Forms of employment – which is the most beneficial?
Employers know very well how many duties and great responsibility are associated with running your own business. Many formalities are required, for example, when hiring employees, which is also associated with high costs. Check what forms of employment are available and which one is the most advantageous.
What does the choice of the form of employment depend on?
Each form of employment of employees is associated with slightly different obligations of the employer and costs. Each is also intended for different purposes. Therefore, its choice should depend to a large extent on how the cooperation between the employer and the employed party will proceed. There are positions where it is important to constantly monitor the employee, but there are also those where the time, manner or place of work does not matter – only the effect matters. This may affect the optimal form of employment.
In this case, a lot depends on the expectations of both parties, as well as the specifics of running the business and the needs of the employer. Therefore, no form of employment can be considered universally the best. Therefore, it is worth familiarizing yourself with the features of each solution and making your own decision.
Forms of employment – employment contract
An employment contract is often considered to be the “best” form of employment – especially from the employee’s point of view. In fact, the employee can enjoy numerous privileges and, above all, stability. Formally, only people employed under an employment contract can be called employees. Only they are also covered by the Labour Code. Therefore, from the employer’s point of view, this form of employment is not necessarily beneficial – primarily because it causes many restrictions.
An employment contract applies to the performance of work in a specified position, at a specific place and time, under the direction of the employer or another person indicated by the employer, for a specific remuneration. It involves the need to cover the costs of full ZUS contributions. The most important characteristics of this form of employment are:
- regulated working time,
- the need to ensure remuneration above the minimum wage threshold set by the government,
- the employee’s right to paid leave,
- sick pay,
- detailed rules for hiring and dismissing employees,
- additional remuneration for work on Sundays and holidays or overtime.
The employer must then take into account high employment costs – much higher than in the case of other contracts. The minimum cost of employing an employee under an employment contract is the amount of the minimum wage plus approx. 20% of social security contributions. The method of terminating the contract may also be a problem. The employee is protected under this form of employment.
It is also worth knowing that there are different types of employment contracts. These are the following agreements:
- for an indefinite period of time,
- for a trial period (up to 3 months),
- for a limited period of time,
- for the duration of the work,
- as a replacement.
So does an employment contract have any advantages from the employer’s point of view? It certainly increases the attractiveness of a given position, helping to attract better employees. By offering an employment contract, permanent recruitment of specialists and qualified employees is much easier. It also helps in reducing turnover and improving collaboration thanks to team stability. It increases employee loyalty and can translate into the quality of their work. However, these are also threats, because a person employed under an employment contract can abuse their privileges without major consequences.
Contract of mandate – a better form of employment?
An alternative for employers who are afraid of the obligations and costs associated with an employment contract is a contract of mandate. It is concluded on the basis of the provisions of the Civil Code. It is associated with greater independence of the employee and fewer obligations of the employer. It is usually concluded for the performance of a specific work for a specific remuneration. The employee is then referred to as the contractor, and the employer – the principal. The contractor is obliged under the contract to perform the order diligently, but there is no specific effect in this case.
A contract of mandate is definitely a form of employment that is less desirable by employees. It does not involve paid leave or the possibility of taking sick pay. It can be terminated without numerous formalities and without notice. In this case, the provisions of the Labour Code do not apply either, e.g. regarding the maximum working time, uninterrupted rest or overtime. However, the employer’s costs are much lower, which usually means a higher net (“take-home”) salary for the employee. Currently, all contracts of mandate are subject to mandatory contributions until the monthly income from all insurance titles is exceeded – PLN 2600 gross. For contracts of mandate, there is also a minimum hourly rate of remuneration.
However, it should be known that according to the law, a contract of mandate is intended to be used only in situations where the employment does not have the characteristics of an employment relationship. Therefore, this applies to positions characterized by independence and freedom in the organization of work and the lack of strictly defined working hours. If the work is to be performed at a specific place and time, and the employee is subject to the instructions of the supervisor and does not have freedom to organize his duties, the use of a contract of mandate may be associated with unpleasant legal consequences for the employer.
Contract for specific work – a form of employment in which the effect is the most important
A contract for specific work is the least frequently used form of employment, because it is characterized by a specific purpose. It is concluded on the basis of the provisions of the Civil Code and concerns the performance of a specific work. This means that what matters is the result of the work done. Usually, the maximum time of its performance is specified under the contract for specific work, but apart from that, the employee has full freedom regarding the organization of time, place and method of work.
The contractor is not subject to social security contributions, nor does he have any employee privileges. There are no minimum wage rates. It is possible to apply high flat-rate tax-deductible costs. It is a form of employment associated with minimal formalities, ideal in situations where only the effect of the work done counts. Employment costs are the lowest in this case.
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