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Contracts Concluded for Working

Viimati uuendatud: 23.02.2017


Work is usually done under an employment contract, but a contract for services or an authorization agreement could also be concluded. Which contract should be concluded for the specific job? There is no single answer to this question. One should first understand what is the purpose of concluding one or another contract, and what is agreed on with each.

  • Employment contract is concluded for working for a longer time period. The employment contract is usually without a term, the employer organizes and checks the fulfilment of work tasks, remuneration is paid at least once per month, the employee is entitled to an annual paid vacation, occupational health care and safety requirements have been set. Working time organization foresees working and resting times, the norms of which correspond to legal requirements. The employer provides tools to fulfil the work tasks. The employment contract is ended according to legal rules. Parties of the contract are called employee and employer.
  • The contract for services is concluded for providing a service, when parties agree to manufacture of change something, or to achieve some other agreed result (e.g. apartment renovation). Usually, the contractor is free to decide how and when they work. The contract for services is always fixed-term. Parties of the contract are called contractor and contracting party.
  • The authorization agreement is concluded for providing a service and suitable for the fulfilment of a specific task (e.g. holding a lecture). Achieving the result must not correspond to the result expected by the mandatory (e.g. representative in a litigation proceedings). Parties of the contract are called mandatary and mandatory.

Main Differences Between the Employment Contract and Other (Service Provision) Contracts Under the Law of Obligations

Employment   Contract

Service   Provision Contract

Employer manages and controls the employee.

Service provider can choose the working time and place.

Written; helps to avoid disputes about agreed conditions.

Can also be oral.

In general, without a term. Fixed-term if the work is of temporary nature.

In general, fixed-term.

Working time and overtime is limited, resting time is set.

Unrestricted work, no resting time is foreseen.

When working full-time, right to receive the minimum salary. Employer must pay the taxes.

No minimum rate is set, payment of taxes must be agreed.

Right for a paid vacation.

Not entitled for a vacation.

Limited material liability.

Liability for the entire damage.

Employment contract termination only on legally stipulated grounds; compensation is paid for redundancy.

Law does not stipulate contract termination grounds; no prior notification nor  compensation payment obligation.

Employer must guarantee working conditions safe for life and health.

Service provider must create safe working conditions.

To resolve a dispute, right to turn to a labour dispute committee or court.

To resolve a dispute, only right to turn to court.

As the comparison of contracts shows, the employment contract is certainly to be favoured as it gives greater rights and protection to the employee. Recommendation: prefer the employment contract!

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