Along with the bookkeeping services provided by our accounting office in Krakow and accounting office in Warsaw, we also provide HR and payroll services, therefore we would like to introduce you to this topic in a series of short questions and answers.

What are the differences between an employment contract and a contract of mandate?

The basic difference between an employment contract and a contract of mandate is that the provisions of the Labor Code apply to the employment contract, while the provisions of the Civil Code apply to the contract of mandate.

The provisions of the Labor Code guarantee employees, among others, the right to vacation leave in the amount resulting from the length of service, maintenance of the notice period, protection of remuneration against seizure by a bailiff, additional remuneration for work at night, on holidays or overtime, payment of the equivalent for unused vacation, etc. The Civil Code does not contain provisions in this area, therefore contractors do not have such rights as employees employed under an employment contract.

What ZUS contributions are subject to an employment contract and a mandate contract?

Employment contracts are always subject to reporting to all social insurances (pension, disability, sickness and accident insurance), as well as health insurance. In the case of contracts for services, the issue of overlap of insurance titles should be considered, which determines the scope of insurance for which the contractor will have to be reported. Currently, as a rule, contracts for services are subject to mandatory social and health insurance, with the exception of sickness contribution, which is voluntary in the case of contracts for services. In the case of overlap of insurance titles, i.e. employment in another workplace on the basis of an employment contract or a contract for services, the amount of income achieved is important. A contractor receiving remuneration from another source lower than the minimum wage is subject to mandatory retirement, disability, accident, health and voluntary sickness contributions. A contractor receiving remuneration from another source equal to or higher than the minimum wage is subject only to mandatory health insurance. Students or pupils up to the age of 26 are not subject to reporting to insurance under a contract for services. This entry is of course not exhaustive, as specific circumstances in a given case must be taken into account. Only general principles of insurance coverage have been indicated above.

Who is eligible for PIT exemption?

PIT exemption is available to young employees who are under 26 years of age and benefit from the exemption from the obligation to pay an advance payment on income tax on income they earn, among others, from an employment contract and a contract for services. To benefit from the exemption, there is no need to submit a specific declaration to the employer, as this relief is applied automatically. However, it should be noted that this relief can only be used for income in the amount of PLN 85,528 in a calendar year. The excess over this amount is subject to tax in accordance with the tax scale.

What are the rules for enrolling in PPK in the case of employment contracts and contracts for services?

Employee Capital Plans are automatically enrolled in by persons who are over 18 but under 55, and who are required to pay contributions for retirement and disability insurance (also under a contract for services). Employees/contractors between 55 and 70 years of age can join PPK voluntarily. Employees/contractors who have submitted a declaration to their employer of no intention to join PPK are exempt from enrollment in Employee Capital Plans.

If you need services we offer, contact us:

Bookkeeping office in Warsaw

PHONE: +48 22 292 47 21
EMAIL: biuro.warszawa@prwt.pl

Bookkeeping office in Krakow

PHONE: +48 12 345 21 06
EMAIL: biuro.krakow@prwt.pl