Labour Inspectorate Orders: Administrative or Civil Jurisdiction?

Disputes concerning the true nature of the relationship between a company and an individual have become increasingly common in practice. In particular, situations frequently arise where a company engages an individual under a civil law services agreement, while the individual subsequently alleges that the relationship was, in substance, one of employment and seeks payment of salary and other employment-related benefits.

For employers, particularly large businesses, disputes of this nature extend well beyond the interests of a single claimant. Legal conclusions reached by the State Labour Inspectorate or by the courts may encourage similar claims, trigger additional inspections, and expose businesses to significant financial and reputational risks. It is therefore important not only to defend individual cases successfully but also to maintain a consistent legal position regarding the distinction between employment relationships and independent contractual arrangements.

A recent decision of the administrative courts in Uzbekistan highlights an important procedural issue.

The State Labour Inspectorate concluded that a de facto employment relationship existed between a company and an individual and, on that basis, issued an order requiring the employer to remedy the alleged violation. The company challenged that order before the administrative court, arguing that it had been issued unlawfully.

The administrative court, however, terminated the proceedings on jurisdictional grounds, holding that the dispute did not fall within the competence of the administrative courts.

The court reasoned that an order issued by the State Labour Inspectorate does not, in itself, create an enforceable obligation requiring the employer to make the payments referred to in the order. Where the employer declines to comply voluntarily, the Labour Inspectorate may bring proceedings before the competent court in the interests of the individual whose labour rights are alleged to have been violated. It is the court hearing that dispute—not the Labour Inspectorate—that must determine whether an employment relationship existed, whether the individual was in fact admitted to work, and whether the claims asserted are legally justified.

Accordingly, the Labour Inspectorate's conclusion that an employment relationship exists does not substitute for judicial determination of those issues and cannot, by itself, serve as a legal basis for the recovery of employment-related payments.

The court further emphasised that the dispute was not, in substance, a public law dispute between the employer and a state authority. Rather, it concerned the legal character of the relationship between the company and the individual. Consequently, questions relating to the existence of an employment relationship and any associated monetary claims fall within the jurisdiction of the civil courts.

The court's reasoning indicates that an order issued by the State Labour Inspectorate is not regarded as a standalone administrative act producing direct legal consequences for the employer and is therefore not capable of being challenged independently before the administrative courts.

This decision provides valuable guidance on the respective jurisdiction of the administrative and civil courts in employment status disputes. It also demonstrates that an employer's disagreement with the Labour Inspectorate's findings cannot necessarily be pursued through a separate administrative challenge to the Inspectorate's order.

Where the underlying dispute concerns the existence of an employment relationship and the recovery of employment-related payments, those issues must be determined in proceedings between the employer and the individual before the competent civil court. An order issued by the State Labour Inspectorate neither replaces judicial determination of those issues nor prejudges the outcome of the proceedings.