Contract for specific work – structure and cost calculation

Contracts for specific work: employer costs – this topic is of particular interest to business owners seeking cost-effective forms of collaboration. In an era of dynamic economic change and rising tax and social security contribution burdens, the contract for specific work remains one of the most commonly chosen civil law contracts – particularly in the creative and IT sectors, or when carrying out unique projects. The following article presents a detailed analysis of the costs incurred by the client, discusses the nuances of tax and social security contributions, and highlights practical pitfalls and recommendations for business owners.

The specific nature of the contract for specific work – legal basis  

A contract for specific work is governed by the provisions of the Civil Code (Articles 627–646) and constitutes a classic result-based contract. This means that the key feature of this form of cooperation is the achievement of a specific, individual result – a work – for which the contractor receives remuneration. Typical examples include creating a website, writing an original text, producing a graphic design or running a one-off workshop.

Unlike an employment contract or a contract for services, a contract for specific work does not involve a relationship of subordination nor does it specify the place or time of work. The employer does not exercise day-to-day supervision over the contractor, and payment is made solely on the basis of the result achieved.

The advantage of a contract for specific work – from a cost perspective – is that there is no obligation to pay social security and health insurance contributions (except in strictly defined cases). The total cost of this contract in a typical case is therefore the gross amount resulting directly from the contract concluded with the contractor. In practice, the employer’s cost is limited to:

• the contractor’s gross remuneration,
• administrative costs (preparation of documents, bookkeeping, handling tax returns),
• any organisational costs (managing multiple contractors, registering contracts with the Social Insurance Institution (ZUS) using the RUD form).

Unlike an employment contract or a contract of mandate, there are no costs relating to social security contributions, the Labour Fund or the Guaranteed Employee Benefits Fund (apart from the exceptions described below).

Exceptions – when does a contract for specific work generate higher costs?

In practice, business owners should be aware of situations where remuneration under a contract for specific work is subject to social security contributions. This applies to two main scenarios:

1. A contract for specific work concluded with one’s own employee (a person employed on a permanent basis by the same employer);
2. Performance of the work for one’s own employer, even if the contract is formally signed with another entity.

In these situations, remuneration under a contract for specific work is included in the basis for calculating social security and health insurance contributions, as well as contributions to the Labour Fund and the Guarantee Fund for Employees’ Savings (FGŚP). The employer therefore bears the full cost of these contributions, in the same way as with an employment contract. For example, for a gross amount of 4,000 zł, the employer’s total contributions may exceed 700 zł, bringing the total cost of employment to almost 4,820 zł (including: pension, disability and accident insurance contributions, as well as contributions to the Labour Fund and the Guarantee Fund for Employees).

Example: Mr Mateusz entered into a contract for specific work with his own employer for PLN 4,000. After adding all contributions, the cost to the employer amounted to PLN 4,819.20.

Taxation and tax-deductible costs – impact on the total cost

A contract for specific work constitutes income from work carried out personally and is subject to personal income tax. The method of calculating the tax depends on the amount of remuneration and the tax-deductible costs (KUP) applied:

• 20% of tax-deductible costs – the standard rate for most works,
• 50% of tax-deductible costs – preferential rate for copyrighted works, provided that the economic rights are transferred to the client (limit of 120,000 zł per year).

A higher KUP means lower tax and a higher ‘take-home’ payment for the contractor. For the business, the cost remains equal to the gross amount; however, the amount of tax and the relevant documentation (e.g. acceptance certificate, clause on the transfer of copyright) are of significant importance for the tax security of both parties.

Example: Remuneration of PLN 10,000, 50% KUP, tax at 12% – net pay of PLN 9,400, employer’s cost: PLN 10,000.

Although, from a formal point of view, the main cost is the gross remuneration, the client should also take into account other, often overlooked, expenses:

• documentation management (preparation and archiving of contracts, invoices and acceptance reports),
• registration of the contract with ZUS using the RUD form (mandatory from 2021, within 7 days of the contract being concluded),
• verification of the correctness of tax-deductible costs (documenting creative work, transfer of copyright, etc.),
• managing multiple contractors (timely settlements, data accuracy, audits),
• tax and ZUS risks associated with the incorrect classification of contracts.

Contract for specific work vs. employment contract and contract of mandate

The costs of a contract for specific work are significantly lower than those of employment under an employment contract or a contract of mandate – in the latter cases, the employer pays a comprehensive package of contributions (pension, disability, sickness, health insurance, Labour Fund, Guarantee Fund for Employees’ Pensions, and Employee Pension Scheme). For example, when employing a worker on the national minimum wage in 2025 (4,666 zł gross), the employer’s cost amounts to approximately 5,691 zł, which is over 1,000 zł more than the gross amount paid.

With a contract for specific work, the cost is usually exactly this gross amount, which offers a significant cost advantage for short-term projects or one-off assignments.

Settlement formula and documentation – formal requirements

Tax and social security compliance requires proper documentation:

• a precise description of the work’s outcome,
• an acceptance certificate signed by the parties,
• proof of completion of the work (file, publication, report, printout),
• in the event of a transfer of copyright – an explicit clause in the contract,
• compliance with the limits and rules governing the 50% tax-deductible expenses (in accordance with Article 22(9b) of the Personal Income Tax Act).

Incorrect classification of the contract or a lack of the required documents may result in the contract being challenged by the Social Insurance Institution (ZUS) or the tax office, and the need to pay outstanding contributions/taxes with interest.

Tax and advance payments – practical considerations

For contracts for specific work exceeding PLN 200 gross, an income tax advance is deducted at a rate of 12 per cent (up to PLN 120,000 per year) or 32 per cent (above this amount). For people aged 26 or under, a tax exemption applies provided certain conditions are met. In the case of non-resident foreign nationals, a flat-rate tax of 20 per cent applies, with no possibility of deducting business-related expenses.

When is a contract for specific work not a good option?

Not every type of work can be safely settled under a contract for specific work. If the work is of a continuous or repetitive nature, is carried out under supervision, and takes place at a specified time and place, such a legal relationship should be covered by an employment contract or a contract of mandate. Any attempt to circumvent these rules risks the contract being reclassified by ZUS or PIP, which results in high costs in the form of outstanding contributions, interest and potential penalties.

Particular caution should be exercised with regard to recurring contracts for specific work with the same contractor – each contract should relate to a different, specific outcome.

Contracts for specific work and a business owner’s tax-deductible expenses

For the client, remuneration paid under a contract for specific work, provided the work serves business purposes, constitutes a tax-deductible expense in the month of payment or when made available to the contractor. If the remuneration has not been paid, it does not constitute a tax-deductible expense (Section 23(1)(55) of the Personal Income Tax Act). It should be noted that contractual penalties, damages or deductions are not tax-deductible expenses.

Obligations towards ZUS – notification of the contract and penalties for failure to do so

From 1 January 2021, every contract for specific work must be registered with ZUS within 7 days of the date of conclusion (form RUD). Exceptions include contracts concluded with one’s own employee, performed for one’s own employer but signed with another entity, and contracts with sole traders in respect of the services provided. Failure to comply with this obligation may result in administrative penalties and an audit to verify the correct classification of the contract.

Contracts for specific work in practice

• Contract for PLN 100 – flat-rate tax of 12%, total cost: PLN 100.
• Contract for 3,490 zł (20% tax-deductible business expenses, 12% rate) – total cost: 3,490 zł.
• Contract with transfer of copyright (10,000 zł, 50% tax-deductible costs) – total cost: 10,000 zł.
• Contract with an in-house employee – total cost: gross salary + full social security contributions + Labour Fund + Guarantee Fund.

Summary

A contract for specific work, whilst attractive in terms of costs for the business owner, requires informed and correct application – both from a legal and a tax perspective. The actual cost to the employer is usually the gross amount; however, specific situations (a contract with one’s own employee, incorrect classification of the contract, errors in documentation) can dramatically increase expenses and risks. A responsible approach to the form, content and settlement of a contract for specific work allows one to benefit from its advantages whilst minimising the risk of administrative and tax penalties.

Frequently asked questions

When can a contract for specific work be entered into, and how does it differ from a contract of mandate?

A contract for specific work is entered into when the aim is to achieve a specific, measurable result – whether tangible or intangible (e.g. writing a programme, producing a graphic design, sewing a dress). Unlike a contract of mandate, which concerns the performance of specific tasks (a process), a contract for specific work focuses on the end result. The subject matter of the contract must be clearly defined, and the result must be verifiable.

Do you have to pay social security contributions on a contract for specific work?

As a general rule, no social security or health insurance contributions are payable on a contract for specific work. The exception is when a contract for specific work is concluded with one’s own employee – in which case it is subject to contributions in the same way as an employment contract. From 2021, most contracts for specific work must be reported to ZUS using the RUD form within 7 days of being concluded, but this does not automatically result in an obligation to pay contributions.

How is tax on a contract for specific work calculated?

Income from a contract for specific work is taxed according to the tax scale (12% or 32%, depending on the tax bracket). The contractor may deduct tax-deductible costs – typically 20 per cent, and in the case of copyright transfer, up to 50 per cent (subject to certain limits). If the gross remuneration does not exceed 200 PLN, a flat-rate tax of 12 per cent applies, without any allowable business expenses.

Can a contract for specific work be terminated before the work is completed?

A contract for specific work cannot be terminated in the traditional sense. It may be terminated by mutual agreement or rescinded in the circumstances set out in the Civil Code, e.g. a significant increase in costs, delays on the part of the contractor or performance of the work contrary to the contract. The specific circumstances under which the contract may be rescinded are set out in the relevant articles of the Civil Code.

What are the main advantages and disadvantages of a contract for specific work?

The main advantages are lower costs (no social security contributions), a higher net remuneration for the contractor, and flexibility in setting the terms of cooperation. The disadvantages include a lack of social protection (e.g. the right to holiday leave, sickness benefits), no minimum hourly rate, and limited options for terminating the contract before the work is completed.

Does a contract for specific work have to include provisions on copyright?

Not always, but if the subject matter of the contract is a work within the meaning of copyright law (e.g. a graphic design, text, computer programme), it is worth regulating the transfer of economic copyright or the granting of a licence. This allows the client to use the work legally and entitles the contractor to deduct 50 per cent of the costs as tax-deductible expenses.

Can any activity be the subject of a contract for specific work?

No, a contract for specific work may only relate to the production of a specific result. Recurring tasks that involve the provision of services or the performance of activities without a clearly defined end result (e.g. cleaning, distributing leaflets) should be carried out under a contract of mandate, not a contract for specific work.