Labour & Employment

Poland: Changes Regarding Employment Agreements for a Definite Time

The judgment of the European Court of Justice C-38/13 of 13 March 2014 has triggered some important amendments to the Polish Labour Code regarding employment agreements for a definite period of time. Changes are expected to be implemented soon.

Current practice

According to Article 33 of the Polish Labour Code, employment agreements concluded for a definite period of time longer than six months may stipulate a provision that allows termination of the agreement after two weeks’ notice. In comparison to agreements for an indefinite period, or even to agreements for a probation period, the situation of employees varies in terms of the length of notice period.

In case of agreements for an indefinite period, the stability of employment depends on the period of service with a certain employer, which means that the notice period extends relatively to the employment period. Thus, the required notice period may be two weeks for a period of employment shorter than six months, one month for a period of employment longer than six months or three months for a period of employment longer than three years, with a specific employer.

The situation of an employee who works on the basis of employment agreement for a definite period is the same, no matter if the agreement was concluded for seven months or seven years. The notice period is always limited to two weeks.

Impact of the judgment – Why do we need changes?

The European Court of Justice stated that the Polish regulations concerning the notice period of agreements for a definite period violate Clause 4.1 of the framework agreement on employment for a definite period – because they are independent of the period of employment. Clause 4.1 was concluded by several international organisations gathering representatives of industry, employers, trade unions and enterprises (UNICE, ETUC, CEEP) on 18 March 1999, as an annex to the Directive of the Council of the EU 99/70/EC of 28 June 1999. The Directive requires equal treatment of all categories of workers and prohibits unfavourable treatment of agreements for a definite period if the only reason is a specified time of existence of the agreement.

Although, the Directive is not part of the polish legislation system, it might justify an employee’s claims in case of possible disputes against its employer. It might also be used as an argument for equalising their rights with those of other employees.

How it started and potential effects

The proceeding related to the employee, pending before the District Court in Białystok (Sąd Rejonowy w Białymstoku), was a subject to a preliminary ruling of the European Court of Justice. A woman was employed on the basis of an agreement for five years, while her general period of service amounted to more than 20 years. In this situation, the court felt, a two weeks’ notice period was grossly unfair compared with the situation of other employees who might have had less experience and a shorter period of service.

Therefore, equalisation of rights between employees working on a contract for a definite and an indefinite period may not be limited only to the period of notice but may also refer to consulting obligations with trade unions in case of termination of the agreement, as well as to justification of termination.

Another issue which differentiates the situation of employees is the wide scope of potential dues owed to them as a result of illegal termination. After the above judgment, the Polish legislator must also tackle this problem.

Expected amendments

So far the initial project prepared by the group of deputies provides for a maximum period of employment of 24 months for an agreement for a definite period. If the general service period exceeds this period, the agreement is considered as concluded for an indefinite period. The project allows extensions of agreements for a definite period if the relevant provisions are stipulated in the collective labour agreement.

The most important amendment concerns the period of notice. As mentioned, the parties to the employment agreement may provide a two weeks’ notice period. Under the amending project, such a possibility will be limited to agreements concluded for more than 12 months, and the notice period will be extended to one month for agreements concluded for a period longer than 18 months.

Compensation for unlawful termination will also be changed up to 12 months remuneration; it is currently limited up to three months.
The amendments to the Labour Code are expected in 2015, but the final form is still unknown. It is not easy to foresee the end result, but a possible justification of the planned amendments is the worsening situation of employees working on agreements for a definite period; for example, a lack of creditworthiness or difficulties taking out loans.

The expected changes may limit employment for a definite period. On the one hand, it may be beneficial for employees. On the other, it may harm the running of a business and force employers to use other forms of employment, such as more flexible civil law contracts, and thus abuse employee rights.