There is more than one way to hire a person in Poland, since Polish law offers a wide variety of types of contracts. There are significant differences between them, and the choice is not always risk-free.
The most popular type of contract is an employment contract. Polish law provides for two basic forms of employment contracts: for an indefinite term and for a definite term. Each can be preceded by a separate contract for a trial term.
It should be noted that the duration of a trial-term employment contract cannot exceed three months, and it can be used between the same parties only once, unless there was at least a 3-year gap between the contracts or the job type has changed.
Definite-term employment contracts are also limited. Currently the maximum duration of employment on a definite-term contract is 33 months, and the maximum number of contracts between the same parties is 3, regardless of breaks between consecutive contracts. There are some exceptions from these limitations, which apply to specific cases, such as substituting for absent employees, seasonal work, or a term of office on a management board.
The main difference between a definite-term or trial-term contract and an indefinite-term employment contract is in the rules for terminating these contracts. Termination of a contract for an indefinite term requires a detailed reason justifying termination, while with the other contracts it is not necessary. This, in other words, means that terminating an indefinite-term employment contract is not easy.
An indefinite-term employment contract is also regarded as more prestigious and showing more trust in the employee on the part of the employer. This is the reason why higher-level employees, managerial staff, directors and management board members almost always choose or insist on an indefinite-term contract.
Apart from employment contracts, there is also a choice of civil-law contracts available under Polish law, including, for example, contracts of mandate, which are usually used for regular staff. They also include managerial contracts used for board members and for executive and general directors. Civil-law contracts also cover all types of B2B contracts used when the individual providing work is registered as a sole trader and conducts individual business activity.
There are numerous differences between employment and civil-law contracts. Primarily, civil-law contracts do not fall under the employment law regime, meaning that the Labour Code and other employment laws do not apply to persons hired under such contracts. As a consequence, civil-law contracts are often perceived as more flexible than employment contracts. Unlike in the case of employment contracts, civil-law contracts have no limitations on working time. They also include no mandatory benefits or leaves. The parties to a civil-law contract are free to set and decide these terms. The employer is also released from a number of duties in relation to persons hired under civil-law contracts that normally relate to employees, such as maintaining personnel files or fulfilling certain health and safety obligations.
Unlike in the case of employment contracts, a termination of a civil-law contract must, in general, comply only with the requirements the parties have agreed in the contract.
There are also differences in social insurance contributions and taxes, to the advantage of civil-law contracts, in particular B2B contracts.
Therefore, flexibility is a factor that makes civil-law contracts attractive in Poland, especially for employers. However, the parties are not entirely free to decide the type of contact or to choose between an employment and a civil-law contract. Civil-law contracts can be used only for persons whose manner and conditions of work are not typical of an employment relationship, meaning that these persons are not directly supervised by the employer and have the freedom to decide how, when and where they perform work. If there is supervision over the individual’s work, and the individual is required to work fixed hours, in a designated place, in accordance with given instructions, a civil-law contract is certainly not the right choice.
Due to the nature of their roles, general or executive directors, board members, and persons performing freelance jobs (for example designers) are those individuals who can benefit from civil-law contracts almost risk-free. When it comes to other individuals, some analysis and caution is always needed.
Magdalena Świtajska, adwokat, Employment & Global Mobility practice, Wardyński & Partners
The content of this article is a part of Episode 15 of the programme News from Poland – Business & Law. You can watch the episode here >>>