Earned activity can take different legal forms – first of all, it can take place on the basis of an employment contract, or a civil law contract (such as a contract of mandate or contract for specific work). The distinction is important because many rights under the Labour Code and regulations (such as the right to leave) apply only to the employment relationship, and do not include either civil law contracts or business activities. Consequently, the terms “employee” and “employer”, are used to refer to the employment relationship, and do not apply to other forms of gainful employment.
Employment contract
It is regulated in the Labour Code. Its essence is the provision of work by an employee for remuneration from an employer, under their direction, at a place and time determined by the employer. The salary for work cannot be waived. The salary for full-time work cannot be less than the minimum wage, which is set for each year (sometimes it also changes during the year), in accordance with the law. The salary must be paid in money, regularly, no less than once a month (unless the contract is for a shorter period of time). The contract should be in writing, or at least, its basic terms should be confirmed in writing by the employer. An employment contract with a foreigner must be concluded in writing. The employment contract is subject to the payment of social security contributions (pension, disability, sickness, and accident). The law provides for a number of obligations and rights for each party to the employment contract, and in the event of non-compliance, provisions of the employment contract that are inconsistent with the law and less favourable to the employee are null and void by operation of law. The law regulates, among other things: working hours, methods and periods of termination of the contract; vacations and time off; the parties’ obligations in the field of occupational health and safety.
Legal basis:
Act of 26 June 1974 – Labour Code (consol. text: Journal of Laws of 2023, item 1465, and of 2024, items 878, 1222).
Act of 10 October 2002 on the Minimum Wage (consol. text: Journal of Laws of 2020, item 2207, and of 2023, item 1667).
Civil law contracts
A common legal basis for earning are civil law contracts (primarily – contract of mandate and contract for specific work). Their functions and legal construction distinguish them from an employment contract. They are regulated in the Civil Code. Their conclusion does not always entail the payment of social security contributions. With a contract of mandate there is no obligation to pay sickness contributions, and if the same person works simultaneously under a contract of mandate and an employment contract with at least the minimum wage, they do not pay contributions on the contract of mandate, while in the case of a contract of work there is no obligation to pay contributions at all. This results in higher incomes for people bound by such contracts, but at the same time, lack of coverage by the social security system – these people are not entitled to benefits – sickness, accident, disability, or pension, respectively. Due to the lack of social security and the lack of employee rights (such as, for example, the right to leave, various rights related to parenthood or disability, protection against termination of employment in the case of pregnancy or at pre-retirement age), civil law contracts are sometimes criticised. At the same time, there are constant demands for changes in the tax treatment of these contracts.
Contract of mandate
Is a civil law contract, regulated by the Civil Code. Unlike a contract for work, a commission is a so-called contract of diligent performance. This means that the person accepting the commission is not responsible for achieving a specific result, but for the diligent performance of the commissioned activities. For example, a person giving instrument lessons on the basis of a contract of mandate is not responsible for whether the student learns to play, but is responsible for the timely conduct of the lessons and their careful preparation. With regard to the performance of the contract, the person accepting the order (sometimes called the contractor), retains more flexibility than an employee – the place, time or manner of performance are not unilaterally determined by the principal.
Contract for specific work
Is a civil law contract, regulated by the Civil Code. Under it, the order taker undertakes to perform the work, and the orderer undertakes to pay the remuneration. Unlike a contract of mandate, a contract for specific work is a so-called contract for a result, which means that its essence is the performance of some concretised tangible or intangible work – it can be, for example, sewing a dress, painting a room, designing an Internet platform or delivering a paper.
As a rule, a contract for specific work is not subject to the payment of social security contributions, which means, on the one hand, a higher net salary for the person taking the order, but on the other hand, no sickness, health, accident and pension protection. Contributions are paid if the contract for specific work is concluded with the contractee’s own employer.
Information current as of: .
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