How will labor inspectors react to the withdrawal of employees?

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Labor inspectors have no objection if a company outsources its projects to other organizations, cooperates with recruitment agencies, or interacts with other companies under labor supply agreements.

Controllers may ask questions about the reasons for such changes. In this case, it is enough to show the economic benefits for the company. It can be justified that staff optimization helps to manage the company more effectively or gives it a competitive advantage in the market.

Inspectors may express interest only if the agency provides less favorable working conditions to the employees hired compared to similar employees in the client company (according to Article 341.1 of the Labor Code). In such situations, claims will be directed to the agency, not to the organization.

To avoid additional questions dominican republic email list when bringing employees on staff, it is necessary to take into account the restrictions. For example, employees can be hired under a contract with an agency for temporary replacement of absent employees or for periodic work lasting up to nine months (in accordance with Article 341.2 of the Labor Code). This period must also be reflected in the outstaffing agreement for the provision of personnel.

How will tax authorities react to the withdrawal of employees?
The tax authorities also do not object to a company removing its staff from the state and concluding an agreement on the provision of labor resources. However, all expenses must be justified in accordance with tax legislation (according to Article 252 of the Tax Code).

Therefore, auditors may demand an explanation of why the organization is “renting” personnel that were removed from the staff. Changes in personnel can be explained by the fact that the company is saving on hiring personnel and reporting.

Tax authorities will scrutinize a deal with a private agency, just like with any other counterparty: whether it is real or fictitious, whether the price corresponds to the market price. Usually, fictitious deals are considered to be those in which migrants are hired in huge quantities. When using outstaffing services, make sure that their price corresponds to the market price.

Tax authorities may suspect a scheme only in atypical cases. For example, if a company leases personnel to work under a simplified or imputed tax system. Inspectors will suspect that organizations are intentionally transferring employees to third-party staff in order to reduce their headcount. Sometimes this can only be proven in court (in accordance with the ruling of the FAS Ural District dated July 10, 2013, No. F09-6659/13).