system does not sufficiently take into account the amount in which insurance contributions were paid, no incentives are provided to pay additional social contributions. The experience of other countries shows that voluntary insurance is not effective.91 it is obvious that the self-employed in Russia, as well as in other countries, will accumulate savings for old age outside the pension system, primarily in the form of assets.92
87 Широкова E.K. Страховые взносы в государственные внебюджетные фонды Российской Федерации [Evgenia К. Shirokova, Insurance Contributions to the State Extra-Budgetary Funds of the Russian Federation] 54 (Moscow: Wolters Kluwer, 2010).
88 Федеральный закон от 15 декабря 2001 г. № 167-ФЗ «Об обязательном пенсионном страховании в Российской Федерации» // Собрание законодательства РФ. 2001. № 51. Ст. 4832 [Federal Law No. 167-FZ of 15 December 2001. On Compulsory Pension Insurance, Legislation Bulletin of the Russian Federation, 2001, No. 51, Art. 4832].
89 Постановление Правительства Российской Федерации от 2 октября 2014 г. № 1015 «Об утверждении правил подсчета и подтверждения страхового стажа для установления страховых пенсий» // Собрание законодательства РФ. 2014. No. 41. Ст. 5545 [Resolution of the Government of the Russian Federation No. 1015 of 2 October 2014. On Approval of the Rules for Calculating and Confirming of the Insurance Period for Insurance Pensions, Legislation Bulletin of the Russian Federation, 2014, No. 41, Art. 5545].
90 Self-Employed: Banks Want to Help Self-Employed to Pay the Professional Income Tax, supra note 85.
91 OECD, The Future of Social Protection: What Works for Non-Standard Workers?, Policy Brief on the Future of Work (May 2018) (Apr. 23, 2020), available at https://www.oecd.org/social/Future-of-social-protection.pdf.
92 European Commission, 2018 Pension Adequacy Report: Current and Future Income Adequacy in Old Age in the EU. Vol. I, 30 April 2018 (Apr. 23, 2020), available at https://op.europa.eu/en/publication-detail/-/publication/f0e89c3f-7821-11e8-ac6a-01aa75ed71a1/language-en.
The exemption of the self-employed from the payment of social contributions -if they earn below a certain threshold - is common in many European countries. it fits in the broad picture of platform economy. Belgium has already provided for the exemption of self-employed platform workers from the social security status of "self-employed" if income from a platform activity stays below a certain threshold (in 2018 it was 5,100 Euro).93 The situation in Russia differs from this pattern since no minimum thresholds for the payment of social contributions are provided for and all payers of the tax on professional income are exempted completely from the payment of pension contributions.
One condition for coming out of the shadow economy named by the self-employed was the exemption from the obligation to pay social insurance contributions.94 This indicates systematic problems in the social security system, like a low level of social benefits and very strong requirements for access to some social benefits (e.g. increased retirement age).
At the same time, the social security system must be strengthened as the reduction of the financial basis of the pension insurance by exemption of the self-employed from the payment of pension contributions does not contribute to its effective functioning. On the contrary, if the number of such self-employed persons increases it will put additional pressure on the financing of the pension insurance and the social insurance covering temporary incapacity for work and maternity.
2.3.2.2. False incentives of the Tax on Professional income
a) Avoidance of Employment Relationships
The tax on professional income creates incentives for employers to conclude contracts with self-employed persons who use the tax on professional income instead of employment contracts. Some employers even force their employees to become self-employed and pay tax on professional income. Despite the regulation that the payer of the tax on professional income cannot work for a customer (principal) who has been his or her employer during the past two years (Art. 6 of the Law No. 422-FZ), employers often force their own employees into this regime and into self-employment. in an effort to save money, many employers can go to great lengths, including the re-registration (and change of the name) of their organisation.95 The sanctions provided for in the legislation (Art. 5.27 of the Code of Administrative
93 Yves Stevens, Social Security and the Platform Economy in Belgium: Dilemma and Paradox in The Platform Economy: Unravelling the Legal Status of Online Intermediaries 259, 266 (B. Devolder (ed.), Cambridge; Antwerp; Chicago: Intersentia, 2018).
94 Self-Employed: Banks Want to Help Self-Employed to Pay the Professional Income Tax, supra note 85.
95 Что будет, если компания переведет работников в самозанятые // БУХ.1С. 25 июля 2019 г. [What Happens If a Company Turns Employees into Self-Employed, BUKH.1S, 25 July 2019) (Apr. 23, 2020), available at https://buh.ru/articles/documents/92526/.
Offences) do not seem to frighten employers. Only one example: In Yekaterinburg, about 70 ambulance drivers (urgent medical aid) were made self-employed.96
According to the media, this measure is much more effective than the tax holidays for several groups of self-employed persons in 2017-2019. Since the end of December 2019, 330,000 self-employed persons were registered by the tax authorities as payers of the tax on professional income,97 as compared to 4,676 self-employed persons registered during the tax holidays. According to media reports, the majority (85-87 percent)98 did not have the status of individual entrepreneurs before and did not pay taxes before. The most widespread areas of activity of payers of the tax on professional income include passenger transportation, rental of apartments, consulting, tutoring and advertising services.99 The statement that tutors have registered as payers of the tax on professional income has caused misunderstanding and suspicion of inaccurate information, since tutors have had tax holidays until the end of 2019.
b) Interrelationship Between the Payment of Tax on Professional Income and Employment Status
The tax on professional income can be paid using the mobile application "my tax." The data is automatically transferred to the tax authorities. Persons working through platforms in the field of transportation can accept an offer to render services only if they confirm the application of the special tax regime "tax on professional income." This explains why the majority of people registered as payers of the tax on professional income (18.7 percent) offer transportation services. The mobile application can, theoretically and practically, be installed for all services via platforms and mobile applications.
In one case, the court has found that between an individual and Yandex.Taxi an agreement on access to the service was concluded with the confirmation of the use of the special tax regime "tax on professional income" by clicking on the button "I am informed, agree and fully accept the terms of the offer in the Service Yandex Taximeter."100 The court interpreted using the mobile application "my tax" as an (additional) argument
96 В Екатеринбурге водители «скорой помощи» заявили о готовности к забастовке из-за перевода на «самозанятость» // Росбалт. 27 января 2020 г. [In Yekaterinburg, Ambulance Drivers Said They Were Ready to Strike Due to a Shift to "Self-Employment," Rosbalt, 27 January 2020] (Apr. 23, 2020), available at https://www.rosbalt.ru/russia/2020/01/27/1824678.html?ref=tjournal.ru.
97 Self-Employed: Banks Want to Help Self-Employed to Pay the Professional Income Tax, supra note 85.
98 Будущее налогового администрирования - бесконтактные технологии, - Михаил Мишустин // Федеральная налоговая служба. 13 сентября 2019 г. [The Future of Tax Administration Is Contactless Technology, - Mikhail Mishustin, Federal Tax Service, 13 September 2019] (Apr. 23, 2020), available at https://www.nalog.ru/rn77/news/activities_fts/9034201/?fbclid=IwAR39pAQ 9BHw5dEqrIoyaDkMX1cSxogLYhznpbHzg8kTptQ7MJWu84bpNjJc.
99 Id.
100 Апелляционное определение Московского городского суда от 22 ноября 2019 г. по делу № 33-53437/ 2019 [Appeal Ruling of the Moscow City Court of 22 November 2019 in case No. 33-53437/2019].
in favour of the civil law nature of the relationship between the"driver on demand" and the platform. The use of such an application can be regarded as an additional argument for the self-employed status and strengthens the formalistic approach concerning the existence of an employment relationship.
Conclusion: Interrelationship Between Labour, Social and Tax Law
As shown under 1.4, theoretically there are different ways of how to include workers on demand into the scope of labour law. However, practically none of the above-discussed options will work in Russia not only due to the gaps and the deficits in labour legislation and the existing formalistic approach of courts concerning the employment relationship, but primarily because there is no coordination of legislative measures and reforms in labour, social and tax law.
While some scholars are considering an extension of the scope of labour law, it has been proposed, at the same time, to narrow the scope of the LC and to exclude Chapter 48 from the scope of the LC on specific features of regulating the labour of workers employed by individual employers.101 Such a reform will result in the replacement of employment relations through civil law relations (probably resorting to a privileged tax regime), and the abolishment of the labour rights of involved employees.
The new tax regime creates the wrong incentives for employers to replace workers through self-employed persons who use the tax on professional income. in such a situation, each proposal to guarantee labour and social rights to platform workers is bound to fail because employers will prefer to outsource work to "cheap" payers of the tax on professional income. For this reason, the abolishment of false incentives in tax law is required.
There were already a lot of gaps in formal and effective access to social protection for the self-employed in Russia. But instead of broadening the access to social protection for the self-employed the legislator limits it further. Actually, many European countries promote a more universal approach,102 extending access to different branches of social insurances for the self-employed. As part of the implementation of the European Pillar of Social Rights, the European Commission on 8 November 2019 formally adopted the Council Recommendation "On Access to Social Protection for Workers and the Self-
Зайцева Л.В. Экономически зависимые самозанятые: различия национальных подходов к определению правового статуса // Вестник Томского государственного университета. 2019. № 446. C. 213 [Larisa V. Zaitseva, The Economically Dependent Self-Employed: Differences in National Approaches to the Determination of Their Legal Status, 446 Tomsk State University Journal 212, 213 (2019)].
102 Christina Behrendt et al., Social Protection Systems and the Future of Work: Ensuring Social Security for Digital Platform Workers, 72(3) International Social Security Review 17, 26 (2019).
Employed."103 The objective of the Recommendation is to provide access to adequate social protection to all workers and the self-employed and to establish minimum standards in the field of social protection of workers and the self-employed. The Recommendation aims to ensure for all workers and the self-employed: formal coverage of social protection; effective coverage, adequacy and transferability of social protection; transparency of social protection entitlements. Also, in Russia decent social protection should be guaranteed irrespective of the form of employment. it is not enough to merely make minor adjustments to the existing social security system; instead, fundamental changes are required. in particular, the change from the employee model to a more universal model is needed, as this would guarantee a stronger safety net. The limitations of pension rights of working pensioners should be abolished. Hanging on to the existing social insurance pattern, together with the exemption of self-employed payers of the tax on professional income from the payment of social contribution, jeopardises the sustainability of the social insurance system.
The author endorses the view of scholars that the binary model in labour and social law is outdated; a transition from employee protection within the employment relationship to protection on the labour market is required.104 Hereby, it must be stressed that a sustainable solution is not to be found in a special regulation exactly for workers on demand, but should address all persons in the grey area between dependent employment and self-employment.
Since the tax on professional income introduces a new regulation of social insurance of payers of the tax on professional income, a mixture between a tax regime and an employment category for the purposes of social insurance law has emerged. Federal Laws "On Compulsory Medical insurance" and "On Compulsory Pension insurance" mention "persons, using the tax on professional income" as a separate category of insured persons (who can be voluntarily insured) apart from employees and individual entrepreneurs. This situation is not unique for Russia. in France, in 2008 the category of auto-entrepreneur (or micro-enterprise) was introduced with a simplified tax and social contribution regime if earnings did not exceed a certain threshold. it was intended to establish in France a particular status of self-employed persons, but due to the legislative reform of 2014 it was deconstructed into a special tax regime.105 While it is the first time in Russian legislation that a group of self-employed persons using a special tax regime is separated within a special category of insured pensions, it remains to be seen which development is going to prevail. The experience with the
103 Council Recommendation of 8 November 2019 on access to social protection for workers and the self-employed (Apr. 23, 2020), available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=ur iserv:0J.C_.2019.387.01.0001.01.ENG&toc=0J:C:2019:387:T0C.
104 Riccardo del Punta, Labour Market Reforms and Beyond: The Italian Case, 35(3) international Journal of Comparative Labour Law & industrial Relations 355, 356 (2019).
105 Alexandre de le Court, Formalising Vulnerable Self-Employment Under Social Security Law: A Case-Study of Continental Welfare State Systems, 144 Revista del Ministerio de Trabajo, Migraciones y Seguridad Social 57 (2019).
introduction of a new tax regime demonstrates the need for a uniform application of employment categories in tax law, social law and labour law.
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Information about the author
Olga Chesalina (Munich, Germany) - Senior Researcher, Max Planck institute for Social Law and Social Policy (33 Amalienstr., Munich, 80799, Germany; e-mail: [email protected]).
