The title should be "why I don't give you a job without doing tax evasion".
In Romania it's about the same: the taxation for an employees is high and so is social security (pregnancy leave, difficulty firing, etc). But people don't complain as much because tax evasion is really high.
Of course, this is really annoying for me because if your customer is in the US they will not pay you behind the counter, they will do a wire payment or such, which goes straight into accounting and is taxed.
In this regard, tax evasion becomes unfair competition.
Some companies are preferring contractual work and abusing it, by putting clauses in the contract that employees cannot quit for the next 5 years. This works in the cases were employees need to travel a lot (for example) and in the contract it is stipulated that if you quit, you have to pay the costs of accommodations, food and "training" provided during the contract, which is not feasible for most people.
This IMHO, is equivalent to modern slavery. If you're not able to quit, you cannot complain, you cannot negotiate a higher salary and you are at your employer's mercy.
It's only fair if employers cannot fire people at will (without being sued to oblivion). "I can leave anytime I want but you cannot fire me" doesn't make sense.
(For the record I am for at-will quitting and firing)
I assume in any relationship both parties can abuse their position.
But, as an employer, I feel I am clearly at a disadvantage.
It's easy to put clauses in a contract, but it doesn't actually mean they could be enforced in a court of law, even in one as bad as Romania's.
Having seen the restrictions the local Labour Department (ITM) puts in place, including the kind of stuff you may add to a contract makes me doubt what you say is more than a scam. I have never seen such a contract nor do I know somebody in IT working under such conditions.
Even a non-compete clause is something that I cannot add to a contract because it's super-expensive. According to the law if I want a non-compete on an employee, I have to pay him at least 50% of his salary for the duration of the non-compete.
There are many restrictions in place because companies don't play by the rules either. Some things I've seen in practice: civilian collaboration contracts, which have far less restrictions than regular working contracts; collaboration contracts with authorized individuals (PFA); minimum wages declared, to escape taxes, the rest of the salary being paid illegally.
Also, I know of at least one instance in which the owner of a company asked his employees to sign their resignations, without a date added. He can fire anyone when he feels like it.
I have never seen such a contract nor do I know
somebody in IT working under such conditions ...
IT is one of the very few privileged classes in Romania. People working in IT are blessed. It does happen a lot less in this field and usually the fraud committed is more subtle, but it does happen. I was talking about my godson btw, he's not working in IT, but he is a knowledge worker and he has 3 years of his contract left.
Also, asking for a return of "subsidies" is completely legal.
Even a non-compete clause is something that I cannot
add to a contract because it's super-expensive.
IMHO, non-competes should be banned completely. And I'm glad that you are unable to add it to your contracts ;-)
This brings us back to my original comment where I said that generally companies do tax evasion in Romania and most "job creation" involves a certain degree of tax evasion. I guess the same happens in Hungary too.
About firing, it does seems fair to me: an employee can just quit at any time with no reason so a company should also be able to fire at any time.
They way I see it, asking for a return of "subsidies" should be regulated some more. But not outright banned since I can clearly see some situations where it would make sense.
I am able to add non-compete to a contract, it's just not worth it because the ex-employee will still be getting at least half a salary each month. I don't see why they should be banned.
On non-competes - because the potential for abuse far outweigh the benefits for employers. It is also a way to subvert the free-market rules.
In California non-competes are not valid, except for equity stakeholders. Silicon Valley is in California and clearly the lack of this privilege hasn't done much harm to businesses - quite the contrary, if the correlation with their success in the software industry says anything about it (the same argument could be made pro software patents, however software patents have only began to be seriously accepted / enforced recently - and I feel like Silicon Valley will see a decline because of it).
We are a 3 people company doing software and we all do teleworking. (We used to be 4 people in 3 cities, now we are just 3 in 2 cities.)
So, I don't see how much my position as an employer impacts my employee's daily experience. They are free to do what they please, they just have to perform some work on a laptop for 8 hours a day.
The disadvantages are many for a company, starting with the fact that you have to play by the rules that are enforced by various entities that usually can't wait to fine you.
Firing an employee is rather complicated [1] and you are not allowed to do time-limited contracts much. So, once you hire somebody you do it "for life".
In a small company I would say any employee influences about as much my life as I influence theirs. I had a guy quit on me out of the blue this year (got another offer) and it was a bit of a shock for my business -- I'm not certain there is anything I could do that would impact an employee that much except suddenly firing him, which is restricted as I've just said.
1. Actually they changed the law recently, it might have become less complicated, not sure...
In Romania it's about the same: the taxation for an employees is high and so is social security (pregnancy leave, difficulty firing, etc). But people don't complain as much because tax evasion is really high.
Of course, this is really annoying for me because if your customer is in the US they will not pay you behind the counter, they will do a wire payment or such, which goes straight into accounting and is taxed.
In this regard, tax evasion becomes unfair competition.