NSS opět ke znakům závislé práce – tentokrát u IT pracovníků

The Supreme Administrative Court has recently reiterated its position on the nature of cooperation between companies and self-employed individuals, this time in the IT sector, from the usual perspective of dependent work. It has long been established in court practice and by the State Labour Inspection Office that the decisive factor is not the contractual framework or designation, but primarily the actual substance of the cooperation. It is also irrelevant that, for example, in the IT sector it is relatively common to cooperate based on various service agreements instead of employment contracts. If the cooperation effectively corresponds to dependent work, it constitutes illegal work—even if both parties consciously chose a different contractual arrangement.

The case in question concerned a company that was fined by the Labour Inspection Office for enabling illegal work by three programmers. The inspection concluded that these programmers were in fact performing dependent work outside an employment relationship. What arguments did the Labour Inspection Office and subsequently the Regional Court in Brno use?

The programmers cooperated exclusively with the company for a long time. This cooperation was their main source of livelihood. They performed their activities for the company on average eight hours a day, i.e., full-time. They also worked very closely with other company employees, participated in joint team meetings, and were generally integrated into the company’s organizational structure. According to the contractual arrangement, they were practically not entitled to refuse assignments given by the company, which effectively prevented them from obtaining contracts elsewhere or freely managing their own working capacity. Taken as a whole and after evaluating all indications, this could not be considered an equal commercial relationship but rather a disguised employment relationship.

The Supreme Administrative Court confirmed the conclusions of the Labour Inspection Office and the Regional Court in Brno. In cases where cooperation exhibits the characteristics of dependent work, it is necessary to respect the legal requirement that such work be performed under a basic employment relationship, regardless of the will or intention of the parties.

Such cooperation also entails significant tax and social security risks. If the tax authority concludes that the cooperation represents a disguised employment relationship, additional tax liabilities may arise, including obligations related to social and health insurance. The tax administration has recently indicated that its classification should logically not differ from that of the Labour Inspection Office.

The judgment has significant implications not only for the IT sector. The Supreme Administrative Court has once again confirmed that any cooperation between a company and a self-employed person must always comply with legal rules without fulfilling the characteristics of dependent work. Companies should therefore carefully analyze and assess their cooperation arrangements with self-employed persons to avoid potential fines and reputational risks.

Would you like to learn more about this topic? Register for the seminar organized by EY in cooperation with Nemensis, where we will discuss practical cooperation arrangements with self-employed persons in more detail. More information can be found HERE.

Authors:

Kateřina Suchanová

Ondřej Pajatsch

Matěj Šimpach