What is a so-called "junk contract" and why should you know your rights?
In Poland, many employers still choose to hire workers under civil law contracts - most often a contract of mandate (umowa zlecenie) or a contract for specific work (umowa o dzieło). They are colloquially known as "junk contracts", because they do not guarantee workers privileges such as paid annual leave, protection against dismissal, the right to sick pay or the counting of service towards a pension.
For the employer the benefit is obvious - lower employment costs and greater flexibility. For the worker, however, it means no job security and limited access to social benefits. The problem arises when the nature of the work actually corresponds to an employment relationship, yet the employer persistently keeps the worker on a civil law contract.
Polish labour law clearly protects people employed in such conditions. Article 22 § 12 of the Labour Code expressly prohibits replacing an employment contract with a civil law contract where the conditions under which duties are performed correspond to an employment relationship. It is therefore worth knowing which criteria determine that your "junk contract" should be converted into a full employment contract.
When should a contract of mandate be an employment contract? Key criteria
In Article 22 § 1, the Labour Code precisely defines what an employment relationship is. Under this provision, an employment relationship arises when an employee undertakes to perform work of a specified type for an employer, under the employer's direction, and at a place and time designated by the employer. If your day-to-day work meets these conditions, you have the right to demand an employment contract, regardless of what is written in the civil law contract.
The most important criteria indicating an employment relationship are:
- Subordination to the employer - a supervisor gives you instructions on an ongoing basis, imposes procedures, oversees your working day and holds you accountable for assigned tasks
- A designated place of work - you must perform your duties in a specific office, company premises or another place indicated by the employer
- Set working hours - you log into the system at set times every day and must be available during fixed time slots
- Personal performance of work - you cannot subcontract your duties to anyone, and the company requires you to perform them personally
- The need to submit leave requests - you must ask for permission to take time off, just like an employee
It is worth stressing an important difference: a genuine contract of mandate gives the contractor a considerable degree of independence. The contractor decides which means and methods to use to achieve the result defined in the contract. If your situation is quite different, you have serious grounds to challenge the form of your employment.
What consequences does an employer face for unlawful employment on a junk contract?
Keeping a worker on a civil law contract when they are in fact working under employment conditions constitutes an offence against employees' rights. Polish law provides specific and severe sanctions for this, which should motivate every employer to comply with the rules.
First of all, an employer against whom a labour court or the National Labour Inspectorate (PIP) establishes the existence of an employment relationship will be required to settle all arrears. This includes in particular:
- Payment of outstanding Social Insurance Institution (ZUS) contributions - for the entire period in which the worker should have been employed under an employment contract
- Settlement of back taxes - arising from differences in tax treatment between a contract of mandate and an employment contract
- Payment in lieu of unused annual leave - the worker is entitled to leave that was denied to them for years
- A fine of PLN 1,000 to PLN 30,000 - imposed by a labour inspector or a court
The financial consequences can therefore be very significant, especially if the worker was employed under a civil law contract for many years. It is worth noting that employee claims for establishing an employment relationship do not become time-barred that easily - the limitation period is 3 years from the date on which the claim became due.
What to do if you suspect you are entitled to an employment contract?
If, after reading this article, you are convinced that your work meets the criteria of an employment relationship, you should take specific steps. There are two courses of action - amicable and formal - and it is worth weighing the advantages and disadvantages of each.
The amicable route - talking to your employer
The first step may be to speak directly to your employer and demand that the employment relationship be regularised. However, bear in mind that through the amicable route the employer will not be obliged to pay compensation for outstanding leave or to settle unpaid ZUS contributions. This means that the period worked under the civil law contract will not count towards your length of service and will not have a positive effect on the amount of your future pension.
The formal route - PIP or the labour court
If the employer refuses to change the form of employment or the amicable route is not possible, you have the right to report the matter to the National Labour Inspectorate or to immediately file a claim to establish the existence of an employment relationship with the labour court. Proceedings before the labour court are free of court fees for the employee, which significantly makes it easier to pursue your rights.
The formal route offers considerably greater benefits - the court can oblige the employer to settle all arrears, which will count towards your length of service, your pension entitlement and compensation for unused leave. Before taking any legal steps, however, it is worth consulting an experienced lawyer about your situation, who will assess the strength of your arguments and help you gather appropriate evidence.
Don't wait - protect your employee rights today
Every day of work on an inappropriate contract is a day on which you lose the privileges you are entitled to - annual leave, pension contributions, protection against dismissal and many other benefits guaranteed by the Labour Code. The longer you wait, the harder it may be to recover what you are owed.
If you have doubts about the form of your employment, contact our law firm. Our experienced lawyers specialising in labour law will analyse your situation, assess the chances of success and help you choose the most advantageous course of action. An initial consultation will let you learn your rights and make an informed decision about the next steps.
Don't let your employee rights be violated. Book a consultation today - together we will protect your interests.
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