Recently, the media and even the professional community have been actively discussing a “new prohibition” on entering into civil law contracts where the characteristics of an employment relationship are present. We would like to clarify: the rule itself is not new. Employers should distinguish between what has actually changed and what has simply become more explicit.
Prohibition on Using Civil Law Contracts Instead of Employment Contracts: Not a New Rule, but a Long-Standing Requirement
Recently, the media and even the professional community have been actively discussing a “new prohibition” on entering into civil law contracts where the characteristics of an employment relationship are present. We would like to clarify: the rule itself is not new. Employers should distinguish between what has actually changed and what has simply become more explicit.
1. Background
On April 7, 2026, Law of the Republic of Kazakhstan No. 277-VIII “On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Improving Safe Working Conditions, Protecting Employees’ Labour Rights and Social Security” was signed (the full text of the law is attached to this review).
Article 26 of the Labour Code of the Republic of Kazakhstan has been supplemented with paragraph 1-1:
“It is prohibited to enter into a civil law contract with an individual if such contract contains at least one of the distinguishing characteristics of an employment contract provided for in Article 27 of this Code.”
“A contract containing one or more distinguishing characteristics of an employment contract provided for in Article 27 of this Code shall be recognized as an employment contract irrespective of the name actually given to it by the parties and shall entail legal consequences in accordance with the labour legislation of the Republic of Kazakhstan.”
2. Why this is not a new restriction
The characteristics in question are set out in Article 27 of the Labour Code of the Republic of Kazakhstan and have remained unchanged since the Code was adopted in 2015:
• performance by an employee of work (an employment function) according to a specific qualification, specialty, profession or position;
• personal performance of obligations subject to internal labour regulations;
• receipt by the employee of remuneration for work in the form of wages.
The presence of even one of these characteristics previously meant that the relationship was an employment relationship rather than a civil law relationship, regardless of how the parties named the contract. The new paragraph 1-1 of Article 26 of the Labour Code does not create a new rule; it expressly codifies what already followed from Article 27 of the Labour Code and what tax authorities, the state labour inspectorate and courts have consistently applied in practice.
What this means for employers:
If your civil law contracts have already been structured correctly — with a clearly defined scope, a specific deliverable, acceptance under completion certificates and no characteristics of internal labour regulations — formally, nothing changes for you. In practice, however, enforcement is becoming stricter: the express wording in the law makes it easier for inspectors and courts to act, so potentially problematic civil law contracts should be reviewed now.
3. Liability: also not new, but worth recalling
Liability for using a civil law contract instead of an employment contract is already provided for under existing legislation:
• supervisory powers — the state labour inspectorate is entitled to issue binding orders requiring civil law contracts to be reclassified and formalized as employment contracts (Article 98 of the Code of Administrative Offences of the Republic of Kazakhstan, taking into account amendments concerning the powers of the labour inspectorate);
• tax consequences — reclassification may result in additional assessment of social tax, social contributions, pension contributions and compulsory social health insurance contributions for the entire period of the actual employment relationship, together with penalties;
• employees’ rights and guarantees — the employer may be required to provide all guarantees that the employee failed to receive due to incorrect classification, including paid annual leave, sick leave payments, overtime payments, termination compensation, etc.;
• in certain cases — criminal liability of responsible officers under Article 152 of the Criminal Code of the Republic of Kazakhstan for other serious violations of labour legislation that caused substantial harm to an employee’s rights.
What this means for employers:
The express statutory prohibition does not introduce new sanctions, but it increases the likelihood that a violation will be identified and classified specifically as an employment relationship, with the consequences calculated for the entire period during which the civil law contract was in force, rather than only prospectively.
4. Court practice: reclassification is already taking place
A noteworthy example from publicly available sources: following a tax audit of a partnership operating in the field of archaeology, the tax authority reclassified civil law contracts entered into with 19 employees, in parallel with their employment contracts, as employment relationships, relying on the characteristics set out in Article 27 of the Labour Code. The basis was that the work performed under the civil law contracts actually formed part of the partnership’s core statutory activities rather than constituting a one-off result for an external customer.
The partnership challenged the decision in court, arguing that the law does not prohibit entering into both an employment contract and a civil law contract with the same individual at the same time. Nevertheless, the Administrative Court of Almaty upheld the tax authority’s position: since the work under the civil law contracts coincided with the legal entity’s core activities and was not limited to the delivery of a specific result to an external customer, the contracts were treated as disguising employment relationships and the additional tax assessments were upheld as lawful.
Key takeaway for employers:
Even the existence of a duly executed employment contract with an employee does not protect a parallel civil law contract with that same employee from reclassification if, in substance, the work performed under it falls within the company’s core activities. Even before the adoption of the new paragraph 1-1 of Article 26 of the Labour Code, courts assessed the actual substance of the relationship rather than the title of the contract — and they will continue to do so, now with more explicit statutory support.
5. Recommendations
• conduct an audit of existing civil law contracts for the characteristics listed in Article 27 of the Labour Code, especially where the contractor works regularly, personally and according to a fixed schedule;
• pay particular attention to civil law contracts under which remuneration is paid regularly and in the same fixed amount — regulators and courts may regard such payments as indicative of wages and therefore of an employment relationship; such contracts should be reviewed as a priority;
• for project-based and one-off services, define the subject matter of the contract by reference to a measurable result rather than the process of performing work;
• avoid entering into civil law contracts with existing staff members for work that overlaps with their regular job duties;
• where work is systematic and long-term, switch to an employment contract — the risks and total financial exposure resulting from reclassification are generally significantly higher than any savings achieved through a civil law contract.
