When you draft or review a template employment contract, you should take into account these 12 points to ensure you produce a legally sound and commercially feasible document.

  1. Employee statuskey decision. Consider whether an employment contract is the best solution for the new hire or if some alternative structure would be better, e.g. a civil law service agreement. In Poland there is a delicate distinction between an employee and a contractor. The key issue is the degree to which the employer supervises the worker. Where there is a high level of oversight, “employee” status is a must and labour law regulations apply. Moreover, there are rules aimed at combating hidden employment which penalise the improper application of non-employment structures.
  2. Type of contracta plethora of possibilities. If employee status is suitable for the new hire, there is a wide range of employment contracts you can choose from: contract for a trial period, fixed-term contract, project-specific contract and a contract for an indefinite period of time. The difference between them is their duration and the level of the employee’s protection against termination. In particular, an employer must have a justified reason to terminate with notice an open-ended contract. If you would like to have a trial period for the new worker you must remember that a separate contract is required and you should avoid “trial period clauses” in other contracts. Moreover, a third fixed-term contract concluded with the same person may lead to automatic open-ended employment. Finally, there is no separate type of contract for executives, and you have to choose one of the above generic types.
  3. Minimum requirementsdon’t forget! You should not forget to put a minimum level of core provisions into the contract, whatever the type. These should be obvious: type of contract, type of work (job post), parties to the contract, signing date, remuneration and place of work. The most important is the type of contract. If this is left out, it is likely that the contract will be viewed as concluded for an indefinite period of time.
  4. Signaturesdecision makers required. When hiring a regular employee the local employment contract must be signed by a manager who has proper authorisation, e.g. a management board member or an HR manager with power of attorney. This issue gets tricky when you hire a local executive, e.g. local CEO or CFO. If that person has already been appointed to the local management board, the contract must be signed by a representative appointed by a shareholders’ resolution or the supervisory board (if there is one). Otherwise the contract will be invalid.
  5. Scope of dutiesstay flexible. When drafting a job description you must strike the right balance between being too general and too descriptive. A properly drafted job profile will come in handy for measuring the employee’s performance and if the contract needs to be terminated due to underperformance or breach of duties. The scope of duties can be set out directly in the contract or in a separate document. The latter is the preferred option, as it allows more flexibility if any amendments need to be made later on. If you specify the scope of duties directly in the contract, future changes will require the employee’s consent. Beware: wording that the employee must perform “any other assigned duties” is ineffective.
  6. Restrictive covenantsmake sure you need them. Discuss with your line managers what level of protection the business requires. Non-compete restrictions during employment are a no-brainer, and it is market practice to apply them. However, post-termination non-compete covenants can be costly. Make sure you have provided for proper exit options, such as a right of withdrawal or termination. The lack of such clauses or having them badly drafted can put you in a situation where you have to pay compensation to a former employee even if there is no business justification for it. You should also consider the scope of the ban in terms of restricted activity and territory. Mistakes here can lead to the clause being unenforceable.
  7. Corporate policiesdo not re-write them into the contract. There is no need to supplement an employment contract with provisions that describe and repeat the terms and conditions that are already set out in internal by-laws. This particularly relates to working time arrangements. If you do so, those provisions will become “contractual”. This means that any detrimental changes to such arrangements will require the employee’s consent or a formal alteration procedure. Moreover, any contractual provision saying that corporate policies apply as amended from “time to time” would also be ineffective with regard to policies describing benefits. Any detrimental change would require the employee’s consent.
  8. Bonus clauses – be careful, they backfire. These clauses are the most difficult to draft because it is hard to reconcile internal region-wide practices with the local legal framework. Typical wording combines a reference to the employee’s requirement to reach targets while underlining that the bonus is “discretionary”. In Poland target-based bonuses are treated as remuneration, and any reference to “discretion” is unenforceable. This means that if targets are met you have to pay the bonus, even pro-rata.
  9. Company cargive me back my car! It may sound trivial, but rules on company cars can cause huge operational problems, in particular during a termination procedure. First, it is important that you set out precise rules on the return policy. Otherwise you may end up being unable to retrieve the car until the final termination date. Second, you must consider whether you want to allow for private use of the car. It can have detrimental tax effects for both parties. Moreover, private use can be treated as a benefit which should be compensated for if the employee is deprived of the car during employment.
  10. Contractual penaltiesavoid them, they are not enforceable. Contractual penalties are not enforceable in employment contracts governed by Polish law. An employee’s liability toward the employer is regulated by the Labour Code and any contractual deviations are not permitted. You should also be very careful with any “set-off” clauses allowing you to make deductions from payments to employees. These clauses may also be unenforceable due to strict remuneration-protection rules.
  11. Working timeovertime payment is due! Working time rules are very strict in Poland and contractual deviations are not welcome. As a result, many clauses found in regional employment contract templates are unenforceable, for example, a clause stating that base salary already covers overtime, or wording to the effect that the employee opts out from the weekly 40-hour norm. Only a very limited number of employees can be exempt from overtime.
  12. Language versionyes, you need a Polish version. All employment documents must be in Polish. This also applies to employment contracts. Bilingual versions are permitted, but the Polish version will be prevailing. Contracts in other languages are only allowed if the employee is a foreigner and you inform him/her properly about such an option.