Relatives working in FOP store without registration: what fines threaten the entrepreneur
The State Labor Service emphasizes that Ukrainian legislation does not establish any special exceptions or benefits for family members or close relatives of an individual entrepreneur in labor relations. If a relative actually performs the duties of a seller, works according to a set schedule, complies with work rules, and sells goods on behalf of the entrepreneur, such relations are considered labor relations.
In this case, the employee must be registered in accordance with the requirements of Article 24 of the Labor Code. Admission to work is possible only after concluding an employment contract, issuing the appropriate order or employer’s directive, and submitting a notification of employee hiring to the tax authorities.
For legal registration of cooperation, the legislation provides several options.
The first is concluding written employment contracts with relatives, which is mandatory for the FOP. This method provides employees with insurance experience, social guarantees, and pension rights.
The second is if family members plan to work independently, they can register as individual entrepreneurs and cooperate based on civil law contracts or joint activity agreements.
At the same time, using a civil law contract to perform the duties of a seller, including a meat product seller, generally does not comply with the requirements of the legislation. Such work is permanent, involves adherence to internal labor regulations, and performing a labor function rather than achieving a separate one-time result, which is characteristic of civil law relations.
State Labor Service inspectors also warn that using relatives' labor without proper registration is equated to allowing an employee to work without an employment contract. For such a violation, even during martial law, entrepreneurs are held liable.
In particular, Article 265 of the Labor Code establishes a financial penalty of ten minimum wages for each unregistered employee. At the same time, for single tax payers of groups I–III, a warning is applied upon the first detection of such a violation.
Additionally, according to Article 41 of the Code of Ukraine on Administrative Offenses, an entrepreneur may be fined from 500 to 1000 non-taxable minimum incomes of citizens.
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