An important amendment to the Labour Code, to which fixed-term employment contracts are subject, came into force in February 2016. Such contracts are now only permissible for a maximum duration of up to 33 months. Until recently there was no statutory maximum period for such contracts, however in line with the judgments of the Supreme Court, a fixed-term contract for a longer period than 3-4 years can, in some circumstances, qualify as an open-ended contract. This is particularly aimed at the situation where a fixed-term contract for a long period of time is not justified by the type of work or temporary assignment (e.g. need to increase the number of employees as a result of a new fixed-term contract with a client).
The number of fixed-term employment contracts between the same parties is limited to three, regardless of the break between the previous and current contract (a contract purely for a probationary period does not count). Each subsequent employment contract will, by virtue of law, be deemed to be an open ended contract. There is also a new regulation where parties may sign a maximum of two fixed-term contracts. Each third fixed term-contract will be deemed to be open ended however this only applies if the parties had previously concluded two consecutive fixed-term employment contracts for a definite period of time in succession, where the interval between the termination of the preceding and the establishment of the subsequent employment contract is less than one month. Starting from February 2016 each fourth fixed-term contract concluded between the same parties will automatically be deemed to be open-ended, by virtue of law, regardless of the interval between the contracts.
The same applies to the situation when the total length of service at a given employer exceeds 33 months. All previous employment contracts between the parties will count to this limit. The employer should therefore very carefully review its employment records to check whether an individual has already been employed by the company in that past.
As this new rule is much more restrictive, there are several exemptions when counting the contracts. In line with these exemptions not all fixed-term contracts will count to the limit of 33 months and the maximum number of three contracts. The following are exempt:
- a substitution contract to replace an absent employee;
- a contract for casual or seasonal work; and
- a contract for work during a tenure (e.g. of a management board member), if the employer will provide reasonable grounds related to the business (e.g. need to employ construction workers on a construction site).
Such exemptions must additionally be justified by the surrounding circumstances and cover a genuine periodic need for increased numbers of employees. In addition, when an exemption applies, the employer is obliged to notify the local State Labour Inspectorate by letter or email within 5 days of signing the employment contract. If the Inspectorate finds that the reasonable grounds are not satisfactory it may apply to the Labour Court for re-qualification of the employment contract type.
Another important change relates to the applicable termination notice periods. Previously, the parties could agree a notice period of two weeks’ in a fixed term contract of at least six months in length. Such a short notice applied even for contracts of two or three years in length. This was often judged by the European Commission and the Court of Justice of the European Union as discriminatory when compared to the situation of employees employed on open ended contracts. Therefore the same rules will now apply to both types of contracts. The notice for termination of fixed-term contracts will depend on the employment period with a given employer and minimum amount will be as follows:
- 2 weeks’ notice if an employee has been employed for less than 6 months;
- 1 month’s notice if an employee has been employed for at least 6 months;
- 3 months’ notice if an employee has been employed for at least 3 years.
On the other hand previously there is no facility to terminate a contract concluded for a shorter period of time than 6 months. The new law will cancel this restriction and the parties will also be able to terminate fixed-term contracts of a short duration.
The amendment to the Labour Code also includes some other changes. The catalogue of employment contract types has been limited to three types of contracts: probationary, fixed-term and open ended. It is now not possible to conclude an employment contract for performance of specified work and a substitution contract to replace an absent employee. In such cases the employer may use an employment contract for a probationary period (max. length 3 months) or a fixed-term contract.
The legality of instructing the employee during the notice period to stay away from work whilst he/she is still entitled to be paid (gardening leave) has been subject to varying judgments of the Polish Supreme Court. The Court has usually confirmed that employers are entitled to put employees on gardening leave. However, as this matter was not regulated by the Labour Code, the Court sometimes required the consent of the employee. The new amendment allows an employer to unilaterally place an employee on gardening leave without requiring the employee’s consent. Thus such entitlement will no longer be a controversial matter.
The amendment to the Labour Code provides several complex transitional law provisions, which will apply to the contracts which were valid prior to 22nd February 2016 and continue after this date. For this reason it is highly recommended that the employers consult their legal advisors of the planned legal steps (e.g. signing a new limited contract or its termination) as some controversial issues may arise.