Polish civil law contracts: mandate contract

In the previous blog entries we mentioned, that anyone running a business here in Poland probably knows, that a substantial number of Polish workers are employed under the so-called civil law contracts.

Anyone who has ever conducted business activities in Poland knows, that there’s a number of workers employed under the so-called civil Law contracts. Let’s take a closer look.

In the previous blog entries we mentioned, that anyone running a business here in Poland probably knows, that a substantial number of Polish workers are employed under the so-called civil law contracts. 

As of 2020, there are two types of such contracts, that are quite known on the local Polish market:

• umowa o dzieło type of contract.
• umowa zlecenia type of contract;

Those are usually known in English as Specific-task contract (o dzieło) as Mandate Contract (zlecenie) respectively.

Although various names may be used for the latter as well, such as Order Contract/Commission Contract or even Freelance work agreement.

But they all usually mean the same — umowa zlecenia type of contract.

Currently, there are 2 types of “employment” contracts that exist under the current Polish Law, that are known to every Pole:

Such contracts are not regulated by the Polish Labour Law despite their overwhelming popularity among some employers and employees alike.

Being typical Civil Law contracts, both Specific-task contract (o dzieło) and Mandate Contract (zlecenie) are regulated by provisions of the Polish Civil Code.

Their flexibility helped them gained popularity among foreigners registering new businesses in Poland as well, as there are way fewer regulations when comparing to your traditional employment contracts.

Not to mention that the labour costs are significantly lower.

For people, who are not fully familiar with the Polish Labour Law, they come to be quite handy, for those taking the first steps in running a business in Poland.

Specific-task contracts are especially popular among IT specialists, working on project-basis jobs with various clients. Although we should mention, that the majority of Polish IT companies prefer working with their contractors under the so-called B2B contract.

Meaning: you have to be registered as a sole trader or work through or virtual company. The latter being a perfect solution from non-EU nationals, who cannot be registered as sole traders.

But let us get back to our Civil law agreements, let’s take a closer look at the umowa zlecenia type of a civil law agreement — Mandate Contract.

Mandate contract: main features

We shouldn’t confuse those two types of contracts. As they are fundamentally different. While one can work on a project basis under the Mandate Contract, this type of document can be used for any type of work.

This of it as the lite-version of your common employment contract (called Umowa o Pracę in Polish).

Mandate contract can be used for any type of activity, any type of services that may be provided for the end-customer: IT services, barber’s services, car rental, even drivers.

Any account manager or salesperson can be employed under this type of contract. Provided that they both come to an agreement, of course.

From the legal point of view — it is completely acceptable and does not violate any law, currently in force in Poland.

However, if you are an IT specialist and looking for a legal way to optimise taxes, the Specific-Task contract is the way to go. Just remember, that in accordance with the current Law, the said specific task or dzieło in Polish must be a unique, independent, specific work, or piece of work.

But if you are looking for retirement, social security and health benefits for yourself as well as your family, you should probably stick with the Mandate Contract agreement if a typical employment contract is out of the question.

Mandate contract: pros and cons

Let’s start with the cons.

Although being more flexible than your typical employment contract, the employer as well as the employee, still have to follow a number of rules. With the 2017 amendments to the current Civil Code were introduced, adding the minimum wage requirement.

As of 2020, the current minimum hourly rate cannot be lower than PLN 17.00/hour gross.

Similar to your typical employment contract aside for being subject to Personal Income Tax (current basic Tax rate is set at 17%), there are mandatory social security (ZUS) as well as health insurance contributions.

Although health insurance covers not only you but also your family members. So if you are moving to Poland with wife and kids, this may be something you should consider, when choosing contracts.

At the same time, social security contributions (ZUS) are quite important if you are planning on staying in Poland. They can be quite beneficial for you in the long run.

Similar to the Specific-work contract, when providing services for your client any work can be further delegated to subcontractors.

Mandate Contract also means limited supervisory, when it comes to tasks delegated to the “employee”.

Unless both those things are impossible due to the contract’s provisions stating otherwise. It’s all up to you and your Employer/Client.

The same goes for paid holidays and paid overtime. The Mandate agreement does not cover those automatically like the Employment Contract usually does unless those provisions are included in the Mandate Contractor.

Let’s sup it up:

• Flexibility (both when it comes to adding and taking away things);
• More Taxes and More benefits;
• Tasks can be delegated (unless your contract states otherwise);
• No privileges such as paid holidays or paid overtime (unless your contract states otherwise);

Do not forget, all these contracts fall under the subsequent provisions of the Civil Law, and should anything goes wrong (we hope not), all claims shall be made in a civil court.