On 6 October 2026, the Supreme Court upheld a lower court ruling that several FOPs conducting joint commercial activity without a formal partnership agreement did not constitute an employer-employee relationship with an unregistered worker, overturning State Labor Service fines. The decision clarifies the boundary between civil law cooperation (joint activity agreement) and labor relations, impacting social security contribution (SSC) and personal income tax (PIT) obligations.
Key Takeaways
- Joint Activity vs Employment: Courts examine actual control, subordination, and integration into business processes; mere profit-sharing among FOPs does not create employment liability for each other’s workers.
- Documentary Evidence: A written joint activity agreement (Article 74 of Civil Code) defining roles, profit shares, and lack of subordination is critical evidence to rebut labor inspectorate claims.
- Tax Implications: Each FOP reports their share of revenue under single tax; SSC and PIT are paid only for their own officially hired employees, not for partners’ staff.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement