Principles of employment under civil law contracts

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What is the difference between employment under a specific task contract and contract employment? What contributions and tax are deducted from the remuneration of contractors and contractors? What rights and obligations do people employed under civil law contracts have? We answer below.

Civil law contracts - rules of proper preparation

Pursuant to Art. 22 of the Labor Code, by entering into an employment relationship, the employee undertakes to perform work of a specific type for the employer and under his management and at the place and time designated by him, and the employer - to hire the employee for remuneration.

Employment under the conditions specified above is employment based on an employment relationship, regardless of the name of the contract concluded by the parties.

Additionally, it is not permissible to replace an employment contract with a civil law contract while maintaining the conditions of work specified above.

The rules for concluding civil law contracts, which include a mandate contract and a specific task contract, are governed by the provisions of the Civil Code. The decisive influence on whether we are dealing with an employment relationship is not the name of the contract concluded between the parties, but the conditions under which the work is actually performed.

The most important feature that distinguishes civil law contracts from employment contracts is the lack of subordination of the contractor entrusting the work. This means that a person employed on the basis of a mandate contract cannot work in the hours and place strictly determined by the employer and report to the superior as an employee.

An employer concluding a civil law contract under the conditions in which an employment contract should be concluded may be held liable for an offense against the employee's rights. It is subject to a fine from PLN 1,000 to PLN 30,000.

Characteristics of a mandate contract

The mandate contract is a fixed-term contract. It defines a specific product or service that an employee must perform. The order taker undertakes, in accordance with Art. 734-751 of the Civil Code, to perform certain activities for the principal, for the effect of which he is ultimately not responsible.

A characteristic feature of a mandate contract is that it may be - depending on the will of the parties - a paid or free contract. If the contract or its circumstances do not indicate that the contract taker is to perform it free of charge, then the performance of the order shall be remunerated.

As a rule, the contractor must personally perform all the activities he undertook in the contract. In the case of a mandate contract, it is also allowed to perform the order by a third party, i.e. a substitute. The contract of mandate may be terminated at any time by either party. If it results from the ordering party's will, he should reimburse the expenses incurred by the other party, and in the case of a paid order, pay the appropriate part of the remuneration. If the contract is terminated by the person accepting the paid order, he is liable to the other party for the resulting damage.

The contract of mandate should be concluded in writing (one copy for each party) and specify at least:

  • type of contract,
  • its start and end date,
  • job characteristics,
  • value of remuneration,
  • information on whether the contractor will use copyright, where 50% tax deductible costs are applied.

The mandate contract is characterized primarily by the following:

  • there is no subordination of the employer,
  • work can be provided not only by a natural person, but also by an economic entity,
  • it is not covered by the statutory minimum remuneration,
  • the remuneration is paid after the work is completed,
  • there are no restrictions on the number of subsequent contracts,
  • the contractor has limited rights (no vacation, severance pay, sick leave, notice, etc.),
  • in the case of, for example, students, there is no obligation to pay the commission contract with ZUS contributions.

In practice, it often happens that people are employed on the basis of a mandate contract where an employment contract should be concluded. Employers, by modifying the classic features of the assignment, try to achieve the same socio-economic goal that is related to the employment relationship, without incurring additional (financial and social) costs associated with it. The conclusion of a mandate contract does not entail an obligation to pay contributions to the labor fund, guaranteed employee benefits fund, rehabilitation fund for disabled persons, or to make annual contributions to the company social benefit fund. In the case of a mandate contract, the termination of the contract itself is also more advantageous for the employing entity.

Characteristics of a contract for specific work

A contract for a specific work (also known as a result contract) concerns a one-off performance of a work, which is the achievement of a predetermined result.

A specific task contract may be concluded orally or in writing. However, it is important that both parties agree:

  • parties to the contract,
  • subject of the contract,
  • the nature of the work in a precise manner (reference to a formula, drawing, description using weight units, etc.),
  • time of execution of the work,
  • method of settlement of the materials used,
  • remuneration,
  • complaint rules,
  • a copyright issue (in the case of works).

The person accepting the work to be performed does not have to perform it personally, but is responsible for the actions of third parties. In addition, the order taker is liable under the warranty for defects in the work performed.

As a rule, a contract for specific work does not constitute an independent title to social insurance, but sometimes it happens that the employer is obliged to deduct and account for social and health insurance contributions from the remuneration paid to the recipient of the contract. This applies only to the employer commissioning the performance of the work to his regular employee, then contributions will be deducted from the sum of revenues from the employment contract and the contract for specific work. Of course, this situation is not without derogations. The employer does not have to pay health and social insurance contributions to his permanent employee when he signs a specific work contract with him and the latter is on unpaid, maternity or childcare leave.

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Rights and obligations of the parties

Contract work

From the performer's point of view

  • the contractor is only responsible for the final result;
  • the performer of the work is not entitled to holiday, maternity or parental leave;
  • when a specific work contract is concluded with your own employer, contributions are paid in the same way as in the case of an employment contract;
  • in the event of a fraud on the part of the employer, the contractor can only sue him through the civil procedure, i.e. he must hire a lawyer and prepare for a long way through the courts.

From the client's point of view

  • does not oblige to grant holidays or benefits such as severance pay, benefits, etc .;
  • no need to pay social or health insurance contributions (unless the contract is concluded by the company with its own employee).

Contract of mandate

From the contractor's point of view

  • is entitled to retirement, sickness, disability, accident and health insurance;
  • is not entitled to holiday, maternity or parental leave;
  • is not entitled to a care allowance;
  • in the event of a fraud on the part of the employer, the contractor can only complain about it in civil proceedings, i.e. he must hire a lawyer and prepare for a long way through the courts.

From the client's point of view

  • it finances half of the costs incurred by the contractor for the disability and retirement pension contributions,
  • if the contractor is a student or a student up to the age of 26, the employer does not have to pay social security contributions;
  • the client does not grant leave, does not pay severance pay, does not pay sick leave.

Posting of employees under civil law contracts

In the case of civil law contracts, one cannot speak of a delegation. The reimbursement of travel costs will not include payments of benefits provided for in the regulations on business trips of employees due to the fact that the contractor / service provider is not an employee of the client (within the meaning of the Labor Code).

In order for the parties' settlements related to business trips to include, for example, the payment of per diems, such provisions must be included in the contract. The contract may provide for higher and lower benefits than those provided for by law in the case of business trips of employees, and it may also omit such benefits altogether.

In a situation where both parties to the contract decide to use information in the contract regarding the settlement of business trips, it should be remembered that the trip should directly result from the scope and type of activities performed under the contract. In addition, it is necessary to regulate the obligations of the parties in such a way that there is no doubt that the contractor is not under the management of the ordering party. The obligation to travel should result only from the need to properly perform the subject of the contract.

OHS in civil law contracts

The employer is obliged to provide safe and hygienic working conditions to natural persons performing work on a basis other than the employment relationship at the workplace or in a place designated by the employer, as well as for self-employed persons in the workplace or in a place designated by the employer.

The regulations do not clearly indicate how this obligation is to be fulfilled.If the type of work performed, the degree of risks associated with working conditions or the course of processes is so significant that it is advisable that only natural persons with an appropriate health condition and trained in health and safety should be allowed to perform these works or stay in these conditions temporarily. work, the employer or other entity organizing the work may require the person with whom he concludes a civil law contract to undergo a medical examination or training in the field of occupational health and safety. Moreover, it should be stated that natural persons performing work on a basis other than an employment relationship in a workplace or in a place designated by the employer are obliged to comply with the provisions and principles of occupational health and safety on an equal footing with employees - to the extent determined by the employer. On the other hand, there are no grounds for treating persons performing work on a basis other than employment at the workplace or in a place designated by the employer, as employees. There is no obligation to refer them to medical examinations and organize health and safety training.

Contributions for social and health insurance in contracts of mandate and for specific work

Performance of work on the basis of a specific task contract, mandate contract or other contract for the provision of services, to which the provisions on mandate apply in accordance with the Civil Code, may have legal effects in the field of social security and health insurance.

The table below presents the types of contributions to which a person performing gainful work is subject to a mandate contract or a specific specific task contract.

On January 1, 2016, major changes came into force regarding the obligation to pay social security contributions under civil law contracts. Namely, until the end of 2015, it was the case that if an employee performed work on the basis of several mandate contracts, the obligatory title to social insurance was the contract signed at the earliest. At the request of the employee, other contracts could also be contributed or the employee himself determined which contract he wants to pay contributions from. In fact, two contracts were most often signed with the employee - the first for a low amount, which was subject to contributions, and the second, with a higher salary, which was no longer subject to contributions. The amendment to the regulations introduced the obligation to pay contributions to all social insurance for each of the mandate contracts, the remuneration of which does not exceed the minimum wage. This means that if the contractor performs several mandate contracts for lower amounts, e.g. PLN 500, only the next contract will be exempt from contributions after exceeding the minimum wage threshold. However, in order for the employee to be released from paying premiums under subsequent contracts of mandate, he will have to prove to the principal that he or she has the right to do so. Merely a declaration is no longer enough. The confirmation may be the presentation of a mandate contract confirming employment or the ZUS RMUA document received every month. The regulations do not apply only to employees who perform work only on the basis of a mandate contract. If the employee is employed on the basis of an employment contract and his remuneration is lower than the minimum wage, the remuneration under the mandate contract will also be subject to premiums. Similarly, in the case of entrepreneurs conducting non-agricultural business activity - if they have the right to pay premiums on preferential terms, i.e. from the base of PLN 630 in 2018, all mandate contracts will be subject to premiums until the sum of all titles does not exceed the minimum remuneration.

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Problems of self-employment

Self-employment is opening your own business, which will be a gainful activity: service, trade, manufacturing, construction, consisting in searching for, identifying and extracting minerals from deposits and collecting benefits from things and intangible assets. Such activity is conducted in an organized and continuous manner and on its own behalf, regardless of its effect. The main differences between employment and self-employment are listed below:

  • the employee bound by the employment relationship undertakes at the time and place designated by the employer to perform specific tasks for the employer; the self-employed person has the freedom to choose the place and hours of work;
  • the employer undertakes to employ an employee limited by the employment relationship for remuneration; a self-employed person is not guaranteed a minimum wage level;
  • the provisions of the labor law (especially the Labor Code) apply to the employment relationship; self-employed persons cooperate with their contractors on the basis of civil law contracts;
  • the risk in the employment relationship rests with the employer; in the case of self-employment, the risk falls on the self-employed entrepreneur;
  • self-employment guarantees lower ZUS contributions than in the case of full-time employees;
  • in contrast to full-time employment, self-employment is characterized by low employment stability;
  • a self-employed person is obliged to keep accounts, pay insurance premiums and taxes;
  • a self-employed person is not entitled to leave;
  • the responsibility of a full-time employee is defined in the Labor Code; in the case of a self-employed person, its liability may be contractually limited to a specific amount, e.g. by way of contractual penalties, without the possibility of claiming full compensation;
  • the employer may terminate the contract with the self-employed at any time;
  • The self-employed, unlike full-time employees, do not apply to the protective periods before the termination of employment, i.e. the prohibition to terminate the employment contract within four years before acquiring the right to retirement pension and the prohibition to terminate the contract during justified absence from work;
  • unlike salaried workers, the self-employed are not protected by trade unions.

Schemes of premiums of commission contracts by insurance subject

When determining the appropriate premium payment scheme under the mandate contract, the first step is to determine the amount of the basis for insurance for all titles owned by the employee, i.e. employment contract, business activity, other mandate contracts. If the sum of the grounds does not exceed the minimum wage, each mandate contract is obligatorily covered by retirement, disability, accident and health insurance. Only the sickness insurance contribution remains voluntary. Regardless of the entity and title of insurance, if the sum of insurance titles exceeds the minimum wage, only the health insurance premium will remain obligatory under the contract of mandate.

Insurance subject

Insurance title

E.

R

C.

IN

WITH

  • Employee

  • A person with a different mandate contract

  • Pensioner

  • Professional soldier

Contract of mandate (if the sum of all owned insurance titles is lower than the minimum wage)

ABOUT

ABOUT

D

ABOUT

ABOUT

Student and pupil up to the age of 26

Contract of mandate

N

N

N

N

N

  • Employee

  • A person with a different mandate contract

  • Pensioner

  • Professional soldier

Contract of mandate (if the sum of all owned insurance titles is equal to or higher than the minimum wage)

D

D

D

D

ABOUT

Entrepreneur

Contract of mandate (with premiums paid for business activity in the amount of at least 60% of the average monthly remuneration)

D

D

D

D

ABOUT

Entrepreneur

Contract of mandate (with preferential premiums paid for business activity)

ABOUT

ABOUT

D

ABOUT

ABOUT

A person receiving maternity allowance or allowance in the amount of maternity allowance for another reason (e.g. employment relationship)

Contract of mandate

D

D

N

D

ABOUT

A person on parental leave for another reason (e.g. employment relationship)

Contract of mandate

ABOUT

ABOUT

D

ABOUT

ABOUT

Schemes of premiums for specific work contracts with regard to the insurance entity

Insurance subject

Insurance title

E.

R

C.

IN

WITH

Persons who are not employed under an employment contract with the ordering party

Contract work

N

N

N

N

N

Employee

Contract for specific work concluded with or on behalf of the employer

ABOUT

ABOUT

ABOUT

ABOUT

ABOUT

Employee

Contract for specific work concluded not with the employer and not performed on his behalf

N

N

N

N

N

A person who has no other civil law contract concluded and is not an employee

Contract work

N

N

N

N

N

Conducting non-agricultural activities

Contract work

N

N

N

N

N

Pupil and student up to 26 years old

Contract work

N

N

N

N

N

Pensioner, pensioner employed under an employment contract

Contract for specific work concluded with or on behalf of the employer

ABOUT

ABOUT

ABOUT

ABOUT

ABOUT

Pensioner, pensioner employed under an employment contract

Contract for specific work concluded not with the employer and not performed on his behalf

N

N

N

N

N

A person receiving maternity allowance or allowance in the amount of maternity allowance

Contract work

N

N

N

N

N

The symbols used in the table mean:

  1. O - compulsory insurance
  2. D - voluntary insurance
  3. N - the insured person is not insured