Fixed-term contracts - changes in regulations

From February 22, 2016, new labor law provisions will apply regarding the type of contracts, employment under a fixed-term contract and periods of notice, concluded between the same parties to a legal relationship.

Pursuant to the amended regulations, from that date it will be possible to conclude three types of employment contracts: for a trial period, for a definite period and for an indefinite period. The legislator resigned from the possibility of concluding a contract for the duration of a specific job and a replacement contract. This does not mean that such contracts cannot be entered into, but, contrary to the current regulation, they will not be treated as separate contracts, but as a sub-type of fixed-term contract.

New provisions on fixed-term contracts

The new wording of Art. 25 § 2 of the Labor Code (hereinafter the Labor Code) indicates that a contract for a trial period may be concluded with an employee "(...) in order to verify his qualifications and the possibility of employing him for a specific job". Currently, the possibility of concluding such a contract must be consistent with the quoted purpose of the contract for a trial period, i.e. when the employer wants to check the qualifications of the newly employed person due to the need to entrust him with a precisely indicated type of work. However, in the next paragraph, two situations are indicated in which it is permissible to conclude an employment contract for a trial period with the same person. The first situation will occur when the type of work performed changes. It is important that there is a real change in the type of work performed, and not just a change of the name of the employee's job.

Whether we are dealing with a new type of work will be determined by the scope of the employee's duties. On the other hand, we will have the second situation when at least 3 years have passed since the termination of the previous employment contract, and the employee is to provide the same type of work. In the last case, the employer may hire an employee for a second contract for a trial period, despite the fact that the type of work has not changed, due to the lapse of at least three years from the termination of the previous employment relationship. However, the possibility of concluding a third - new contract for a trial period, after the employee returns to work again, has been excluded. In this case, only one use of the possibility of re-employing an employee under a trial period contract in the same position is allowed. However, this limitation does not apply in the event of a change in the type of work performed. This is due to the fact that the passage of time is irrelevant, but the very fact of changing the type of work performed. Finally, it should be noted that the conclusion of a contract for a trial period, apart from the cases indicated above, in accordance with the jurisprudence of the Supreme Court should be treated as a contract for a definite or an indefinite period, depending on the circumstances of a given case.

Fixed-term contracts and related restrictions

On the other hand, the greatest changes occurred in the employment of employees on the basis of fixed-term contracts, where restrictions were introduced not only as to the number of concluded contracts, but also to the duration of employment on the basis of such contracts.
Compared to the previous legal status, the period of employment of an employee under a fixed-term contract may not exceed 33 months. Exceeding this deadline will automatically transform into a contract for an indefinite period. At the same time, the amended regulations introduce restrictions on the number of contracts concluded with a given employer, which cannot be more than three. It does not matter whether there will be a monthly or any break between these contracts. In addition, one should be careful when extending the contract by means of an annex, which will be treated as the conclusion of a new, subsequent fixed-term contract, which must be counted against the limits resulting from the above restrictions.

The indicated restrictions do not apply to contracts concluded for a definite period to replace an employee during his justified absence; in order to perform work of an occasional or seasonal nature; in order to perform work during the term of office; and if the employer indicates objective reasons on his part, the conclusion of such an agreement in a given case is intended to meet the actual periodic demand and is necessary in this respect in the light of all the circumstances of concluding such an agreement. In the last case, when all the conditions for applying the aforementioned exception are met, the employer is obliged to notify the relevant district labor inspector within 5 days of concluding such a contract for a specified period. Failure to perform the indicated obligation may result in the imposition of a fine in the amount of PLN 1,000.00 to PLN 30,000.00. When concluding a fixed-term contract for the purposes referred to above (four exceptions), the employer is obliged to indicate in the fixed-term contract, the purpose or objective reasons for concluding such a contract. Failure to include a clause in the contract with objective reasons justifying its conclusion will result, after the indicated limit of 33 months, in recognizing such a contract as a contract concluded for an indefinite period.

Termination of the contract for a specified period

From the date of introducing the new regulations, unlike the existing ones, a fixed-term contract may be terminated at any time and by either party. This means that there is no longer any need to reserve a clause in the employment contract allowing the termination of such a contract with a two-week notice period, provided that the employee has been employed by the employer for at least 6 months. Moreover, the Employer does not have to indicate the reason for the termination of such an agreement and is not obliged to consult such termination with the company trade union organization. The length of the notice periods for a fixed-term contract are defined in the same way as for an indefinite contract and are as follows:

1. 2 weeks, if the employee has been employed for less than 6 months,

2. 1 month, if the employee has been employed for at least 6 months,

3. 3 months, if the employee has been employed for at least 3 years.

Finally, it should be noted that pursuant to Art. 36 2 LC the legislator gave the employer the right to unilaterally release an employee from the obligation to perform work during the period of notice for a fixed-term contract. Previously, this was possible only after obtaining the consent of the employee.

The changes introduced in the employment of employees on the basis of fixed-term contracts will oblige employers to keep a history of employment of a given employee in their enterprise, which will have to be taken into account when assessing the exceeding of employment limits applicable to fixed-term contracts and the possibility of re-concluding a contract for a trial period.

Author: Maria Kołdras, labor law expert at SMART-HR.