Transparency of labor relations and "whitening" of wages

• According to the requirement of Article 7.2 Labor Code labor relations arise after registration of a notice of an employment contract entered into an electronic information system by means of an enhanced electronic signature, and sending information about this to the employer in electronic form.
• According to Article 58.10 of the Tax Code: for creating conditions for the concealment (understatement) by the employer of the income of individuals by involving them in the performance of any work (services) without the entry into force of an employment contract (contract) in accordance with the procedure provided for by the Labor Code, the employer for each such person is subject to a financial sanction during the calendar year for the 1st time 2,000 manat, for the 2nd time 4,000 manat, for the 3rd time in case of repeated violation - in the amount of 6,000 manat.
• According to article 192.1 of the Code of Administrative Offences: individuals are fined from 1,000 to 2,000 manats, officials - from 3,000 to 5,000 manats, legal entities - from 20,000 to 25,000 manats for engaging an employer to perform any work (services) without the entry into force of an employment contract (contract) in accordance with the procedure provided for by the Labor Code of the Republic of Azerbaijan.
  According to the requirements of article 192.3 of the Code of Administrative Offences, officials are fined in the amount of 1,000 to 1,500 manats for issuing an employee a salary below the minimum wage established by the relevant executive authority.
• According to article 162-1 of the Criminal Code: the involvement of a significant number of employees (10 people or more) to perform any work (services) without the entry into force of an employment contract (contract) in accordance with the procedure provided for by the Labor Code of the Republic of Azerbaijan is punishable by a fine of 7,000 to 10,000 manats or imprisonment for up to 3 years. According to article 162-1.2, the same acts, if committed repeatedly, are punishable by imprisonment for a term of 3 to 7 years.

According to paragraph VI of Article 35 of the Constitution of the Republic of Azerbaijan and the requirement of Article 155.3 of the Labor Code, everyone has the right to remuneration for his work not lower than the minimum wage established by the state, the monthly wage of an employee who has worked the monthly norm of working time and who has performed a labor function cannot be lower the minimum wage established by the state. Also, according to the requirement of Article 155.1 of the Labor Code, an employee cannot be credited with an amount that determines the minimum monthly wage for skilled labor and service.

• fixing the amount of wages accrued for unskilled labor below the minimum monthly wage established by the country;
• reduction in the average monthly wage fund per employee, despite the increase in the number of employees compared to the previous period;
• an indication of the wage fund in the subsystem "Notice of an employment contract" is lower than the average monthly wage for the same territories, fields of activity and professions (positions);
• the wage fund is lower than the average monthly wage determined on the basis of the information “On professions and positions by type of economic activity” provided by the State Statistics Committee;
• evasion of payroll obligations by taxpayers by providing employees with leave at their own expense;
• taxpayer evasion of payroll obligations by increasing employee travel expenses over previous periods;
• the conclusion of a civil law contract by taxpayers with their employees in order to evade payroll obligations.

Taxpayers who have admitted the above circumstances are sent by the State Tax Service a corresponding notification “On the risks of evasion in labor relations.” It is recommended that the notification correctly reflect the amount of wages paid to employees in the taxpayer declarations and notices submitted to the taxpayer within 10 working days. the tax authority has the right to recalculate liabilities based on the requirements of Articles 37 and 83 of the Tax Code.