What has to be included in a contract of employment?

The employment relationship is most often established based on a contract of employment concluded between the employer and the employee. As in the case of other contracts, contractual provisions which have to be obligatorily included in the employment contract are governed by legal regulations. Some of them have a formal nature (specification of the parties to the contract, date of its conclusion and type), while others shape the rights and obligations of the parties to the contract of employment.

Employment contract – key elements

The obligatory provisions of the employment contract include specification of:

• Parties to the contract – designation of the employee and the employer. The contract cannot be concluded, if the parties to it are not specified.
• Contract type – Specification of the type of the employment contract which the parties may freely choose from among the types provided in the Labour Code, i.e. a probationary contract, a definite-term contract or an indefinite-term contract. The type of the contract may be stated in the contract name or may arise from its contents, e.g. from specification of the date of contract termination. Deciding to conclude a definite-term contract, the parties should express their intention in the contract, since otherwise the contract will be considered as concluded for an indefinite period. If the parties do not refer to the type of the contract in the contents at all, it has to be inferred from all of the circumstances – generally, it will be an indefinite-term contract.
• Date of contract conclusion – Indication of the date on which the parties concluded the contract. This date may prove essential, if the contract does not specify the date of work commencement – then, the date of contract conclusion is considered as the date of establishment of the employment relationship.
• Terms and conditions of work and pay – including but not limited to the following:
  
  • Type of work – The type of work is usually specified by indication of the position, function or profession, but it may as well have the form of a description indicating the types of activities to be performed by the employee. The parties may agree that the employee will perform more than one type of work under the concluded contract. The contract cannot be concluded, if the type of work is not specified.
  • Place of work – The place of work should as much as possible reflect the place of work performance. It may, but does not have to, be at the registered seat of the employer. It is designated as a point in the geographical meaning (e.g. the city and the specific address of work performance), but one may also indicate a specified area (e.g. if the employee moves around such an area when performing their duties).
  • Remuneration for work with an indication of its individual components – Remuneration should correspond to the type of work agreed in the contract of employment. It may be specified as a base monthly rate (e.g. PLN 4500 gross) or an hourly rate (e.g. PLN 30 per hour gross). One has to bear in mind that remuneration for work cannot be lower than minimum remuneration determined for a given calendar year – in 2021 minimum remuneration amounts to PLN 2800 gross. Remuneration should be specified in an exact and doubtless way as to the agreed rules of its payment. If there are detailed pay provisions in the workplace (e.g. in collective labour agreements or pay regulations), it is enough to refer to those provisions, e.g. indicating the relevant remuneration rate governed by them. Failure to specify employee’s pay rights in the contract does not make the contract invalid – then, remuneration is specified based on the pay regulations applicable in the workplace, and if there are no such regulations – based on the provisions of labour law.
  • Working time – Specifying the amount of working time, one needs to indicate if the employee will work full time or part time. If the parties choose part-time work, it is necessary to further specify the amount of working time applicable to the employee as, e.g. 7/8 FTE. If the parties do not specify the amount of working time in the employment contract, the employee is considered to be employed full time.
  • Work commencement date – The date of work commencement is the date of establishment of the employment relationship. The parties to the contract of employment are free to choose the work commencement date – they may specify it as falling several days, weeks, months or even a year after the date of conclusion of the employment contract. However, the date of work commencement cannot be specified as a one falling earlier than the date of conclusion of the contract of employment, since it is assumed that the employment contract should be concluded in writing on the work commencement date at the latest. If the contract does not specify the date of work commencement, the employment relationship is established upon conclusion of the employment contract.

Employment contract – additional provisions

The contract of employment may as well regulate also other issues, such as the right to severance pay, compensations or other benefits.

Moreover, the provisions of labour law also provide for additional obligatory contractual provisions related to the occurrence of specific circumstances, among others:

• An employment contract concluded with an employee delegated to work in an EU non-member state for a period exceeding one month has to specify the period of performance of work abroad and the currency in which remuneration will be paid to the employee;
• A contract concluded for a definite-period exceeding the permitted limit of 33 months or 3 contracts for the purpose of employee substitution during the period of their excused absence, for the purpose of performance of occasional or seasonal work, as well as for the period of the term of office or in the case where the employer states important objective reasons on their part, has to specify the purpose or circumstances justifying contract conclusion;
• A contract providing for part-time employment of an individual has to indicate the permitted number of hours of work over the amount of working time applicable to the employee which when exceeded give the employee the right to an allowance for overtime work.

To sum up, among the obligatory provisions of the contract of employment which shape the rights and obligations of the parties to the employment relationship the most important element is specification of the type of work, since the lack of such a regulation prevents contract conclusion.

Failure to specify any of the other elements (place of work, remuneration, working time or date of work commencement) does not make the contract invalid, as it is possible to determine them in an indirect way, e.g. the date of work commencement and the place of work may be determined based on the context. However, a good practice which makes it possible to avoid unnecessary doubts is to specify all obligatory provisions and additional provisions, if any, in a way that fully reflects all of the arrangements made between the parties to the contract of employment.

Author:

Magdalena Wilkoszewska
Director of the Labour Law Department, Attorney-at-law,
TGC Corporate Lawyers

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