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POLAND: Does the conclusion on the contract on the material liability for entrusted property between the principal and the agent create an employment relationship?

On the 3rd of April 2019, the Polish Supreme Court (case no. III PK 99/18) has issued a verdict, in which he responded to the question, of whether or not concluding agreements on material liability for entrusted property (typical for an employment relationship), can decide on recognition of the agency agreement, as a contract of employment.

Olga SZTEJNERT-ROSZAK - 20.01.20
Country expert

The plaintiff initially was employed by the defendant, upon the basis of an employment contract for a limited period of time. Following this, they were employed for another period of time, upon which the parties came to an agency agreement, reserving that the plaintiff does not become an employee of the defendant. The agency agreement has been repeatedly annexed. During the contract period, the parties also concluded an agreement on the liability for entrusted property. Following unsuccessful attempts at changing the agency agreement into a contract of employment, the plaintiff terminated the agency agreement, and then filed the claim with the Labour Court, to establish that the agency agreement was de facto a contract of employment.

The Labour Courts of both instances concluded that the complaint will not be acknowledged. They pointed out, that the mere conclusion of contracts for liability for entrusted property by the two parties, did not affect the final assessment of the relationship between the parties as agency agreements. These contracts supplemented the agency agreement and constituted a form of material security for the defendant, which the plaintiff knowingly, and freely accepted.

After examining the cassation the Supreme Court dismissed the complaint, concluding that the courts correctly identified the essential features of the legal relationship between the parties. In the contracts, which exemplified a disputed nature between the parties, there were no rulings guaranteeing labor rights for the plaintiff. The Court underlined, that the agreement for liability for entrusted property does not create an employment relationship and – although it is admittedly a classic additional clause to the employment contract – it may be concluded with an agent in accordance with the principle of freedom of contract. In such cases, material liability for any potentially caused damage, would require the principle to demonstrate all grounds for liability for damages, for the caused damage by the agent, on the basis of the general provisions of the Polish Civil Code.

 

Olga Sztejnert-Roszak, IDI Country Expert for agency & distribution in Poland

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