What are the forms of employment?

Choosing the right career path is not only a matter of industry or position, but above all a decision on what terms we will provide our services. In the Polish legal system, there are various forms of employment, which determine our privileges, obligations and the level of social security. Understanding the differences between the two is crucial for both a candidate looking for stability and a freelancer who values flexibility.

The foundation of stability: Employment contract

For many people, the most common form of employment is invariably an employment contract. It is a specific legal relationship, which is regulated in detail by the Labour Code. When we decide to hire employees, we enter into the so-called employment relationship, which is characterized by several important features.

First of all, under this agreement, the employee undertakes to perform a specific type of work for the employer and under his direction and at a place and time determined by the employer. In turn, the employer undertakes to pay the salary. The key features of an employment relationship are voluntary, remunerated and personal performance of tasks.

Employment under an employment contract brings the widest range of benefits. An employee has the right to:

• paid annual leave, the length of which depends on the length of service (20 or 26 days);
• free health care and sickness benefits (sickness insurance);
• protection against sudden dismissal by having to maintain a notice period;
• guarantee that they will receive at least the minimum wage set for a given year by the state.

It is worth noting that an employment contract can be concluded for a trial period, for a definite period of time or for an indefinite period. The latter option is most desired by those planning to take out long-term commitments, such as a mortgage, as it provides the greatest employment stability.

Flexibility and freedom: Civil law contracts

In a dynamic business environment, civil law contracts, which, unlike full-time employment, are subject to the Civil Code, are gaining more and more popularity. They give the parties much more freedom in shaping their mutual relations, but at the expense of less social protection.

Contract of mandate

This is the most popular form of employment of an employee (although formally we do not call the employee an employee, but a contractor). Its subject matter is the performance of a specific legal or factual act with due diligence.

In the case of an order, it is important that the contractor usually has more freedom in choosing how to perform the work than a full-time employee. Although the mandate agreement has been subject to social security for several years (the contractor is subject to social insurance), the issue of paid annual leave or paid sick leave (sickness insurance is voluntary here) depends solely on the arrangements between the parties. However, a big advantage for many is the fact that this contract has a certain minimum hourly rate, which protects against exploitation.

Contract for specific work

This is the so-called result agreement. Here, it is not the careful action itself that counts, but the specific end result – e.g. writing an article, creating graphics or building furniture. A contract for specific work is characterized by the lack of mandatory social security contributions (ZUS), which translates into a higher remuneration “on hand”. However, it should be remembered that the lack of social security contributions means no contribution period to retirement and no right to free medical care, unless the contractor has another title to insurance.

Modern forms of cooperation and self-employment

The modern labor market offers a much wider range of choices of various forms of employment. More and more specialists are opting for a sole proprietorship (JDG), switching to the B2B (Business-to-Business) model.

Such forms of cooperation are particularly attractive for people with high earnings. A self-employed person pays his or her own contributions, takes care of the employment fund and settles accounts with the tax office. Although it loses the privileges of the Labor Code, it gains the opportunity to optimize taxes and work for many clients at the same time.

In specific industries, there is also an agency agreement, where the agent undertakes to mediate in concluding contracts, or a managerial contract, which is an unnamed civil law contract dedicated to the management staff. There is also a cooperative employment contract that combines the features of a full-time job with membership in a labor cooperative.

Obligations of the parties to the employment relationship and health and safety

Regardless of the form chosen, each professional relationship gives rise to specific obligations of the parties to the employment relationship (or the parties to a civil contract). The basic ones include:

1. Employee’s duties: conscientious and diligent performance of tasks, observance of working hours and care for the welfare of the workplace.
2. Employer’s obligations: timely payment of remuneration, ensuring safe and hygienic conditions (occupational hygiene) and respect for the dignity of the employee.

It is worth noting that even on the basis of civil law contracts, the principal is obliged to ensure safe working conditions, although he does not have to apply all the strict working time standards known from full-time to this end.

Comparison of costs and benefits

When choosing a form of employment, financial aspects are crucial. The minimum hourly wage and the amount of the minimum wage are indicators that usually change twice a year. For a full-time employee, the minimum wage is the gross amount from which the employer pays a number of contributions. In the case of a contractor, the contractor’s remuneration depends on the number of hours worked, unless a flat rate has been agreed.

Export to Sheets

For young people, up to 26 years of age, concluding a civil law contract (mandate) is particularly financially advantageous due to the exemption from income tax and the lack of the need to pay contributions if they are students. Then their gross salary is equal to the net amount.

Termination and extension of cooperation

Each of the mentioned forms has different rules for terminating the contract. We are protected by the provisions on termination on employment, and any extension of the contract for an indefinite period often occurs automatically after the third term contract (in accordance with the limit of 33 months).

In the case of civil law contracts, we are dealing with the possibility of quick termination of the contract, which is sometimes perceived as a disadvantage (instability) or an advantage (mobility). However, if we care about flexibility, working at any time and not having a rigid framework, these contracts will be a hit.

Summary – what to choose?

The decision to hire an employee on specific terms should always be preceded by an analysis of the needs of both parties. Do we care about workers’ rights and full social protection? Then the only right choice is the basis of the employment contract. Or is it a priority to earn more with fewer contributions? Then it is worth considering a contract for specific work (if the nature of the work allows it) or an order.

It should be remembered that it is against the law to try to replace a full-time job with civil law contracts in conditions where there is subordination and a permanent place of work. The National Labour Inspectorate rigorously approaches abuses in this regard, protecting the integrity of the employment relationship.

When choosing from the available forms of employment, it is worth looking not only at the amount of the transfer, but also at what happens in crisis situations – during illness, the desire to go on vacation or when planning to expand the family. Each specific form of employment has its ups and downs, and a conscious choice is the first step to a satisfying professional career.