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.
Currently, there are 2 types of „employment” contracts that exist under the current Polish Law, that are known to every Pole:
- umowa zlecenia type of contract;
- umowa o dzieło type of contract.
They are usually translated as Mandate Contract (zlecenie) and Specific-task contract (o dzieło) respectively.
Although to be fair, the latter is often translated as “Contract for Specific Work” or “Contract of Commission”, so if you ever stumble upon any of those terms — they all mean the same. Specific-task contract.
Okay, but how do they differ from the traditional employment contract?
Well, the trick is that despite their universal popularity here in Poland, they are not actually employment contracts. Meaning: they are not regulated by the Polish Labour Law.
They are Civil Law contracts and as the name suggests are exclusively regulated by the provisions of the Polish Civil Code.
Those types of contracts are way more flexible, than their traditional counterpart umowa o pracę (employment contract), which makes them extremely popular among everyone, who runs a business in Poland.
As in this case, the labour costs of hiring an employee are significantly lower.
With IT specialists being of the few exceptions by the way. Polish prefer working under the so-called B2B contract. Meaning: you gotta be registered as a sole trader or work through our virtual company. The latter is a good solution for foreigners from outside the EU, who cannot register themselves as sole traders.
But let’s get back to our Civil Law contracts. In this article let’s take a closer look at the umowa o dzieło type of a civil law contract.
One thing that should be understood is that the mandate contract and the specific-task contract are fundamentally different.
While the first one can be used for any type of work (we can think of it as the lite-version of your traditional employment contract, fewer obligations for both Parties), the 2nd works on a project basis.
It basically means that it is used when an employer wants the worker to perform a certain specific type of work or a project. It cannot be used for any type of activity.
You see, this specific-task or “dzieło”, as it is called in Polish, is actually defined under the current Law. It must be a unique, independent, specific work, or piece of work.
Let’s take an example. Imagine, that you are planning on hiring an IT specialist to create a mobile app on iOS — the specific-task contract can be applied. We are good.
However, if you are looking for seasonal workers to pick up strawberries or you are opening a language school and looking for teachers, you cannot hire them under this type of contract.
Teaching your class Spanish is not an independent piece of work like a mobile app is, or a brand book or a module for a desktop program.
Furthermore, in accordance with the law, this task must be unique — therefore created only once. That is why modifying an old project is out of the question. As it cannot be considered a typical dzieło (from the legal point of view).
It’s a common mistake when using this type of contract.
But why use it all? Well here’s a couple of advantages.
Specific-task contract: Pros and Cons
Under the specific-task contract, both Parties mutually agree that the Contractor will provide a result within a specific time frame.
The details are usually less relevant (from the legal point of view), time and place are chosen by the Contractor. So are the tools the Party will be using.
Furthermore, unlike your typical employment contract, any work performed under the specific-task contract can be further delegated to a subcontractor. Unless the contract says otherwise of course.
In addition, the minimum wage provision does not apply to this type of contract. Just to remind you, the current minimum wage is set at PLN 2600 gross (applies from 1/1/2020).
So, for instance if you hire someone to create a logo, the other Party can charge you PLN 500 for the said logo. It’s all good.
There are no mandatory social security contributions (ZUS) or health insurance or sick leaves. The only tax, that s applicable is the Personal Income Tax (PIT). The current tax rate is 17%.
Only 80% of the whole amount is subject to PIT. Even less (50%) if you transfer copyright ownership for the work created.
The remuneration is usually paid upon the task completion or on monthly basis e.g. specifying that the remuneration will be paid in instalments.
To sum it up:
- favourable tax-deductible expenses;
- freedom to choose the suitable method of performing the task;
- tasks can be delegated (unless your contract states otherwise);
As we said before these types of contracts are less popular among workers, for the above-mentioned lack of social security, no sick leave and pension contributions. Lower labour costs do come at a price, after all.
Please do remember, however, that as these type of contracts fall under the provision of the Polish Civil Code, all claims (should something go wrong) will be made in a Polish civil court.