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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

Authorisation agreement

Contract of services

Legal basis

Employment Contracts Act (ECA) section 1 Subsection 1

Law of Obligations Act, sections 619–634

Law of Obligations Act, sections 635–657

Remuneration

At least the minimum wage

Right to remuneration, but unremunerated agreements also possible

Right to remuneration

Nature of job

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

Provision of services subject to the agreement

Manufacturing or modification of an object or provision of services for the achievement of any other agreed result 

Form of contract

Written (except for ECA section 4 subsection 5)

Oral or written

Oral or written

Term

Indefinite (except for ECA section 9)

Fixed (indefinite is not forbidden)

Fixed

Superior–subordinate relationship

Yes

No

No

Required personal performance

Yes

No

No

Higher remuneration for overtime, working on holidays and on night shifts

Yes

No

No

Compulsory and paid annual leave

Yes

No

No

Fixed working hours and restrictions on working time and rest time

Yes

No

No

Medical insurance

Yes

Yes/no*

Yes/no*

Organisation of medical examination

Yes

No

No

Place of settlement of disputes

Labour dispute committee or court

Court

Court

Examples

Customer service representative, teacher

Lawyer (representation of clients in court)

Renovator (e.g., renovation of the apartment's bathroom)

*In order to receive health insurance, the total social tax declared from one or several authorisation agreements and/or contracts for services in 2024 must be at least 239,25 euros (i.e. gross monthly wage of 725 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

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. 

Last updated: 02.01.2024