The last version of a bill concerning amendment to the Labor Code has just been accepted by the Parliament. The new regulation shall enter into force 6 months after its adoption, i.e., probably in the first quarter of next year. Fixed-term contracts are highly popular among employers; hence we recommend analyzing the main regulations of the new law in advance, as they introduce significant changes with respect to the conclusion and termination of fixed-term contracts.
Maximum duration of a fixed-term contract
It will be possible to conclude a fixed-term contract for a period of no more than 33 months. During that period, the parties may conclude no more than 3 contracts. If the employment period exceeds 33 months or a fourth fixed-term contract (excluding a trial-period contract) is concluded with the same employee, this shall automatically mean the conclusion of an indefinite-period contract.
In accordance with the new law, each extension of a period for which a given fixed-term contract was concluded shall be considered the conclusion of a new contract.
However, the law provides for certain exceptions. The limitation to 33 months shall not be applicable to fixed-term contracts if the conclusion of such a contract is necessary and serves the purpose of satisfying actual and seasonal demand of an employer and the contract was concluded to: (1) replace an absent employee, (2) perform work as an occasional/seasonal worker, (3) perform the function for a specified term of office, or (4) if an employer proves objective reasons for the same on its part. A contract should explicitly specify the purpose or circumstances of its conclusion in order to substantiate and justify the application of an exception.
An employer who concludes a fixed term contract for objective reasons shall be additionally obligated to notify a competent regional work inspector about the conclusion of that contract within five business days from its conclusion.
Notice period of a fixed-term contract
The biggest change envisaged in the amendment is the introduction of the same notice periods for fixed-term contracts as those applicable to indefinite-term contracts. The duration of a notice period for both types of employment contracts will depend on period of employment with a given employer:
- employment up to 6 months shall require 2 weeks’ notice period,
- employment for a period from 6 to 36 months shall require 1 month notice period,
- employment for more than 3 years shall require 3 months’ notice period.
At the same time, the rule that a notice period is only applicable to fixed-term contracts concluded for a period exceeding 6 months shall cease to be effective. It shall be now possible to terminate any fixed-term contract, subject to the notice period.
The planned amendments to labor code do not concern justification and consultations with trade unions regarding termination of fixed-term contracts, i.e.:
- termination of fixed-term contract with a notice period shall not require a cause to be indicated in the notice letter
- trade unions will not have to be notified about the intention and cause of the termination of a fixed-term contract.
Trial period contracts
Pursuant to the new law, a trial-period contract may be concluded with the same employee more than once. This shall be possible in two cases:
- immediately after termination of a contract, in case where an employee is expected to perform a different type of work;
- after the lapse of at least 3 years following termination or expiration of a previous contract if an employee is expected to perform the same type of work, with the proviso that the number of contracts in such a case is limited to two contracts for a trial period.
The purpose of a contract for a trial period shall not change. It is still intended as a period to check the qualifications of the employee and his/her capacity for a given job. The currently effective notice periods shall not change.
Deletion of contracts concluded for the duration of particular work
The amendment deletes contracts concluded for the duration of particular work from the Labor Code. Starting from the effective date of the new regulations, it will only be possible to conclude a fixed-term contract with an employee designated to perform particular work.
Release from the obligation to perform work
The amendment permits to release an employee from an obligation to perform work during a notice period, with the right to remuneration. To date, the above right of an employer, though commonly exercised, has not been explicitly confirmed by legal regulations.
Application of new regulations to effective contracts
The previous regulations shall still be applicable to: (a) contracts for the duration of particular work already effective at the effective date of the amendment, (b) fixed-term contracts terminated before the effective date of the amendment, (c) fixed-term contracts which do not include an early termination clause with 2 weeks’ notice period.
The new regulations will be applicable to the determination of a notice period if a fixed-term contract provides for a 2 weeks’ notice period and was concluded for a period in excess of 6 months (e.g., if a contract lasts for more than a year, its termination with a notice shall require 1 month notice period).
The limit of 33 months and 3 contracts shall be applicable to fixed-term employment contracts in force on the effective date of the amendment, provided that the period of 33 months shall be counted from the effective date of the amendment.
Fixed-term contracts concluded before the effective date of the new regulations and terminated after the effective date of the amendment shall be subject to the new, longer notice periods; however, the period preceding the effective date of the amendment shall not be included in an period of employment with a given employer.