Choosing the right form of employment is crucial for both employees and employers – employment contract vs. contract of mandate. A common question is: can contract of mandate be changed into an employment contract? We can help you find the right answer to that question.

Employment contract vs. contract of mandate – key differences

Although both employment contract and contract of mandate may involve similar tasks, they differ significantly in terms of legal framework and responsibilities.

Employment contract (based on Article 22 of the Labor Code) involves:

• performing work under the supervision of an employer,
• working at a designated time and place,
• performing duties personally,
• receiving remuneration and being subordinate to the employer,
• the employer bearing the business risk.

Contract of mandate (based on the Civil Code, Article 734-751):

• is based on mutual trust,
• can be unpaid,
• does not always require working in person,
• lacks subordination and fixed working hours.

When can a contract of mandate be changed into an employment contract?

If the National Labor Inspectorate (PIP) identifies that the actual working conditions meet the criteria set out in Article 22 of the Labor Code, it may issue a recommendation to switch the legal basis to an employment contract. This usually occurs when:

• the work is performed personally,
• at a fixed place and time,
• under supervision and direction,
• regularly and for renumeration,
• the contractor does not bear the risk.

What can the labor inspector do?

The inspector may:

• issue a non-binding recommendation to change the contract,
• impose a fine for violating labor law (Article 281),
• file a lawsuit to determine the existence of an employment relationship,
• join court proceedings (with the employee’s consent)

Upcoming legal reforms may give inspectors the authority to issue binding administrative decisions ordering the employer to change civil law contract (e.g contract of mandate, specific task contract) into employment contract.

Why is it important to review your contracts?

Incorrect classification of employment can lead to:

• inspections and financial penalties,
• payment of overdue ZUS contributions and taxes,
• court disputes.

If you hire employees based on civil law contracts, it is worth reviewing the terms and ensuring there is no potential employment relationshp. If you need additional support in accounting and hr&payroll services contact us!

Text based on: INFORLEX