Managerial contracts are a form of employment of civil law nature. Companies use such contracts when they hire high-level employees – mostly managing staff.
As already pointed out above, the managerial contracts are civil law agreements, not employment contracts. Therefore, any matters not specified in the contract, are to be determined by the provisions of the Civil Code, not by labour courts based on the regulations of the Labour Code.
In practice, however, the more common features between managerial contract and an employment contract, the more often the labor court deems such an agreement an employment contract.
Elements of the managerial contracts
Managerial contract frequently makes employee responsible for managing a part of the enterprise and its results. Also, the manager can count on higher salary and greater flexibility in carrying out his duties. Usually contract does not include the provisions about time or place of his work. However, with greater freedom and flexibility also comes greater responsibility. Liability for any damages caused to the employing entrepreneur is unlimited. It is also worth remembering that managerial contracts usually contain a non-competition clause. Such a necessity arises due to the manager’s access to key data and information of the company.
In accordance with the provisions of the Personal Income Tax Act (PIT) and the provisions of the Civil Code, the revenue earned from managerial contract is considered to be activity performed personally.
This causes that person bound by contract, must carry out his tax duties on the basis of the progressive income tax rate. Deduction of deductible expenses is possible only through a lump sum.
CGO Legal Law Firm provides consulting services concerning managerial contracts. We also render services of drafting such contracts, which will not be deemed employment contract.
If you want to gain more information about managerial contracts, feel free to contact us. Click HERE if You want to learn more about employee-related matters.