Contract for work or contract of mandate? – what type of contract with the contractor
Collaboration of cultural institutions with individuals who are not conducting business involves the signing of an appropriate civil law contract. Depending on the nature of the assignment, a cultural institution may be faced with a choice between a work contract and an assignment contract. Each of these agreements has its own specific features and advantages, and the decision on which agreement to choose should depend on the subject of the cooperation. In this article, we will analyze when it makes sense to enter into a contract for work and when to enter into a contract of mandate, paying attention to legal aspects, including copyright and compensation issues.
1. contract for work vs. contract of mandate – basic difference
The main difference between a contract for work and a contract of mandate is that a contract for work concerns the achievement of a specific result (the so-called “work”), while a contract of mandate involves the obligation to work diligently, but without the need for a specific result.
• A contract for work is concluded when the purpose of cooperation is to achieve a specific result, such as creating an artistic work, writing a book, designing a graphic, making a sculpture or preparing an exhibition.
• A contract of mandate, on the other hand, involves performing certain activities diligently, but without a guarantee that the result of the work will be a specific, predetermined result. It is a process-oriented contract, rather than a specific result, such as collaboration in organizing an event, artistic supervision or collaboration in preparing a script.
2. Characteristic features of a contract for work and a contract of mandate
Work contract – possibility to make comments and corrections
One of the key features of a work contract is that the cultural institution, as the ordering party, has the right to make comments and corrections to the completed work in terms of evaluating the result of the work. Reporting amendments is aimed at achieving the expected result – for example, changing the concept of the artistic design, proofreading the text or corrections in the performance of the work.
It is worthwhile to specify in the contract the manner of reporting amendments, as well as the deadline for their inclusion by the contractor. This can be especially important for large projects and tight schedules for performing the work.
Contract of mandate – ensuring the independence of the contractor
In the case of a contract of mandate, it is important for the contractor to have a certain degree of independence in carrying out the tasks assigned to him. The cultural institution must not unduly interfere in the way the contractor performs his duties, as this may lead to the qualification of the cooperation as an employment contract. A contract of mandate must not have the characteristics of an employment contract, such as the obligation to perform work under direction, at a specific time or at a fixed location. The contractor should be free to choose the methods of work and how to carry out the assignment. Excessive control or imposition of fixed working hours or location of the task on the contractor may result in the qualification of the cooperation as an employment relationship, which would entail the application of the Labor Code and the employer’s obligations (including wages, vacations or Social Security contributions).
3. Responsibility of cultural institutions for the settlement of public receivables
It should be remembered that the cultural institution is responsible for the correct settlement of public debts related to civil law contracts, whether it is a work contract or a contract of mandate. This means that the institution is obliged to:
• Pay social security contributions (in the case of a contract of mandate),
• Take care of the correct tax settlement, both on remuneration and on deductible expenses in the case of a work contract,
• Issue appropriate documents (e.g., PIT-11 or PIT-37) for the contractor of the work or assignment.
A mistake in determining the type of contract or in its improper settlement can lead to serious financial consequences for the cultural institution, including penalties for improper payment of Social Security contributions or taxes. That’s why it’s so important to determine exactly which contract is most appropriate to the nature of the cooperation and to accurately account for it.
4. Copyright issues – transfer of rights or license?
When a cultural institution enters into a contract for a work, often one of the key issues is the transfer of copyright or obtaining a license to use the work. It is worth distinguishing between two cases in this context:
Transfer of copyright:
In the case of a contract for a work of art, the cultural institution may require the creator to transfer the copyright to the work created (e.g., graphics, text, film). The transfer of copyrights must be explicitly written in the contract, as these rights do not automatically pass to the ordering party. If the rights are transferred with appropriate contractual provisions, the institution can obtain full rights to use the work, including the right to distribute, edit or use it in cultural and educational activities.
Obtaining a license:
Alternatively, under a contractual agreement, the creator may grant a license to use the work. The license can be exclusive (where the cultural institution obtains the exclusive right to use the work) or non-exclusive (where the creator can license the work to others). The license may be limited in time, territory or scope of use, such as only for one event or in a specific medium.
In the case of an assignment contract, it is not necessary to transfer copyright or grant a license, since the purpose of this contract is not to create a work, but only to carry out activities in a diligent manner. However, if you suspect that a work may be created incidentally as part of the performance of an assignment, it is worth ensuring that appropriate copyright provisions are in place in the context of using the results of that work.
5. issues of determining remuneration in civil law contracts
Contract of mandate:
In the case of a contract of mandate, the minimum wage regulations apply, which means that the remuneration of the person performing the mandate cannot be lower than the minimum wage established by national legislation. This is especially important in the context of individuals who are not in business, because with a contract of mandate we must ensure that the remuneration is in accordance with the minimum rates set by law. In addition, it is important to remember that a contract of mandate entails the obligation to pay social security contributions.
Artwork contract:
In the case of a works contract, there is no obligation to comply with the minimum wage, which gives the cultural institution more flexibility when negotiating the amount of remuneration. In addition, in the case of a contract for work, it is possible to take advantage of the so-called “contract for work”. 50% of the tax-deductible expenses (DTC), which means that the person performing the work can deduct half of the salary from income for tax purposes. This is a beneficial solution for both the creator and the cultural institution, as it reduces the tax burden.
6. Conclusion – which deal will be better?
The choice between a work contract and a contract of mandate depends primarily on the nature of the work to be performed by the person.
• A work contract will be appropriate when the subject of the cooperation is the creation of a specific work (e.g., writing a book, designing a graphic, creating an art installation) and when there is a need to transfer copyright or obtain a license to use the work.
• A contract of mandate will be more appropriate when the purpose of the cooperation is the careful performance of specific activities, such as organizing events, coordinating work, providing artistic advice or other services that do not lead to the creation of a specific work.
In the case of both a work contract and a contract of mandate, it is crucial to properly formulate the terms of the contract, especially on the issue of remuneration and copyright, thus avoiding later disputes.