Four different contracts to employ staff in Poland

You decided to open a branch in Poland and to relocate part of the business here. There will be some challenges awaiting you as can be expected in any other country. One of them will be finding the right talent for your company as well as offering them the appropriate type of contract.

 

There are four different types of contracts that you can offer to your future employees.

 

Umowa o pracę (Employment contract)

 

Umowa o pracę is the most common way of employment in Poland and also the most expensive for the employer. The agreement falls under the legal regulations included in the Polish Labor Code. 

 

The Labor Code regulates the rights and obligations of the parties in the employment relationship, that is the employee and the employer. Employing someone under a contract of employment is primarily associated with certain guarantees:

  • minimum wage guarantee
  • the right for paid holidays
  • sick pay during illness
  • regulated working time
  • regulated ways of how to employ and fire an employee

 

Further points for consideration

 

Establishing a working relationship under a contract of employment is considered the most advantageous form for the employee. The employer also bears the cost of paying partial social security contributions and an additional 20% employer contribution on top of the gross salary. 

 

The Labor Code distinguishes three types of employment contracts:

  • for a trial period (usually three months with an option to extension)
  • for a limited period (i.e. one year)
  • for replacement
  • for an indefinite period.

 

If you are looking for more information about this type of contract from an employee’s perspective, we highly recommend this article

 

B2B contract (self-employment)

 

This form is prevalent within the IT business, and in many ways, also beneficial for the company.

By self-employment, you run your own one-person business. A contract, regulated under Civil Law, stipulates the terms and conditions under which the contractor (entrepreneur) and the employer (employer) work together.

The contract between the two parties determines the remuneration for the work performed, place, time and all other stipulations related to the collaboration. Contractors don’t have the mandatory employee rights provided under labour law. Besides that, all duties related to accounting and ZUS are on the part of the entrepreneur.

 

Advantages of the B2B contract for the company

 

The main benefits from the company’s point of view include:

  • no need to pay for the social contributions for the employee
  • no need to pay for his sick/holiday leave
  • no obligation to pay for maternity/paternity leave
  • easier to ramp up and ramp down staffing
  • the cost is tax-deductible

 

Disadvantages for the company of B2B contract

 

  • some employees will expect their share of the expenses saved by the employer, leading to slightly higher salary expectations
  • not all employees want to work under B2B contracts

 

You can read more about the B2B agreement here.

 

Umowa o dzieło (Contract to perform a specified task)

 

The purpose of this contract is the execution of a specific task by the contractor. The contracting party pays, in return, remuneration for this task. The law does not define the minimum payment. 

Under this type of contract, an employee is not subject to social or health insurance. The agreement to perform a specified task must be documented with invoices and is subject to tax.

 

Umowa zlecenie (Assignment Contract)

 

An assignment contract, also known as a “diligent performance contract” is signed between the principal and the contractor. Its subject is the performance of a specific transaction. Unlike a contract to perform a specified task, the subject of the contract is not the final result, and the compensation is usually paid after the job is done. You can terminate the agreement at any time within the period of notice stated in the contract.

If your service contract represents the only income for your contractor, you will be obliged to pay health and social insurance. 

 

Conclusion

 

These are the four most common employment contracts in Poland. The form that you decide upon depends very much on the type of business that you would like to run. We advise you to contact a lawyer or HR-advisor to learn what contract works best for your business.

If you are interested in hiring employees in Poland, we are here to help!

 

This is a guest post written by Dagmara Grabowiec. Dagmara is a Polish blogger who writes about Poland and Polish culture. Feel free to visit www.partnersontheroad.com to read more from her.