Types of contracts
While looking for a job Max has come along words like employment contract, freelancer and contract for works.
He is confused because he doesn’t know what they mean, what is the difference between them and what is the best solution for him?
No need to worry. Let’s go through them one after the other.
A regular employment relationship is characterized by personal dependency of Max as employee on the employer.
Personal dependency means: Max has to work predetermined working hours.
Max has to work from the place of work the employer allocates to him.
Max's routine is predetermined by the employer.
Max is bound to the employer's working instructions.
Max’s work is regularly controlled by the employer.
With a freelance contract Max obliges himself to work for money for a client for a defined or undefined period of time.
On a freelance contract there is no personal dependency on the client.
That means:
As a freelancers Max choses working hours and place of work himself.
Max can decide on his own work routine.
Max is not subject to the control of the client.
Max can be represented by someone else.
This means Max can delegate the work to someone else.
Max doesn’t give a guarantee for success.
That means he is paid for the amount of time he works, regardless if he achieves the results.
As a freelancer Max doesn’t have the right to:
paid holidays
continued payment in case of sickness
time off for care responsibilities.
There is no minimum wage or collective agreement.
There is no dismissal notice period for the client.
This means that a freelancer can be fired at any time.
As a freelancer Max pays nearly the same social insurance as a regular employee.
It is automatically withdrawn by the customer.
As freelancers are self-employed, Max needs to tax his income himself.
A contract for work is in place when a person – who is called client – obliges Max as a contractor to produce a certain work assignment in exchange for a fee.
A contract for works is based on success. That means Max only gets paid if he finishes the work assignment.
With a contract for works the place of work,
working hours and work routine can be determined by Max himself.
There is no personal obligation to work.
Max can delegate the work to someone else.
Max has to use his own equipment e.g. laptop.
Max is not integrated into the organisation.
As a contract for works is not an employment relationship
Max doesn’t have any rights based on labour law or a collective agreements.
(paid holidays, continued salary in case of illness, leave for assistance and treatment, etc.)
Now Max has a clear overview of the different types of contracts and he can chose what fist best to his needs!