Four different contracts to employ staff in Poland

Introduction to Employment Contracts in Poland

When expanding your business to Poland, one of the essential aspects to consider is the type of employment contract you offer your future employees. In this article, we will explore Poland’s four most common types of contracts and provide insights into their advantages and disadvantages. Understanding these contract options will help you make informed decisions and hire the right talent for your company.

Umowa o Pracę (Employment Contract under Labour Law)

Umowa o Pracę is the most prevalent form of employment in Poland, offering legal protection under labour law to both the employee and the employer. Regulated by the Polish Labour Code, this contract ensures certain guarantees and benefits for the employees, such as:

1. Minimum wage guarantee
2. Paid holidays
3. Sick pay during illness
4. Regulated working time and location
5. Clear guidelines for employment, work conditions and termination

It’s important to note that employing someone under an employment contract is more expensive than the other options in this article. Alongside the gross salary, the employer is responsible for paying an additional 20% employer contribution. Despite the financial implications, this contract provides the most advantageous form of employment for employees on low to medium-high salaries.

Considerations for Umowa o Pracę

When opting for an employment contract, it’s crucial to consider the following points:

1. Trial period: The contract may include a trial period of up to three months, which can be extended.
2. Limited period: Fixed-term employment contract, typically one year, offer flexibility but requires renewal.
3. Replacement: This type of contract is suitable for temporarily filling positions.
4. Indefinite period: Contracts with no specific end date are ideal for long-term employment.

Need to employ staff on UoP but don’t have a legal entity? You can use a Polish Employer of Record service instead.

B2B Contract (Self-Employment, Sole-Trader, Contract under Civil Law)

B2B contracts are common in the IT industry and provide numerous benefits for the company and the contractor. Under this contract, the contractor operates as a one-person business governed by the Civil Law. Key aspects of the B2B contract include determining remuneration, working hours, and collaboration terms.

Advantages of B2B Contracts

From the company’s perspective, B2B contracts offer the following advantages:

1. No social contributions: Companies are not obligated to pay social security or employer contributions for B2B contractors.
2. No sick or holiday leave: B2B contractors handle their sickness or holiday leaves, reducing costs for the employer.
3. No maternity/paternity leave: Companies are not required to provide maternity or paternity leave benefits.
4. Flexible staffing: B2B contracts allow for easier staffing adjustments, facilitating ramp-up and ramp-down processes.
5. Tax deductibility: The costs associated with B2B contracts are tax-deductible for the company.
6. Legal entity: The employer can be an international company without a legal entity in Poland.

Disadvantages of B2B Contracts

However, there are some disadvantages of B2B contracts for companies to consider:

1. Salary expectations: Employees may expect higher salaries to compensate for the expenses saved by the employer.
2. Employee preferences: Not all employees prefer working under B2B contracts, which could limit the talent pool.

Need help setting up your B2B legal entity?

Umowa o Dzieło (Contract to Perform a Specified Task)

The Umowa o Dzieło is a contract designed to execute a particular task. The contractor receives remuneration in exchange for completing the assigned task. This contract is not subject to social or health insurance; the payment is typically documented through invoices.

It’s important to note that the law does not define a minimum payment for this contract type. Therefore, it’s essential to establish clear terms and compensation to ensure a fair agreement between the parties involved.

Umowa Zlecenie (Assignment Contract)

An Umowa Zlecenie, a “diligent performance contract,” is signed between the principal and the contractor to perform a specific transaction. Unlike the contract to perform a specified task, the focus is on the process rather than the final result. Compensation is usually paid after the completion of the job. The agreement allows for termination at any time within the notice period specified in the contract.

If your contractor relies solely on the income from the service contract, you will be obliged to pay health and social insurance on their behalf.

Conclusion

In Poland, these four employment contracts—Umowa o Pracę, B2B Contract, Umowa o Dzieło, and Umowa Zlecenie—offer distinct advantages and considerations for employers and employees. To determine the best contract for your business, we recommend consulting with a lawyer or HR advisor who can provide tailored guidance based on your specific needs. If you are seeking assistance hiring employees in Poland, our team is here to support you throughout the process.