(a) No.
(b) No.
(c) No.
(a) No.
(b) No.
(c) No.
No.
The main risk is that the individual could claim a de facto employment relationship with the company, and thereby claim the rights and entitlements of an employee.
The risk level of de facto employment would vary depending on how the contingent worker is paid, whether the worker is subject to company rules, whether the worker uses their own equipment, how much control the company exerts over the contingent worker's work, etc.
If the contingent worker successfully claims a de facto employment relationship, they may then claim all entitlements that an employee is entitled to, such as the following:
- Double wages for the period without a written employment contract, starting from the second month of employment until the first anniversary of employment without a written employment contract
- Deemed open-term (i.e., permanent) employment relationship with the company starting from the first anniversary of employment without a written employment contract
- Compensation for any overtime worked
- Back payment of unpaid social insurance and housing fund contributions
- Protections against termination applicable to employees (i.e., terminations only permitted based on narrow statutory grounds, and remedies of reinstatement or double severance in case of unlawful dismissal)
- Entitlements to statutory severance and compensation for accrued but unused annual leave days
Misclassification of the remunerations paid to the contingent workers for individual income tax purposes is the main risk, leading to liability for lack of withholding.
Penalties can be up to 300% on the amounts due, depending on the tax authority's discretion, plus late payment surcharges at a daily rate of 0.05%.
If the contingent worker successfully claims a de facto employment relationship, they can then potentially demand back payment of unpaid social insurance contributions going back to the starting date of the de facto employment relationship.
If a court determines that a de facto employment relationship exists, then, based on such determination, the contingent worker may submit a complaint to the social insurance authorities regarding unpaid social insurance contributions and demand back payment.
For unpaid social insurance contributions, the administrative penalties include: (i) an order to pay all amounts owed; (ii) a late payment charge equal to 0.05% of the amount owed for each day of delay in making the contributions, going back to the date when the contributions were originally owed; and (iii) if the payment is not made within the deadline ordered by the labor authorities, a fine equal to one to three times the amount owed.
An employee could also bring a claim for damages directly suffered as a result of failure to make the social insurance contributions (e.g., medical costs incurred by the employee as a result of no medical insurance contributions being made).
Same as for social insurance, as pension insurance is one of the five types of social insurance (the others being medical, unemployment, maternity and work injury). If the contingent worker successfully claims a de facto employment relationship, they can then potentially demand back payment of unpaid social insurance contributions going back to the start date of the de facto employment relationship.
Same as for social insurance. Namely, for unpaid social insurance contributions, the administrative penalties include: (i) an order to pay all amounts owed; (ii) a late payment charge equal to 0.05% of the amount owed for each day of delay in making the contributions, going back to the date when the contributions were originally owed; and (iii) if the payment is not made within the deadline ordered by the labor authorities, a fine equal to one to three times the amount owed.
An employee could also bring a claim for damages directly suffered as a result of failure to make the social insurance contributions (e.g., loss of pension benefits as a result of no pension insurance contributions being made).
No.