A contract of mandate is one of the most popular forms of employment in the market. That is why we have prepared a comprehensive guide on it. Check out everything you need to know about a contract of mandate.
Table of Contents
- Contract of mandate – what is it?
- Elements of a contract of mandate
- Can a contract of mandate be considered an employment contract?
- Key differences between a contract of mandate and an employment contract
- Contract of mandate – rights of the contractor
- Hourly rate under contract of mandate
- Responsibilities related to social insurance contributions (ZUS)
- How to terminate a contract of mandate?
- Contract of mandate – summary
- FAQ – Questions and answers
Contract of mandate – what is it?
A contract of mandate is a civil law contract. The rules for concluding and exercising it are regulated by the Civil Code. On its basis, the person accepting the work order assumes the obligation to perform a specific legal action for the benefit of the commissioning party. When performing the contract, the contractor is obliged to:
- act diligently,
- exercise due care.
The service provided under the contract of mandate does not have to lead to a specific result.
Elements of a contract of mandate
According to the principle of freedom of contracts, the parties can freely shape their legal relationship. However, a contract of mandate should include certain standard elements. These include:
| Identification of the parties | – commissioning party and contractor – natural persons should indicate their name, surname, address of residence, personal identification number, – entrepreneurs must additionally provide identifying information about their company, – legal persons must indicate the company name, its registered office and address, and registration number |
| Date and place of conclusion of the contract | e.g. Łódź, 28 October 2024 |
| Subject of the contract | – the type of service provided – the contractor’s obligation to diligently perform the duties specified in the contract |
| Duration of the contract | the period for which the contract of mandate was concluded |
| Remuneration | – rate or amount of remuneration – terms and conditions for paying remuneration, e.g. monthly payments |
| Signatures of the parties | – commissioning party – contractors |
| Optionally, the agreement can indicate | – required qualifications – place of performance of the order – transfer of copyrights – contractual penalties |
Can a contract of mandate be considered an employment contract?
The provisions of the Labour Code do not apply to the contract of mandate. This means that the contractor is only entitled to the rights resulting from:
- the content of the agreement,
- the Civil Code.
A contract of mandate can be recognized as an employment contract if it meets certain criteria. Elements that may indicate an employment relationship include:
| Fixed place and working hours | If the contractor works in a specific place and at times designated by the mandator, it may suggest subordination. |
| Organizational subordination | A task is performed under the mandator’s direction with no freedom for the contractor to organize his/her working time. |
| Personal provision of work | The requirement for personal execution of the mandate is significant. The contract of mandate allows the delegation of tasks to others. This distinguishes it from an employment contract. |
If a contract of mandate has these elements, the employer may be exposed to legal consequences. They are specified by the National Labor Inspectorate (Polish: PIP). The legal consequences include:
- Fines
- The obligation to transform a contract of mandate into an employment contract
- An order to pay overdue wages and other benefits to which employees are entitled.
Key differences between a contract of mandate and an employment contract
The contract of mandate and the employment contract are the two most common agreements in the labour market. Each has its pros and cons. Here’s a comparison of the main differences between them.
| Criterion | Employment contract | Contract of mandate |
| Definition | The most popular form of employment. It provides full security and benefits for the employee. | Flexible form of employment. It allows one to perform specific work without a permanent employment relationship. |
| Liability | The employer is responsible for working conditions and salary. | The contractor is responsible for the diligent performance of the service. |
| Remuneration | A fixed salary, often with allowances, e.g. holiday. | Remuneration is dependent on hours worked or a set rate. |
| Social security contributions | Compulsory social and health insurance contributions. | Compulsory social insurance contributions, voluntary sickness contribution. |
| Flexibility of the working hours | Fixed working hours, minimum requirements for working hours. | More flexibility, but often with set working hours. |
| Termination of contract | Termination according to the Labor Code, with a notice period. | Can be terminated at any time |
Contract of mandate – rights of the contractor
Employers may offer the employee the provision of services based on a contract of mandate. This is a beneficial solution for them, e.g. due to the lower employee maintenance costs. However, the employer must provide the contractor with equal and appropriate working conditions. This also includes health and safety conditions.
The contract of mandate does not provide strong protection for the interests of workers. Contractors will not receive benefits designated for employees under an employment contract, including:
- specified notice periods,
- annual leave,
- sickness benefit.
Moreover, a contract of mandate is not included in the length of service. It does not guarantee continuity of employment.
Hourly rate under contract of mandate
The annually determined minimum wage also applies to contracts of mandate. What is important, it sets the minimum hourly rate. It serves as the basis for the contractor’s remuneration.
Due to the obligation to apply the minimum hourly rate, entrepreneurs must record contractors’ working hours. The record-keeping method should enable authorities to verify compliance with minimum hourly rate requirements.
Responsibilities related to social insurance contributions (ZUS)
Entrepreneurs with a contract of mandate must pay social insurance contributions. They may be exempt only if the contractor has other insurance titles, the sum of which is:
- equal
- or higher than the minimum remuneration.
In this case, only the health contribution should be paid.
Notification to ZUS (Social Insurance Institution) must be made within 7 days from the conclusion of the contract of mandate. You can use a dedicated ZUS ZUA form. The entrepreneur must report the contractor to all obligatory social insurances. Only the sickness insurance is voluntary.
If the contractor is at the same time hired under an employment contract with the same or another employer, he is treated as an employee. He is subject then to mandatory insurances:
- Social insurance
- Health insurance.
How to terminate a contract of mandate?
A contract of mandate can be ended in the manner specified in its content, most often by termination. In the absence of such a provision, either party may terminate the agreement at any time. However, it should maintain the notice periods specified by the law.
Contract of mandate – summary
The contract of mandate can be beneficial for both comissioning party and contractor. The most important issue is to understand its essence, as well as rights and obligations of the parties. It is also important to analyze the terms to ensure safety and comfort in task execution.
Are you interested in the article about a contract of mandate? Do you have doubts or questions? Our experts are ready to provide you with comprehensive answers. Feel free to contact us!
FAQ – Questions and answers
What is a contract of mandate?
A contract of mandate is a type of civil law contract. One party (the contractor) undertakes to perform a specific service for the other party. It is a form of cooperation that does not involve an employment relationship.
What are the main advantages of a contract of mandate?
The main advantage of a contract of mandate is flexibility in terms of working time. There is no obligation to comply with working time standards. Another advantage is the possibility of quick termination of the contract. Moreover, the contractor has the opportunity to work with many clients at the same time.
What are the obligations of the contractor?
The contractor must perform the service under the agreed terms and on time. He should also take care of the quality of services provided. A good practice is to inform the client about the progress in the commissioned task.
Does a contract of mandate involve tax obligations?
Yes, the remuneration obtained based on a contract of mandate is subject to taxation. The contractor should report his income in the annual tax return. The principal must pay advances for income tax and social and health insurance contributions if required.
Does a contract of mandate grant the right to paid vacation leave?
A contract of mandate does not grant the right to paid leave, as it is not an employment contract. The contractor also does not have other benefits granted to employees under an employment contract.
What information should be included in a contract of mandate?
The contract of mandate should include information such as:
data of the parties,
description of the service to be performed,
duration of the contract,
remuneration and payment terms.
It is also good to include provisions on liability for non-performance or improper performance of the service.
Can I work under a contract of mandate and be employed full-time at the same time?
Yes, you can work under a contract of mandate while also being employed full-time. However, remember to comply with regulations regarding working hours. You should analyze first any restrictions arising from the work rules at your place of employment.
