Comparison of employment contracts and employment contract sample

Work may be performed under various types of contracts, the most prevalent being employment contracts, contracts for services, and authorisation agreements. Before choosing and signing any particular contract, it is advisable to give careful consideration to which type of contract is most suitable for the legal relationship that will be established. It must reflect the real will of the parties as agreed during negotiations.

Employment contract

Contract of services

Authorisation agreement

Legal basis

Employment Contracts Act

Law of Obligations Act, sections 635–657

Law of Obligations Act, sections 619–634

Nature of job

Performance of work as a process subject to management and control by the employer

Production or modification of an object or provision of services for the achievement of another agreed upon result 

Provision of services subject to the agreement

Superior–subordinate relationship Yes No No


At least the minimum wage

Right to remuneration, but unremunerated agreements also possible

Right to remuneration, but unremunerated agreements also possible

Higher remuneration for overtime, working on holidays and on night shifts Yes No No
Compulsory and paid annual leave Yes No No

Probationary period

Yes (a probationary period of 4 months is expected)



Fixed working hours and restrictions on working time and rest time




Medical insurance




Organisation of medical examination Yes No No
Owner of work equipment Employer Contractor Mandatary
Terms for advance notice of cancellation Yes (Employment Contracts Act § 97 (2) No

No, except for Law of Obligations Act § 630 (3)

Place of settlement of disputes

Labour dispute committee or court




Customer service representative, teacher

Lawyer (representation of clients in court)

Renovator (e.g., apartment bathroom renovation)

*In order to receive health insurance, the total social tax declared from one or several authorisation agreements and/or contracts for services in 2022 must be at least 192.72 euros (i.e. gross monthly wage of 584 euros). Health insurance cover becomes valid on the day following the term of submission of the declaration of income and social tax, unemployment insurance premiums and contributions to the mandatory funded pension (TSD). TSD is submitted by the 10th day of the month following the month the payment was made. For example: a service is provided from 1 January, first remuneration is paid on 5 February, TSD is submitted on 10 March, health insurance cover will be valid from 11 March.

Employment contract sample


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. 

Last updated: 01.12.2022