In Poland, the legal basis for performing work may be based on a relationship governed by civil law or by administrative law, or the employment relationship. The most common form of performing work is either performing it within the employment relationship based on contracts regulated by the Labour Code, or within the framework of civil law contracts (‘contract of mandate’, contract for a ‘specific task’) regulated by the Civil Code.
a. Factors that Determine Who is an Employee and Who is an Independent Contractor
Performing work on the basis of the contract of employment
Definitely the most common contract regulating the performance of work is the contract of employment. Polish law provides for several types of such contracts. The Labour Code lists the following contracts: for a trial period, for a fixed period and for an indefinite period. Only an individual person having the capacity to conclude the contract of employment may be an employee. The employer, on the other hand, may be a legal person as well as a natural person, and also an organizational unit without the status of a legal person, if they employ workers. Therefore, one does not have to run a business to be an employer.
The Polish Labour Code lists the obligatory elements of every employment relationship. This listing can serve as a basis for the construction of a legal, positive definition of the employment relationship concept. The employment relationship arises when an employee undertakes to perform work of a specified type for the employer, under the employer’s supervision and in the place and time indicated by the employer, and the employer commits itself to employing the worker for remuneration. It is, therefore, a mutually binding relationship, in which the two parties to the contract, both the employee and the employer, are at the same time bound and entitled to specific considerations. However, the fact that the contract of employment is mutually binding does not at all result in the considerations of the parties being always mutual and fully equivalent.
According to the rulings of the Supreme Court, the constitutive elements of each employment relationship, which always have to occur jointly, are: voluntary character of performing the work, personal performance of the work in a continuous manner, the employee’s subordination to the employer, performing work for the employer, and the paid character of employment.
The voluntary character of performing work by an employee assumes in the first place that forced labour is inadmissible. The Constitution of the Republic of Poland specifies that the obligation to work may be imposed only by law (art. 65 par. 2 of the Constitution of the RP). At the same time, the voluntary character of performing work manifests itself in the fact that an employee is not obliged to perform work of another type other than that resulting from the content of the concluded contract of employment. Thus, the employer cannot order an employee to do work of a type different than the type specified in the contract, unless there is a clear statutory base. Otherwise, this could be considered as forced labour. An employee’s consent to perform a different type of work alone is not sufficient, either. If the parties intend to permanently change the type of work performed by the employee, they have to change the terms of the contract either by terminating these terms, or by mutual agreement.
The employer may demand personal performance of work from an employee. Therefore, it is not admissible for an employee to relieve himself from his obligation to perform work by appointing a replacement or a subcontractor. Even in the case of a passing obstacle in personal performance of work (e.g. the employee’s illness), the employee cannot authorize a third person to perform the work in his place.
The employment relationship is a continuous relationship, which should be understood functionally, as being performed in a repeated manner. The employment relationship cannot be reduced to a one-time action or a one-time completion of a certain work. The continuity of the employment relationship does not mean that it has to be performed every day. It is important for the work to be performed in a repeated manner, so it is acceptable that work is performed either on an everyday basis or in specified intervals of time.
Another, crucial and characteristic element of the employment relationship is the employee’s subordination. It is the employer who manages the work of his employees, and it is he who decides about the way it is to be performed. An employee cannot decide about the way the work is to be performed, even if he were a specialist in a given field, and even if it could result in a positive outcome for the employer. The employer may give the employee binding orders relating to work which, unless illegal, have to be respected by the employee. In the body of the Supreme Court’s rulings, failure to carry out the employer’s orders at work without a legally justified reason is considered to be a gross violation of the employee’s basic duties, and such behaviour by an employee justifies the termination of the employee’s contract of employment without notice (so called disciplinary dismissal).
Performing work for the employer means that, as a rule, the effects of an employee’s work and the profits thereof should belong to the employer. This does not mean that the effects of the employee’s work can be used or consumed only by the employer. The employer has the effects of the work of his employees at his disposal. The effects of an employee’s work, as long as their properties allow it, can be the subject of a sale contract between the employer and a third party (e.g. a work produced by the employee, a work made as part of the employment), and they can even be abandoned, destroyed, or disposed of. As a rule, however, a situation where the effects of an employee’s work go exclusively, or in the first place, to a third party that is not the employee’s employer is inadmissible. An exception is temporary employment, under which an employee who is employed by a temporary employment agency performs work for and under the supervision of a third entity which is not his direct employer (the so called user employer). The construction of temporary employment resembles the lease institution in property law, and being an exception from the principle of work for the employer, it is regulated in whole outside the Labour Code in the Temporary Employment Law.
Work based on an employment relationship can be performed only for remuneration. An employee’s obligation to perform work “for free” is invalid. Furthermore, an employee cannot effectively relinquish his right to remuneration. However, it is admissible to perform work at no charge outside the employment relationship, e.g. as a voluntary service, gratuitous training, or under a civil contract.
Work performed within an employment relationship is characterized by the fact that it is performed “at the risk” of the employer. In an employment relationship, the employer’s risk appears in three forms. The first is personal risk – it is the employer who bears the consequences for non-culpable mistakes made by an employee in the process of work. In other words, an employee is not responsible if, despite his efforts and good intentions, he fails to achieve the effects of his work expected by the employer, or even those he himself expected. The employer’s second type of risk is the economic risk – the employer is responsible for the economic results of the business he runs. Thus, even if the financial balance is negative, the total loss of the workplace bears on the employer and not the employees, even if the loss is caused by failure to reach the assumed effects by the employees. The employer’s third type of risk is the technical risk – the employer is obliged to meet his obligation to an employee even during disturbances in the functioning of the workplace. A situation where an employee does not work because, for example, the workplace does not have orders for a specific product, the production line has broken down etc. does not free the employer from the obligation to pay the remuneration for the time of such stoppage.
The above means that a contract of employment is a best-efforts contract rather than a contract to achieve a specific result. The parties to a contract of employment cannot specify in a binding way the expected results of the work and to make the employee’s right to receive remuneration dependent on these results. It results from the nature of the employment relationship that an employee is to perform employee actions in a manner adequate to the type of work and possessed skills, and as effectively as possible.
Work based on a civil law contract
The actual actions defined as “work” by one entity for another entity are not always performed and do not always need to be performed on the basis of a contract of employment. The rising trend to use civil law contracts in place of the contracts provided for in the Labour Code is caused mainly by the obligations which the employer has to meet when concluding a civil law contract and, to be more specific, the obligations which the employer does not have to meet in a civil relationship. The Labour Code is employee-centred, which means that the labour law regulations, and definitely the legal scholars and case-law, are centred on the so called protective function of labour law. According to the currently prevalent trend, labour law should protect the employee, as the weaker party of the employment relationship, from the stronger party. As can be observed in practice, contracts of employment are less common in the market and more often replaced by civil law contracts at a rate directly proportional to the process of increasing employee protection. From the employer’s point of view, these latter contracts ensure better flexibility of labour (among other things, regulations regarding working time do not apply to such contracts), offer a greater ability to react to changes in the workplace, as they arise by allowing easier termination of the legal relationship between the parties, and above all, they lead to reduced labour costs, which seems to be the strongest argument in today’s economic relations.
The Polish Civil Code provides for several contracts by which one of the parties commits itself to performing certain actions for the other party. These contracts are ‘contract of mandate’, ‘contract for a specific task’ and ‘contract of agency’.
The contract of mandate is the most frequently occurring civil-law basis of providing services (including work). As specified in legal regulations, by entering into a contract of mandate, the party receiving the mandate (the ‘mandatary’, or simply the contractor) commits itself to performing a specified legal action for the person granting the mandate (the ‘mandator’ or simply the employer) – art. 734 of the Civil Code. Although a strict interpretation of the quoted regulation does not seem to include the performance of factual mandatory actions (e.g. work), the opinion that factual actions can also be performed on the basis of the contract of mandate is justified by the reference that the regulations regarding the contract of mandate should be applied to all contracts for providing services not regulated in the Civil Code.
Both natural persons and legal persons may be parties to a contract of mandate. The contract of mandate cannot be concluded by an organizational unit, which does not have the status of legal person, because a party needs to have full capacity to legal transactions to conclude the said contract. Also a minor, who does not have at least a partial capacity to legal transactions, as well as a fully incapacitated person, cannot enter into a contract of mandate.
The Civil Code introduces the presumption that a contract of mandate is entered into for remuneration. Thus, if the parties agree that the party receiving the mandate will perform a certain legal or factual action for no remuneration, then the mandate will be free of charge. If there is no clear indication by the parties that remuneration will not be due for the accomplishment of the mandate, the person receiving the mandate is entitled to a remuneration corresponding to the performed work, unless the parties specified the amount of the remuneration in the contract.
The mandate relationship lacks subordination, which is characteristic of labour law, and the contractor does not remain at the disposal of the employer. However, the employer may give the contractor instructions regarding the way of performing the mandate. Even then, the contractor may withdraw from carrying out such instructions if a situation occurs where obtaining approval from the mandator is not possible and there are reasons to believe that the mandator would approve the change if he or she knew the actual state of affairs. Therefore, the contractor has much more freedom during the performance of the work based on the contract of mandate because, as indicated above, an employee performing work on the basis of the contract of employment may never withdraw from the way of performing the work as indicated by the employer, unless such way violates the law.
As a rule, the contractor should perform the mandate in person. However, this is not an unconditional regulation, as withdrawal from personal performance is allowed either on the basis of the concluded contract, if the parties provided for such possibility, or if such possibility is allowed by custom, or if the contractor is forced to do so by the circumstances. In the latter case, the contractor will be responsible for damages, if such damages are caused by entrusting the performance of the work to a third person (subcontractor).
The contract of mandate, like a contract of employment, is a best-efforts contract. The mandatary is not required to achieve specific results. He is only to perform the agreed actions in a manner adequate to the type of work and possessed skills, and as effectively as possible. The fact that the contract of mandate is a best-efforts contract distinguishes it from another civil law contract, the contract for a specific task.
As the Labour Code regulations do not apply to contracts of mandate, persons carrying out a mandate have only such rights as result directly from the content of the concluded contract.
The contract of mandate provides the parties with an option to freely specify the place and time of performing the work. The place where work is to be performed can be either a workplace or any other place specified by premises or by area, not excluding the contractor’s home. Also the working time is freely specified by the parties, because the parties are not restricted by working time limits, or daily or weekly periods of uninterrupted rest.
By entering into the contract for a specific task the person taking the order undertakes to perform a specific task, and the person placing the order, to pay remuneration (art. 627 of Civil Code). It follows from the above that the contract for a specific task is, like the contract of employment and the contract of mandate, a bilaterally binding agreement. It is also a contract for remuneration. The feature which very clearly distinguishes the contract for a specific task from the contract of employment and the contract of mandate is its character – because it is a contract for a result. The parties to the contract define within it a specific, individual result, which can have both a corporeal (e.g. preparing an opinion, a list) or incorporeal (e.g. giving a lecture) character.
The contract for a specific task does not assume personal performance by the person taking the order. If, however, the performance of the work depends on specific, individualized attributes of the contractor (e.g. preparation of a legal opinion by an indicated individual lawyer), then the obligation to perform personally must be assumed. Such situations should be settled by the content of the contract.
As regards the contractor’s rights, the definition of the place of work, the working time etc., the comments referring to the contract of mandate remain applicable to the contract for a specific task as well. That is so, because the parties to the contract for a specific task may freely agree on all issues not prohibited by law, in agreement with the principle of the autonomy of the parties.
b. General Differences in Tax Treatment
Conclusion of a contract under which an employee will perform work, both a contract of employment and a civil law contract, gives rise to obligations of a public nature. These obligations are: payment of the personal income tax advance to the tax office and payment of contributions to the Social Insurance Institution (ZUS). The amount and type of deductions from the employee’s remuneration depends on the type of the concluded contract.
Contract of employment – social insurance contributions and funds, income tax advance
When concluding a contract of employment, the parties are obliged to bear the public burdens. The first such burden is the personal income tax advance paid to the tax office. The way of calculating the amount of the tax is regulated by the income tax law. The amount of the tax is calculated by the employer and the employer is obliged to pay the said tax to the tax office. The amount of the tax advance depends on the amount of pay due to the employee. Although the tax is paid by the employer, it is charged to the employee, because the amount is deducted from the remuneration received by the employee.
Another public burden connected with the contract of employment is social insurance contributions. In the employment relationships, the parties are obliged to pay contributions to ZUS in respect of the following insurances: retirement pension, disability pension, sick benefits, and health insurance, as well as the contributions for the Labour Fund and the Guaranteed Employee Benefits Fund.
The insurance contributions are paid by both parties, in different amounts. The employee finances a part of the contributions for the retirement pension, disability pension, sick benefit, and health insurances. The rest of the above contributions are financed by the employer. The employer is also responsible for financing the contributions for accident insurance and employee funds.
Civil law contracts
A person entering into the contract of mandate is liable for the following compulsory insurances: retirement pension insurance, disability pension insurance, and health insurance. In addition, a person performing work on the basis of the contract of mandate in the seat of the employer is liable for compulsory accident insurance. The sickness insurance is voluntary.
The compulsory social insurances (retirement and disability) and the health insurance are also compulsory for contractors who have already acquired the right to the retirement or disability pension.
On the other hand, the compulsory social insurance and the health insurance do not apply to students up to 26 years old performing a contract of mandate.
Contrary to the contract of mandate, the contract for a specific task is not an independent title to insurance. The social insurance and health insurance contributions have to be paid only if the parties to the contract for a specific task are also parties to an employment relationship. Therefore, if the only relation between the parties is the contract to perform a specific work, the employee does not need to be covered by any insurance.
The employer is obliged to pay income tax on each civil law contract. Depending on the amount of the remuneration received by the person performing work under a civil law contract, the employer pays either the income tax advance or a flat rate tax. These questions are regulated by income tax law.
c. Differences in Benefit Entitlement
All employee benefits are regulated by labour law. These regulations are not only the regulations of the Labour Code, but also of other laws. Additional entitlements may also be granted to employees by internal sources of labour law, such as work and pay regulations, the collective agreement, and also by individual contracts of employment.
As a rule, only employees performing work on the basis of the contract of employment have the right to the above mentioned employee entitlements. The regulations under discussion apply to such employees ex lege.
Persons performing work under a civil law contract have no rights to any employee entitlements based on labour law. This is connected with the fact that they are covered neither by Labour Code regulations nor by other sources of labour law. The above means that regulations concerning such issues as the minimum wage, working time standards, the admissible number of overtime hours and work on Sundays and public holidays, annual leave, or maternity leave do not apply to employees performing work on the basis of the contract of mandate or the contract for a specific task.
This does not mean that the parties to a civil law relationship cannot decide about the application of these regulations to independent contractors. Such practice is fully admissible. Freedom of contract allows the parties to commit themselves to apply the regulations in a specific way, including both the generally binding (the Labour Code, common acts) regulations and the in-house sources of labour law. Such commitment of the parties does not, however, result in that the employer or the employee will be responsible for infringements of labour law according to the rules provided in the Labour Code. Owing to the fact that the parties’ obligation to apply labour law is only a civil obligation, if they infringe the regulations, they will be liable for damages under the Civil Code for failure to perform or inadequate performance of an obligation (art. 471 KC).
Due to the practical purpose of concluding civil contracts, which is making the employment relationship more flexible and exempting the employer from applying Labour Code regulations, situations where the parties to a civil contract voluntarily agree to apply labour law regulations will definitely be marginal.
d. Differences in Protection from Termination
As indicated above, the regulations of the Labour Code apply exclusively to the parties to the employment relationship. They do not apply to civil obligations. This also refers to the conditions of terminating contracts of employment.
Termination by notice and termination without notice of a contract of employment
The Labour Code introduces a number of regulations restricting termination by notice and termination without notice of contracts of employment. In most cases, these restrictions concern the employer. An employee, as a rule, does not have to justify a termination of the contract of employment at all. The only case where the employee should specify a justification of his decision of termination is when the cause of the termination is mobbing and the employee demands compensation.
The Polish Labour Code distinguishes the common and special protection against termination of the contract of employment by employer.
The common protection covers only contracts of employment concluded for an indefinite period. For the employer to be able to legally dismiss a person employed on the basis of such contract there must be a specific, justified reason for dismissal. In addition, the reason must be firstly an objective reason, because subjective feelings of the employer towards an employee do not justify a dismissal, and secondly, the reason for dismissal must actually exist and the burden of proof of its existence rests upon the employer. The Labour Code does not contain a catalogue of events, which would justify an employee’s dismissal by notice. As the Code uses a blanket clause, directions should be looked for in case-law. And so, according to the rulings of the Supreme Court, in a specific situation, the reason justifying termination by an employer of a contract of employment concluded for an indefinite period can be inter alia: inability to work in a team, repeated and long-lasting absences caused by sickness, lack of the employee’s cooperation with the employer, professional uselessness or incapability, minor violation of employee duties which do not justify a disciplinary dismissal, alcohol consumption at work or appearance at work in a state of intoxication, behaviour against the principles of community life, the employee’s irascibility, or theft of the employer’s property. Clearly, the catalogue of reasons is not a closed catalogue. Whether a given reason is justified or not can be decided only in a specific individualized actual situation.
The special protection against termination of the contract of employment applies to employees who, due to special circumstances, are entitled to a temporary limitation of the possibility to terminate their contract. And so, according to the Labour Code, the employer cannot terminate the contract of employment with an employee who lacks not more than 4 years to his or her retirement age, if the employee’s seniority allows him to acquire the right to retirement pension by reaching this age. Also, the employer cannot terminate by notice or without notice an employment contract with a pregnant woman or during her maternity leave, unless there are reasons for disciplinary dismissal. The employer is not free to terminate the contract with a person who is a member of or has a specific function in a trade union, both at the company or above-company level. Labour law regulations require either consultation with the relevant labour union before terminating the contract of employment in the former case, or the union’s consent to the termination in the latter.
The requirements for the existence of a justified reason for the termination of the employment contract, and for a statement of that reason in the text of the notice by employer, applies only to contracts for an indefinite period. Therefore, legal termination of contracts of employment for a fixed period does not depend on the existence of any reason. Nonetheless, on the grounds of the Polish Labour Code, not every fixed-period contract can be effectively terminated.
The notice period for the contract for a trial period depends on the period for which the contract has been signed and it ranges from three working days to two weeks. The replacement contract may be terminated with a notice of three days. Apart from the above, generally employment contracts (fixed term and for an indefinite term) may be terminated with a notice period dependent on the period for which the contract has been signed and it ranges from two weeks to three months.
Termination of a civil contract
Due to the already discussed fact that the regulations of the Labour Code do not apply to civil law contracts (mandate and specific task), their termination is regulated in the Civil Code. From the point of view of the person performing the work, these regulations are unquestionably less favourable, as they neither offer protection against unjustified dismissal in such extent as labour law regulations do, nor do they provide notice periods. Therefore, a contract of mandate or a contract for a specific task can be terminated overnight if the contract does not provide for otherwise.
According to the regulations of the Civil Code, the employer may withdraw from the contract at any time before the completion of the work, but then he is obliged to pay the agreed remuneration after deducting the amount, which the contractor saved due to the non-completion of the work.
A similar situation applies to the contract of mandate, – the employer (‘mandator’) may withdraw from it at any time, but he should return the expenses incurred by the contractor (‘mandatary’) to properly perform the obligation. In addition, if the mandate was paid, the mandator is obliged to pay a part of the remuneration corresponding to the mandatary’s actions so far. If the termination was without an important reason, the mandatory is obliged to return any incurred damage. The restitution for damage in the case of termination without important cause resembles the construction of employer’s liability for unjustified termination of the contract of employment. However, in the case of termination of the contract of mandate, the employer’s liability will be civil liability. The amount of compensation will not therefore be limited as is the case with contracts of employment, but the contractor will not have a claim for the completion of the mandate or the work in imitation of the claim for reinstatement in employment provided in labour law.
Of course, in the civil contract, in compliance with the principle of freedom of contract, the parties may both include the reasons for termination and introduce the notice period. These will not be, however, labour regulations, but civil regulations, and hence the claims can be sought for only under the Civil code.
e. Local Limitations on Use of Independent Contractors
Polish law does not restrict the use of civil contracts. The parties are completely free to choose the basis for employment. Furthermore, there are no general rules concerning specific types of work or positions on which employees may be employed exclusively on the basis of the contract of employment or exclusively on the basis of a civil contract.
It should be remembered that the substitution of a contract of employment by a civil law contract while maintaining the terms of employment as specified in the Labour Code is inadmissible. Therefore, if an employee undertakes to perform work of a specific type
(1) for the benefit of an employer, (2) under the employer’s supervision, (3) and in a place and time fixed by the employer, (4) the work will be performed on the basis of the contract of employment, even though the parties label it a contract of mandate or a contract for a specific task. The establishment of the employment relationship is automatic if all the conditions defined by the Code are fulfilled. This is understandable, as contracts of employment are socially more readily acceptable than civil law contracts, which is the reason why the legislator introduced the described mechanism.
Additionally, the Penal Code contains penal regulations according to which an employer employing an employee on the basis of a civil law contract in a situation in which according to the Labour Code the employer should conclude a contract of employment with the employee commits an offence and thereby is liable to a fine of PLN 1,000 to 30,000 (EUR 250 to 7,500).
f. Leased or Seconded Employees
In today’s social relations, a certain level of flexibility in the employment relationship is desirable. This is understandable, since it is mainly the employer who bears the burden of comprehensive care for the prosperity of the workplace, and who carries the economic risk carried by running a business and employing people therein. If an employer is to quickly react to the demand of the market and the workplace, he must have at his disposal a mechanism of “shifting” free labour forces to places where, in the given moment, the demand for labour is the greatest.
A constitutive element of every contract of employment includes the parties defining in the employment relationship, the type of work performed, the place of work, the amount of the remuneration, and the working time (full- or part-time). As mentioned above, the requirement to specify the type of work to be performed by the employee in the contract is the consequence of the constitutional prohibition of forced labour. An employee has to agree to the type of work performed, and the employer cannot unilaterally order an employee to perform work other than what was agreed upon. Besides protection against forced labour, the definition of the type of work in the contract of labour is an element organizing the employment relationship, and the definition of the type of work offers the employer the ability to indicate duties which are connected with the given position and which the employee is obliged to carry out.
To reconcile the employees’ right to confidence in the type of work performed with the employer’s right to flexibly use the employees’ potential, not to allow a situation where employees are forced to perform labour which has not been agreed on (forced labour), and at the same time influence employment flexibility, the Polish legislator included into the Labour Code the construction of secondment (temporary transfer) of an employee to other work/other place of performing work.
Secondment (temporary transfer) of an employee to other work/other place of performing work
Change of the type of work performed by an employee is, as a rule, possible by a notice altering the terms of work. However, regulations about termination of contracts apply to a termination of the contract terms and therefore, in the case of contracts concluded for an indefinite period, the employer may terminate the terms of such contract only when there are justifiable reasons to do so. A corresponding application of the regulations about the final termination of contracts of employment to the altering termination, leads to a conclusion that the termination by the employer of the terms of contracts (and therefore of the type of work performed) with a pregnant employee, an employee during maternity leave, and an employee during the pre-retirement protection period, as well as an employee who is a member of a union or who has a specified union function, is not admissible without consultation with that union.
The Polish Labour Code provides for one exception to the above rule. The employer has the right to unilaterally transfer an employee to other work if all conditions provided in the Code have been fulfilled. The employer has the right to temporarily transfer an employee to other work without the need to terminate the terms of work of such employee in the following situations: the existence of a reasonable need of the employer (1) and in addition, the other work has to correspond with the employee’s qualifications, (2) the period of secondment cannot exceed three months in a given calendar year, (3) and the secondment to other work cannot cause a reduction in remuneration (4).
When all of the above conditions have been fulfilled, secondment of an employee to another type of work is allowed. The secondment we are talking about can refer not only to the type of work, but the place in which it is performed, as well. For the employer, the advantage of a secondment under the said Labour Code regulation is that the employer does not have to bear additional costs, e.g. travelling expenses, which in lack of secondment would be associated with the necessary business trip to another place of work.
A form of employment relationship, which makes this relationship more flexible is the institution of temporary work. The Temporary Employees Employment Law of July 9, 2003, implementing Council Directive 91/383/EEC of June 25, 1991, introduced the notion of temporary employment to the Polish legal order. Since then, this peculiar form of employment has become a stable element of the Polish labour market. The reasons for the popularity of temporary employment are complex. It seems that the party who benefits the most from this form of employment is the employer, though certain advantages for temporary employees can be seen, as well. This applies particularly to novice employees on the labour market and employees who have other duties in addition to work. It seems plausible to theorize that the greater the inflexibility of typical employment (based on the Labour Code), the more popular temporary work will become. Temporary employment is characterized by the fact that the user employer for whom and under whose supervision the temporary employee performs work, does not remain in a legal relationship with the latter.
A temporary employee is employed by a temporary work agency for a fixed period of time or for the time of performing a specific work. Between the agency and the temporary employee there is a classic employment relationship regulated by the Labour Code. The user employer is not an employer within the meaning of the Labour Code for the temporary employees. On the basis of an agreement with the agency, the temporary employee is sent to work at the user employer’s workplace, the user employer being a third person for the temporary employee.
Due to the fact that an employment relationship occurs between the temporary work agency and the temporary employee, duties resulting from this relationship rest with the agency and the employee, and not with the user employer. That is why the user employer does not pay remuneration to the temporary employee. The user employer’s duties towards the temporary employee are limited exclusively to those provided for by law (e.g. assurance of safe and healthy working conditions, assurance of the use of the annual leave by the temporary employee) or those agreed upon with the temporary work agency, which has “rented out” its employee.
The above means also that the user employer cannot terminate the employee’s contract of employment. This can be done only by the temporary work agency. If the user employer desires to end the employment of a temporary employee, it will be necessary to terminate the legal relationship between the employer and the agency.
An employer who intends to “rent” an employee from a temporary agency agrees with this agency in writing on the type of work to be entrusted to the temporary employee, the qualifications required to perform the work with which the temporary employee is to be entrusted, the expected period of performing the temporary work, the working time of the temporary employee, and the place of performing the temporary work. Additionally, the user employer informs the temporary work agency in writing about the remuneration for work which is to be entrusted to a temporary employee, specified in wage regulations in force at the user employer’s workplace, and about the conditions of performing temporary work regarding health and safety at work.
The user employer’s duties towards a temporary employee are generally limited to obeying industrial safety regulations, keeping of the employee’s working time records, granting the annual leave due to the employee, and non-discrimination in employment. These duties may be extended in the contract with the temporary work agency. Such provisions, however, will be civil obligations and not labour obligations and, in addition, the person entitled to claim damages in court will not be the temporary employee, but the temporary work agency.
From the relation linking the temporary work agency with the user employer, arises the agency’s liability for damage done to the user employer by the temporary employee. The agency’s liability is based on the Civil Code.
A temporary work agency bears liability for damages in case the user employer infringes on the rule of equal treatment in employment with regard to the temporary employee. This is understandable, because there is no employment relationship, which could be a basis for liability, between the temporary employee and the user employer. The temporary agency is entitled to a recourse claim towards the employer “renting” an employee in respect of paid compensation.
g. Regulations of the Different Categories of Contracts
Contract of mandate
The purpose of the contract of mandate is to provide the mandator with specialized services of the Contractor. The Contractor is to perform a set of specified actions on behalf of the mandator. What is worth to be noticed is the fact that the contract of mandate generally expires in case of the death of the Contractor. In case of death of the mandator it is presumed to be still in force. It is the manifestation of the rule of protecting the justified interests of the mandator and his heirs. Contract of mandate is recognized as a contract of thorough action. It means that results of contract should be judged not by the final result of actions of the Contractor but by the way he performed his obligations. It means that the Contractor is responsible not for the final outcome of his actions but for the utmost good faith in exercising his duties towards the mandator.
Currently, contract of mandate is encompassed with obligatory payment of contribution to the Social Security Fund, unless the Contractor meets the requirements of release from the mentioned obligation. They vary and are based on such conditions as: the age of the Contractor, being in employment relationship with the Principal or being registered as a student.
Contract for a specific task
The contract of performing a specific task is a civil-law-based contract concluded between the ordering party and the accepting party. The accepting party commits to create a specific task and the ordering party commits to pay remuneration. A specific task can be any material thing or immaterial composition (e.g. computer program).
Obligation of the accepting party consists of executing such a chain of activities that in the end result in creation of a specified task. As for the obligation of the ordering party, promised remuneration should be clearly stated in the contract, not necessarily in the form of amount of money that is to be paid. Instead, parties can agree to calculate final amount of remuneration based on some factor of a certain value and a numerical factor.
The specific task can also be of a non-material character, especially when it has to do with the creative activity- e.g. with creating a poem or a song.
Contract of performing a specific task is a contract of a result. It means that judging whether it was performed properly should be based on the characteristic of the final outcome of the contract- the specific task- and not on the actions that were undertaken in order to create mentioned task.
Even though the contracts on performing a specific task are not encompassed with obligatory payment of contribution to the Social Security Fund, they are often controlled by the appropriate authorities in order to check if they do not hide actions that otherwise should be viewed as performed under the contract of mandate. It is done to ensure that individuals do not avoid paying mandatory payments to the Social Security Fund.
This is a contract in which the agent commits to be a constant intermediary in terms of concluding contracts between the Principal and his clients or to conclude mentioned contracts in the name of the Principal. Obligation of the principal consists of paying the remuneration to the agent. Both agent and the principal are to be entrepreneurs and the agent is additionally obliged to act within the scope of activity of his company.
This contract can be concluded in any form. Written form is prescribed by the Civil Code only in a situation in which the agent commits to bear liability for performing duties of the clients’ arising from the contracts concluded between them and the Principal.
Management contract is a contract, which is neither named nor defined by Civil Code. It is not identical to any other contract. As a result it is defined as an “innominate contract”. The essence of this contract is to act in the name and on behalf of company. As it is a contract of due diligence a manager is not obliged to achieve a specific result but manager has to assure the highest degree of professional care and conduct. Manager is neither a subordinate nor under management of mandatory.