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Comparison of employment contracts

 

Employment contract

Contract for services

Authorisation agreement

Legal basis

Employment Contracts Act (ECA)

Law of Obligations Act (LOA), sections 635–657

LOA, sections 619–634

Nature of job

Performing work in subordination to the management and control of the employer

Manufacturing or modifying a thing or achievement of any other result by providing a service

Provision of services in accordance with the agreement

Superior-subordinate relationship

Yes

No

No

Remuneration

At least the minimum wage

Right to remuneration, but unremunerated agreements are also possible

Right to remuneration, but unremunerated agreements are also possible

Higher pay for overtime, night work and work on public holiday

Yes

No

No

Compulsory and paid annual holiday

Yes

No

No

Probationary period

Yes (usually for a period of four months)

No

No

Working and rest time restrictions

Yes

No

No

Health insurance

Yes

Only if social tax is paid to the extent of the minimum social tax obligation

Only if social tax is paid to the extent of the minimum social tax obligation

Owner of work equipment

Employer

Contractor

* The contractor usually has their own equipment, but there may be exceptions. E.g., training provider uses the projector of the training place.

Mandatary

Terms for advance notice of cancellation of contract

Yes

(subsection 97 (2) of ECA)

No

No

(except for subsection 630 (3) of LOA)

Place of settlement of disputes

Labour dispute committee or court

Court

Court

Risk assessment of the working environment

Yes

No

No

Instructing the employee

Yes

No

Obligation to inform of any hazards at the common workplace, of measures for avoiding such hazards and of the organisation of rescue operations and first aid.

No

Obligation to inform of any hazards at the common workplace, of measures for avoiding such hazards and of the organisation of rescue operations and first aid.

Organisation of medical examination

Yes

No

No

First aid

Yes

If, in addition to the employees of the employer, a service provider works at the workplace, the employer who organises work generally also organises first aid.

If, in addition to the employees of the employer, a service provider works at the workplace, the employer who organises work generally also organises first aid.

Investigation of an accident at work

Yes

If, in addition to the employees of the employer, a service provider works at the workplace, the employer who organises the work performs all acts related to the occupational accident.

If, in addition to the employees of the employer, a service provider works at the workplace, the employer who organises the work performs all acts related to the occupational accident.

Examples

Customer service representative, teacher

Renovator (for apartment bathroom renovation)

Lawyer (representation of clients in court)

Example:

Employment contract: Tarmo is a professional builder. He has worked for a construction company under an employment contract for 10 years. The employer is obliged to find new construction sites to ensure work for employees, to keep account of working and rest time, and to provide employees with work equipment, clothing and materials. Tarmo is obliged to do the work in the agreed volume, in the agreed place and at the agreed time in accordance with the instructions of the employer.

Contract for services: Tarmo wants to earn some extra money and his neighbour needs a new garage. Tarmo concludes a contract for services with his neighbour, under which he must build a garage according to the project provided by the neighbour. Tarmo will receive remuneration when the garage is completed and delivered. Tarmo has to find the necessary work equipment himself.

Authorisation agreement: A local vocational school asks Tarmo to give a two-day lecture on the use of work equipment in construction. Tarmo and the vocational school conclude an authorisation agreement for the lecture. According to the authorisation agreement, Tarmo has to give a lecture to the students, the content and structure of which is up to Tarmo.