Crucial aspects of most common contracts concluded with foreigners

Employment contract

Mandate contract

Contract for specific work

Managerial contract

An employee assumes an obligation to perform work of a previously specified type in behalf of and under an employer’s direction in the place and time determined by him. In exchange, the employer assumes an obligation to engage the employee and to pay his remuneration.

A mandator orders the performance of specific work in  a certain period of time  and pays an agreed remuneration for it.

It is a contract of performing a “task”, that is a clearly defined job resulting in the production of a specific product. 

One party (a manager) assumes an obligation to run an enterprise in another party’s behalf, in his own name or in behalf of the owner of the enterprise, who gives up the management of the enterprise for economic or personal reasons.
This type of contract has not been regulated by statutory laws, therefore, if it does not have features adequate to those of an employment contract, it is assumed to be a contract on providing service and on the strength of article 750 of the KC, provisions on a mandate contract are applied to it.

Those are contracts of diligent action, meaning that the employee is obliged to perform work of a specified type, in compliance with the wording of the obligation diligently and scrupulously. A specific result is not required.

It is a contract of result – the contractor assumes an obligation to achieve an individually specified result, a specific final effect..

Generally it is a contract of diligent action, however, parties can adopt other assessment criteria of the contract's fulfilment than performing work diligently (e.g. financial results of the enterprise).

It is always paid. The employee receives remuneration for the work performed or unperformed for reasons beyond the employee's control (stoppage, sick leave).

May be either paid or gratuitous. Where the contract was paid, remuneration is due regardless of the result of a contractor’s actions.

Must be paid. The result is rewarded.

The contract may be paid or gratuitous. Generally it is a paid contract, but the value of the manager’s remuneration may vary depending on the results of management.

Work must be personally performed by the employee. The Labour Code does not allow exceptions in this scope.

The contractor may delegate the performance of work to a third party only if this follows from the contract or custom or if he is forced to do so by the circumstances. In such a case, he is obliged to inform the mandatory immediately of who the substitute is and what is his place of residence, and having done so, he is liable only for not taking due care in choosing the substitute (article 738 § 1 LC).

The contractor may perform  the task personally or through third parties unless the contract provides an obligation of personal performance. If the contractor commissions  other persons to perform the task, he must supervise them because he bears personal liability for the outcome.

As a rule, the manager should personally perform work. However, thanks to freedom of contracts, parties may regulate this matter differently in the contract.

The work is performed “under direction” of the employer, meaning that the employee has to comply with supervisors’ instructions regarding work and has to be at the employer’s disposal in the workplace or in another place designated for the performance of work.

Parties to the contract are equal. There is no subordination relationship. What matters is the performance of work, not the time taken and the place of performance.
The employer cannot determine the hours and the place where the contract shall be performed. He can only impose a deadline.
The employer cannot demand the employee to follow all his commands, but only those provided for by the contract.

The manager’s position is Independent; there is no subordination. It is connected to the scope of duties of the manager who is to run the enterprise and bear risk and liability arising from its management, which, as a rule  excludes the manager’s subordination.

The contractor has to follow the mandator’s guidelines regarding  the way the work is performed. The contractor may, without the mandator's prior consent, desist from performing the work in the manner indicated by the mandator if there is no possibility to obtain his consent, and there is good cause to presume that the mandator would consent to the change if he knew of the circumstances (article 737 LC).

The ordering party may control how the task is being performed and if the contractor performs the task in a defective manner or contrary to the contract, the ordering party may call on him to change the manner of performance and may set an appropriate period for this purpose. After the period so set passes to no effect, the ordering party may rescind the contract or entrust the correction or further performance of the task to another person at the cost and risk of the contractor (article 636 § 1 KC).

Work is performed in a continuous manner, that is it is repeated every day or in longer intervals (it is not a one-time work or action).

The contractor is obliged to perform a certain legal or actual action (a one-time action) or to perform actions constituting a specific service (a continuous action).

The contract is of a one-time character. Its lifetime is usually provided in the contract by indicating that the task is to be performed in a fixed time.

Provisions regarding mandate contract have to be applied.

In case of an employment contract, the employee is covered with an obligatory sickness insurance from the day of conclusion of an employment relationship until the day of its termination. Also, when the employee concludes a mandate contract or a contract for specific work with his employer, he is covered with an obligatory sickness insurance. The employee is also covered with other obligatory insurance:

• Pension and disability. The premium is subject to a division between the employer and the contractor (pension: 9.76% + 9.76%, disability: 6.5% + 1.5%);
• Workman's compensation. The premium is fully paid by the employer (set forth individually in compliance with the Act on social insurance against accidents at work and occupational disease).
• Health. Premium is paid only by the contractor (9%) only when he holds a visa for the purpose of performing work, a residence permit for a fixed period or other permits listed in article 3 section 1 point 2 of the Act on Publicly Funded Healthcare Benefits.

Unless an international agreement to which Poland is a party excludes using Polish regulations regarding social insurance, and if the foreigner performs work within the territory of Poland under a mandate contract (also an agency contract and any other contract of providing service, to which Labour Code regulations on mandate contracts apply), he has the right to be covered with a voluntary sickness insurance and with an obligatory insurance:
Pension and disability. The premium is subject to a division between the mandator and the contractor (pension: 9.76% + 9.76%, disability: 6.5% + 1.5%); However, persons performing work under the above mentioned contract are not subject to this insurance if they are pupils of a lower secondary school, an upper secondary school, a secondary school or students until 26 years of age.

A contractor is not subject to social insurance.

If the person performing work gets at least  minimum remuneration, the premium is paid by the employer in full to his Labour Fund (2.45%) and to the Guaranteed Employee Benefit Fund (0.1%). The employer is obliged to report the employee for insurance  within 7 days from the commencement of work.

Workman’s compensation. The premium is fully paid by the mandator (set forth individually in compliance with the Act on social insurance against accidents at work and occupational disease).

Health. The premium is paid only by the contractor (9%) and only when he holds a visa for the purpose of performing work, a residence permit for a fixed period or other permits listed in article 3 section 1 point 2 of the Act on Publicly Funded Healthcare Benefits.
If the contractor receives at least minimum remuneration, the premium is fully paid by the mandator to the contractor’s Labour Fund (2.45%) and to the Guaranteed Employee Benefit Fund (0.1%).
The mandator is obliged to report the contractor for insurance within 7 days from the commencement of work.