Work performance agreement

What it means

A work performance agreement is one of the agreements for work outside employment under the Labour Code. It is concluded for a specific task with a capped number of hours per calendar year with one employer.

Alongside it sit the work activity agreement and the student work agreement. Each has its own scope, pay rules and contribution regime, and using the wrong one is a routine source of back-assessments.

A work performance agreement is tied to an outcome - a defined task that will one day be finished, such as a stocktake, a translation or a seasonal harvest. That sets it apart from a work activity agreement, which covers recurring work within a limited weekly scope. If the task cannot be described as an outcome, the wrong type of agreement has probably been chosen.

How it works in practice

The agreement must be in writing and state the task, the scope of work, the remuneration and the deadline. The employer keeps a record of hours worked, and the pay may not fall below the hourly minimum wage.

The worker is registered with the Social Insurance Agency and, depending on the type, with a health insurer; contributions and a tax advance are paid from the remuneration. The same monthly filings as for employees apply, and a payroll record is kept.

We prepare the agreement with the client before the work starts, never backdated, and register the worker with the Social Insurance Agency before their first day. Depending on the signed tax declaration and the size of the pay, either a payroll tax advance or withholding tax is then deducted. When the paperwork arrives only after the task is done, the registration is already late.

What to watch out for

Such an agreement must not be used for regular dependent work, which belongs in an employment contract. The labour inspectorate and the Social Insurance Agency judge the substance of the relationship, not the title of the document, and assess arrears retrospectively.

The hours cap is counted per calendar year with one employer across all work performance agreements together, not per contract. A company that signs several agreements in a row with the same person can easily exceed it, and the arrangement then no longer stands up as an agreement. We therefore track the running total in the attendance records.