Employment Contract

An employment contract is an agreement between an employee and an employer. The employee undertakes to work for the employer under its control and the employer undertakes to pay for such work. Avokaado Employment Contract is suitable for:

  • most types of employment relationships
  • open ended employment
  • regulating competition and IP issues

Price with Free plan 21 € / time ~15 min
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Frequently asked questions

In which case should an employment contract be concluded for doing work?

An employment contract is an agreement between an employee and an employer, under which a natural person (employee) works for another person (employer) in subordination to the management and control of the employer. The aim of a contractual employment relationship is to regulate the working process, and not directly the achievement of results.

The provisions of an employment contract are not applied to a contract under which the person obligated to do the work is to a significant extent independent in choosing the manner, time and place of doing the work. However, the relative independence of an employee alone may not always necessarily mean that the parties’ legal relationship is not an employment contract. The Employment Contracts Act is not applied to the contract of a member of a governing body of a legal person (management board member, supervisory board member) or a director of a branch of a foreign company.

Does an employment contract have to be in writing?

An employment contract has to be concluded in writing, but it is also valid if this format requirement has been violated. Non-compliance with the written format does not render an employment contract void – the contract is also concluded when the employee starts to perform work which is presumably done for pay. This principle ensures better protection for employees, as failure to draw up a contract does not result in the employment relationship not being recognised.

Who are parties to an employment contract?

The parties to an employment contract are: the employee as a natural person on the one side and the employer as a legal person on the other side, represented by a management board member or a person authorised to conclude the employment contract.

What is the difference between an employment contract and a contract for services?

Firstly, employment contracts are subject to the Employment Contracts Act and the contracts for services to the Law of Obligations Act. The difference between an employment contract and a contract for services is the object of regulation. In the case of a contract for services, the result of the work is regulated. The customer is only interested in the agreed result of the work (delivery of work) by a pre-defined term. The contractor is therefore free to organise the work process for the achievement of the result. He or she is not subordinated to the customer’s management and control and the entire responsibility for the timely delivery of the agreed work results lies with the contractor who receives remuneration only for the delivered work results, independent of the costs.

An employment contract, on the other hand, regulates the performance of work dependent on the employer – the work process managed, organised and controlled by the employer. The employee is obligated to fulfil his or her duties in accordance with the employer’s requirements. Under an employment contract, the employee is working for the employer and that entails significantly more obligations for the latter than a customer would have towards a contractor.

The employer is obligated to create conditions for the performance of work, provide a salary for the employee, organise the working hours and the place of work and to grant holiday to the employee. In a relationship under a contract for services, the customer does not have any other obligations than accepting the work and paying for the work. The customer is not involved in the organisation or management of the contractor’s work – the contractor performs the work at his or her own risk and organises his or her own activities.

What should be kept in mind upon concluding an employment contract?

It should be kept in mind that an employment contract puts an obligation on both parties – the employer is obligated to ensure the agreed work for the employee and the employee is obligated to perform the agreed work.

Upon concluding an employment contract, it is important to agree on all the main terms and conditions as clearly as possible, including at least:

  • the date of commencement of work
  • the trial period and its duration, if applicable
  • the official title and a description of duties (work duties do not have to be described in detail in the employment contract – a detailed description may be drawn u as an annex to the employment contract, e.g. as a job description)
  • the place of work (at least with the precision of the local government region)
  • the salary and the payment procedure as well as any possible additional pay
  • the working and resting hours
  • the length of holiday and the procedure for granting holiday
  • a reference to the terms for advance notice of cancellation of the employment contract or the terms for advance notice of cancellation of the employment contract

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