Publication date: February 19, 2025
Employers often address the question whether it is legal and possible to end employment relationship with the employee and enter into civil law relationship or B2B contract.
This article presents possibilities, risks and limitations of replacing employment contract with civil law contract.
At the outset, it is worth paying attention to the legal provision of the Polish Labour Code, namely Article 22 § 1, which states that:
“§ 1. By entering into an employment relationship, the employee undertakes to perform work of a specified type for the employer and under his supervision and at the place and time designated by the employer, and the employer undertakes to employ the employee for remuneration.”
The provisions of the Act of 26 June 1974 – the Labor Code (Journal of Laws of 2023, item 1465) state that an employment relationship is a legal relationship between an employee and an employer, under which the employee undertakes to perform specific work for the employer, under his management, at an agreed place and time. A characteristic feature of this relationship is the employee’s subordination, as well as the obligation to perform work personally, systematically and repeatedly. In turn, the employer has an obligation to employ the employee in exchange for remuneration. Therefore, it is worth noting that under an employment relationship, it is not permissible to perform work without pay. If the above conditions regarding employment are met, then regardless of the formal name of the contract, it should be recognized as an employment relationship. It is worth emphasizing that in such a case, an employment contract cannot be replaced with a civil law contract, as this would be a contradiction with the currently applicable regulations. The interested person or the National Labor Inspectorate acting on their behalf may file a claim with the labor court to establish the existence of an employment relationship if the actual content of the concluded contract indicates an employment relationship, despite the fact that a civil law contract was formally concluded. Another important issue is the form of the employment relationship, namely, the employment relationship may be established on the basis of an employment contract, appointment, election, as well as nomination, as well as on the basis of a cooperative employment contract. However, each of these forms of the employment relationship is characterized by a different scope of rights and obligations of the parties, but all of them meet the essential features of this employment relationship, such as the employee’s subordination, the obligation to perform work personally and the remuneration of employment.
The parties to an employment relationship are the employer and the employee. The employer may be:
1. A legal person, e.g. a company, foundation, association,
2. An organizational unit without legal personality, e.g. a company branch, a company subsidiary, a plant of a multi-plant enterprise,
3. A natural person, e.g. the owner of a workshop, shop or service establishment.
It is worth noting that when an organizational unit is the employer, the activities related to labor law, such as concluding and terminating employment contracts, are performed by the person or body managing the given unit, e.g. the director, board or manager, or a person authorized to make such decisions, e.g. the head of the human resources department. However, if the employer is a natural person, then they are authorized to independently take actions in the field of labor law. They can also authorize another person to do so. However, in the case of an employee, it is worth emphasizing that such a person can only be a natural person who has turned 18. It is also possible to allow a minor who has turned 15 to be employed, but the condition for such action is to employ only on the basis of an employment contract for the purpose of vocational training, as well as performing light work. As a rule, employing people under 15 is prohibited, unless the regulations provide for exceptions, e.g. in the artistic industry.
In the matter of re-employment of a former employee, it is worth mentioning at the outset that the Labor Code does not prohibit such action, which means that after the end of previous employment, the parties may resume cooperation. This agreement is characterized by the fact that it does not have to be concluded under the same terms, which means that the employer and employee may establish different rules related to employment, even if they are less favorable than previously. Re-employment is characterized by voluntary nature. It requires the consent of both parties, but it is also worth emphasizing that the employer is not obliged to re-employ the former employee. However, there are certain exceptions to mandatory reinstatement, namely in some situations the employer must re-employ the employee. This occurs, for example, in a situation where the labor court rules reinstatement as a result of court proceedings, as well as in a situation where the employee returns after temporary arrest if their guilt is ultimately not proven.
It is also worth raising the issue related to the employment of an employee by an employer on the basis of a fixed-term contract, in which the employer must comply with certain specific rules, namely the length of the break between successive periods of employment is irrelevant. The employer cannot conclude a new fixed-term contract when the total duration of all fixed-term contracts exceeds 33 months, as well as when the employer has already concluded 3 such contracts with a given employee. If one of the above exceptions is met, such a contract will automatically be transformed into a contract for an indefinite period.
There are two possibilities for hiring an employee for a trial period. In the case where the employee is to perform a different job than before, which is characterized by the fact that there are no time limits on re-entering a trial contract. There is also a second possibility, which concerns the situation where the employee is to be hired for the same position, but at least 3 years have passed since the end of the previous employment relationship.
In the matter of re-employment, it is also worth referring to the topic related to the termination of such a contract, taking into account the notice period. However, the legal regulations do not directly specify how to calculate its length, which may consequently raise certain doubts. In this matter, it is worth noting the resolution of the Seven Judges of the Supreme Court of 15 January 2003, III PZP 20/02, according to which: “When determining the notice period for an employment contract concluded for an indefinite period (Article 36 § 1 of the Labour Code), all periods of employment with the same (given) employer are taken into account.” This means that when calculating the notice period, the employee’s total length of service at a given workplace should be taken into account, even if there were breaks between subsequent contracts.The justification for the resolution indicated that a different approach could lead to abuses – for example, deliberate termination of contracts in order to “zero out” the length of service and shorten the notice period. Such a practice would be disadvantageous to the employee and could lead to transferring all the economic risks associated with employment to him. Practical examples could include the following situations:
1. Adrian was employed from March 1 to May 31, after which his employment was interrupted for the holiday period. He returned to work on September 1 and resigned on December 31.
In this situation the notice period is 1 month, because the total length of service in the company is 7 months (3 months + 4 months).
2. Michał was employed as a fitter on a trial basis from February to the end of March. He did not prove himself in this position, so from April to June he worked as a sales representative on another trial basis. Then he signed a contract for an indefinite period and gave notice on August 28.
In this case, the notice period starts on 1 September and is 1 month, because the total length of service covers several different positions but with the same employer.
In summary, all periods of employment with the same employer are added together, even if there were breaks between them. The notice period depends on the total length of service with the company, not on the duration of the last contract. The employer cannot artificially break contracts to “reset” the notice period, as such a practice would be contrary to the Supreme Court’s case law. Employee documentation should be continued if the break between contracts does not exceed 10 years. Thanks to these rules, both employees and employers can effectively manage the re-employment process and avoid potential problems related to the length of the notice period.
In the issue of legal restrictions related to the establishment of a civil law relationship by an employer with a former employee, reference should be made to one of the legal articles of the Labour Code, namely Article 22 § 12. It reads as follows:
“§ 1 2. It is not permissible to replace an employment contract with a civil law contract while maintaining the conditions of work performance specified in § 1″
This provision prohibits replacing an employment contract with a civil law contract while maintaining the conditions characteristic of an employment relationship. Thus, art. 22 § 12 of the Labor Code introduces regulations aimed at protecting an employee against illegal employment based on a civil law contract, if the work actually performed meets the conditions of the employment relationship. If the employee performs duties in accordance with the features of the employment relationship, such as subordination, performing work personally, at the place and time designated by the employer, such a civil law contract may be recognized as an employment contract. Another important legal provision will be art. 281 § 1 of the Labor Code, which contains a catalog of offenses against employee rights. It provides for sanctions for an employer for improper replacement of an employment contract with a civil law contract. This provision states that: “Anyone who, being an employer or acting on his behalf, concludes a civil law contract in conditions in which an employment contract should be concluded – shall be subject to a fine from PLN 1,000 to PLN 30,000.”
In the topic of the risks associated with entering into a civil law relationship with former employees, it is worth emphasizing the fact that there is a possibility of the nature of the contract being questioned by control bodies, e.g. the National Labour Inspectorate.
Article 25(1) § 1 of the Labour Code sets out restrictions on the number and total duration of fixed-term contracts. These provisions stipulate that the total period of employment under fixed-term contracts may not exceed 33 months, as well as the fact that an employer may enter into a maximum of 3 consecutive fixed-term contracts. As mentioned earlier, when any condition concerning these limits is exceeded, such a contract is transformed by operation of law into a contract for an indefinite period. It is also worth paying attention to Article 14 section 4 of the Act of 25 June 2015 amending the Labour Code, which states that the calculation of the total period of fixed-term employment includes the working time from the date of entry into force of the amendment to this Act. This means that previous periods of employment may also be taken into account when determining the limits of fixed-term contracts.
It is worth noting that there is a risk that the court may challenge the termination of a contract for an indefinite period if, following its termination, the employee is re-employed for a fixed term.
In summary, the current employment contract should be seen as a second fixed-term contract. Therefore, the employer will be able to conclude another fixed-term contract with the same employee before the limit of 3 contracts is reached. It should also be noted that the employer must strictly and strictly adhere to the limits relating to the number of contracts and their total duration. This will avoid the risk of the contract automatically being converted into an indefinite period.
In terms of case law relating to establishing civil law relationships with former employees, the following judgments will be of key importance:
1. The Supreme Court judgment of 18 October 2011, file reference III UK 22/11, in which the Supreme Court emphasised that Article 8, section 2a of the Social Insurance System Act extends the definition of an employee to persons performing work under civil law contracts, if this work is performed for the employer with whom they are in an employment relationship. This means that even after the termination of the employment relationship, concluding a civil law contract with a former employee may be treated as a continuation of the employment relationship, which entails the obligation to pay social insurance contributions,
2. The Supreme Court judgment of 2 September 2009, file reference II UZP 6/09, in which the Supreme Court stated that concluding a civil law contract with a former employee, in a situation where the work performed on its basis is identical to previous employee duties, may be considered an attempt to circumvent labor law regulations. Such practice may lead to the necessity of recognizing such a contract as an employment contract with all the consequences resulting from it,
3. Judgment of the Court of Appeal in Szczecin of 22 October 2015, file reference III AUa 40/15, in which the Court noted that concluding a civil law contract with a person who was previously employed under an employment contract may lead to recognizing such a contract as a continuation of the employment relationship, especially if the scope of duties and the nature of the work remain unchanged. The Court also emphasized that the actual performance of duties is important, not the formal name of the contract.
In summary, an employer may legally enter into a civil law contract with a former employee if they do not violate labor law regulations or circumvent the obligation to employ under an employment contract. In terms of flexibility of cooperation, it is worth noting that civil law contracts allow for greater freedom in shaping the terms of cooperation, e.g. in terms of working hours, place of performing tasks, or method of settlement. Employment based on a contract of mandate or a contract for specific work may mean lower costs for the employer, e.g. no obligation to pay full social security contributions. It is also worth adding that if the employee has ended the employment relationship but still wants to provide services in a different form, e.g. as an entrepreneur, entering into a civil law contract may be a beneficial solution for both parties. However, in terms of restrictions, the situation is as follows, namely in accordance with Article 22 of the Labor Code, if the cooperation between the parties meets the characteristics of an employment relationship, e.g. performing work under management, at a designated place and time, a civil law contract may be recognized as an employment contract. There is also an obligation to comply with the non-competition clause, i.e., at the moment when the former employee signed a non-competition agreement after the termination of the employment relationship, entering into a civil law contract with a competing entity may give rise to the risk of claims from the former employer. In terms of risk, it is worth emphasizing that at the moment when the contract actually meets the characteristics of an employment relationship, the employee may pursue their rights in court, which may result in their recognition as an employee and granting them all the benefits they are entitled to. This issue relates to the risk of recognizing the civil law contract as an employment relationship. There is also a risk of financial burden for the employer, namely in the case of recognizing the civil law contract as an employment contract, the employer may be required to settle social insurance contributions, pay outstanding wages for overtime, holidays or other employee benefits. Possible claims may also arise from the former employee, at the moment when the former employee considers that the civil law contract is unfavourable or violates their rights, they may apply to the labor court with a request to establish the existence of an employment relationship. It is also necessary to point out the risk related to sanctions, namely the National Labor Inspectorate and the Social Insurance Institution may impose penalties on the employer if they consider that the civil law contract was concluded in a manner inconsistent with the regulations. So, to sum up, concluding a civil law contract with a former employee is permissible, but it requires special caution. The employer must make sure that the new form of cooperation does not have the nature of an employment relationship, and that the duties performed differ from those previously performed by the employee as a full-time employee. In order to avoid the risk, the nature of the cooperation should be changed, i.e., if the former employee is to provide services, they should differ in scope from the previous duties. The employer should also take care of the terms of the contract, namely the contract should clearly define the scope of activities and cannot contain elements of subordination typical of an employment relationship. “Fictitious” civil law contracts should be avoided, namely, if the employee continues to perform the same work, in the same place and under the same supervision, the supervisory authorities may consider that labor law regulations have been circumvented. The decision to enter into a civil law relationship with a former employee should be carefully analyzed in terms of its legality and potential legal and financial consequences.