Fixed-term employment contract – conclusion restrictions and termination rules

In trading practice, employers often have doubts about the rules which limit the possibility of concluding subsequent fix-term employment contracts and the notice periods.

The purpose of limiting the freedom of concluding several fixed-term employment contracts is to protect the employees against abusing this type of contract by employers. This stems from the fact that a fixed-term employment contract is less advantageous for the employee than a permanent employment contract.

The provisions of the Polish Labour Code determine two limits in concluding fixed-term employment contracts by the same parties. The first limit refers to the duration of employment which cannot exceed 33 months, with the limit to be used on a single occasion or in parts. The other limit refers to the number of fixed-term employment contracts, with them maximum of three such contracts. The duration of intervals between subsequent fixed-term employment contracts is irrelevant to determine whether the limits have been complied with. Even if the intervals last for more than 1 month, the duration of employment under each contract and the total number of such contracts will be taken into account. A fixed-term employment contract is concluded also if the parties execute an annex to the valid fixed-term employment contract to extend the duration of the contract. Should this be the case, the consequence of concluding a fixed-term employment contract is counted as from the day following the original termination date of the contract which was later annexed.

As a result of exceeding the above-mentioned limits, the employee is deemed to be employed under a permanent employment contract. If the limit of employment duration is exceeded, the consequence occurs on the day following the lapse of the 33-month period; if the limit of the total number of contracts is exceeded, the consequence occurs when the parties conclude another (the fourth) fixed-term employment contract. What is important, the breach of any of the limits results in deeming the given employment contract to be permanent. For instance, this consequence will occur if the fourth fixed-term employment contract is concluded, where each contract was for 6 months (24 months in aggregate) due to the breach of the allowed total number of contracts (despite the fact that the allowed total duration of employment, i.e. 33 months, is not exceeded).

The above-mentioned rules do not apply to fixed-term employment contracts concluded for a particular purpose, namely:

to replace an employee during his/her excused absence from work,

to carry out casual or seasonal work,

to perform duties during the term of office,

if the employer states objective reasons attributable to the employer,

– if the conclusion of the fixed-term employment contract in a given case is meant to satisfy a real periodic demand and is necessary within this scope with regard to all circumstances of concluding the employment contract. The assessment whether a fixed-term employment contract is concluded due to objective reasons attributable to the employer needs to be made individually taking into account the circumstances of a given case.

In accordance with the Labour Code currently in force, a fixed-term employment contract may be terminated by the employer with the same notice periods as in the case of permanent employment. The period of notice applicable to both types of employment contracts depends on the length of service with the employer and amounts to:

1)   2 weeks – if the employee’s length of service is less than 6 months,

2)   1 month – if the employee’s length of service is at least 6 months,

3)   3 months – if the employee’s length of service is at least 3 years.

This provision, that is applying equal periods of notice for both the fixed-term and permanent employment contracts, was introduced in the amendment of 25 June 2015 to the Labour Code and some other laws. This amendment entered into force on 22 February 2016. Before that, the periods of notice applicable to fixed-term employment contracts used to be much shorter. Moreover, fixed-term employment contracts did not have to provide for their termination. The purpose of the amendment was to eliminate unequal treatment of employers employed for a fixed term or permanently with regard to the period of notice.

Consequently, some doubts arise in trading practice as to the laws applicable in the circumstances of a given case. The solution can be found in the transitional provisions for the amendment which determine the rules of including the duration of employment with a given employer before the entry into force of the amendment (22 February 2016) in the length of service used for determining the period of notice in the case of a fixed-term employment contract.

The transitional provisions state that with regard to employment contracts being in effect on 22 February 2016 which:

had been terminated before that date – the previous provisions apply;

do not provide for their termination – the previous provisions apply;

are subject to termination – the above-mentioned periods of notice apply (the same as in the case of permanent employment contracts), however, the length of service used for  determining the period of notice does not include the periods prior to 22 February 2016.

The termination provisions introduced on 22 February 2016 apply to all the contracts concluded since that date. This means that all fixed-term employment contracts concluded since 22 February 2016 may be terminated and are governed by the same notice periods as permanent employment contracts. In this case the duration of employment falling before 22 February 2016 is included in the length of service used for determining the period of notice of a fixed-term employment contract.

Anna Ludwichowska, Legal Counsel