What are the types of employment contract?

What are the types of employment contract?
Marek Cieślak

Marek Cieślak

CEO CGO Finance

The employment contract is the most important document that defines rights and duties of both parties in the employment relationship. In the article below you will discover all you need to know about the employment contract in 2024. You will learn about types of employment contracts and their most important components. You will also find information about the rights and obligations of both parties to the employment contract.

Table of Contents

What is an employment contract?

An employment contract is a bilateral agreement. It regulates the employment relationship between an employer and an employee. It specifies the type of work the employee agrees to perform for the employer, under his directions, at a designated time and place. The employee agrees to fulfil duties diligently. He must adhere to occupational health and safety regulations. Moreover, he is obliged to follow instructions from superiors. In return, the employer undertakes to hire the worker for a specified remuneration. The employment relationship begins on the agreed-upon start date.

The employment contract is important for several reasons:

  • It provides legal protection for the employee. It ensures entitlements such as monthly wages, vacation, sick leave, and other labour law benefits.
  • It confirms the employee’s status. Thanks to it, the employee can apply for social security benefits, such as life and disability pension, or sickness benefit. It also enables obtaining a housing loan.
  • It grants the employee a sense of stability and security. It ensures a known and fixed income over a specific period.

Key elements of the employment contract in 2024

An employment contract (for a trial, specified and indefinite period) must be in writing. Otherwise, it will be invalid. If this form is not maintained, an employer must confirm in writing key arrangements before the employee starts work. These include:

  • the parties involved,
  • the type of contract,
  • its terms and conditions.

The employment contract specifies the parties involved and the employer’s address. In the case of an employer being a natural person without a registered office – his residential address. It also specifies the type of contract and the date of its conclusion. It must inform about the working and pay conditions, in particular about:

  • Type of work,
  • Place or places of work,
  • Remuneration for work corresponding to the type of work and identifying its components,
  • Working hours,
  • Starting date of employment relationship,
  • And other elements characteristic of a specific type of employment contract.

Types of employment contract – employment contract for a trial period

One type of employment contract is the agreement for a probationary period. It is concluded for a period not exceeding 3 months, subject to the stipulations of the law, in order to:

  • verify the employee’s qualifications,
  • and determine the possibility of employing them to perform a specific type of work.

The employment contract for the trial period in 2024 specifies:

  • Duration or termination date. Moreover, if it is agreed by both parties, a provision on extending the contract for vacation time and for the duration of other justified absences from work.
  • The period for which the parties intend to conclude a fixed-term employment contract. Additionally, a provision on the possible extension of the contract if applicable.

Such a contract is signed for a period not exceeding:

  • 1 month – when intending to conclude a fixed-term employment contract lasting less than 6 months;
  • 2 months – when intending to conclude a fixed-term employment contract lasting at least 6 but less than 12 months.

The legislator granted the right to a one-time extension in the employment contract for a trial period. It is possible for a period not exceeding 1 month, in cases justified by the nature of the work.

The employer may re-enter into an employment contract for a trial period with the same worker. However, it is possible if the employee is to be hired to perform another type of work.

Types of employment contract – employment contract for a specified period

Employment under a contract for a specified period must not exceed in total:

  • 33 months,
  • and a total of 3 contracts.

If these limits are exceeded, the employee is considered to be hired on a contract for an indefinite period. It starts from the 1st day following the period specified in the previous agreement. Alternatively, from the first day of the fourth fixed-term employment contract. There are exceptions to this rule, e.g. employment based on a contract for substitution.

If parties agree to a longer duration for this type of contract and its associated duties, the legislator assumes they have entered into a new fixed-term contract. It starts from the 1st day after the termination of the previous employment contract.

Are you curious about the changes in the Labor Code in 2024? Read more about them in this article.

Types of employment contract – employment contract for an indefinite period

An employment contract for an indefinite period has no specified termination date. It can be concluded at any time, regardless of the employee’s prior work for the employer. This is the most favourable type of employment contract. It provides the employee with:

  • The best legal protection. An employer can terminate the contract only for valid reasons. They include, e.g. the employee’s failure to fulfil duties, the closure or reorganization of the workplace, or personal reasons on the part of the employer.
  • The right to a full package of employee benefits. These include, e.g. remuneration for work, vacation, sickness benefits, maternity and paternity allowances, etc.
  • A longer notice period compared to an employment contract for a specified time.

Termination rules for the employment contract in 2024

The Labor Code states that an employment contract can be terminated:

  • By mutual agreement – parties can establish any conditions for contract termination.
  • Through a statement from one of the parties, with observance of the notice period. The employee or employer issues a statement terminating the employment contract while adhering to a specific notice period. Its duration depends on the type of contract and the employee’s length of service.
  • Through a statement from one of the parties without observing the notice period. This can only occur in cases specified by the Act.
  • Upon the expiration of the agreed-upon period.

The legislator specifies that the employer’s statement on termination of an employment contract for an indefinite period or termination without notice should indicate:

  • The reason justifying termination.
  • Notification about the employee’s right to appeal to the labour court.

What are the types of employment contract? Summary

The employment contract is a crucial document for both parties. It defines their rights and obligations, providing stability and transparency in employment. This ensures a high sense of stability regarding the legal and economic situation for both the employee and the employer. Our overview of the types of employment contract in 2024 helps to understand the rules of establishing and securing employment relationship.

If you find the above topic interesting and want to know more about it, do not hesitate to contact us. Our experts are ready to help you.

Featured expert

Marek Cieślak

CEO CGO Finance