A preliminary employment contract (przedwstępna umowa o pracę) is a special legal instrument that allows the parties to commit to concluding a final employment contract (umowa o pracę) in the future. This type of contract is particularly useful when an employer plans to hire a specific person but cannot do so straight away for various reasons. This may be because recruitment procedures need to be completed, the workstation needs to be prepared, necessary permits need to be obtained or a new project has yet to start.
The Labour Code (Kodeks pracy) does not regulate preliminary employment contracts, so under Article 300 of the Labour Code the Civil Code provisions on preliminary contracts (Articles 389–390 of the Civil Code) apply accordingly, provided they do not conflict with the principles of labour law. The defining feature of such a contract is that it is binding – both parties take on a legal obligation to conclude the actual employment contract on previously agreed terms, by a set date or at the request of the entitled party.
A preliminary employment contract is governed by the Civil Code and obliges the parties to sign a final employment contract in the future. A party that evades concluding the final (promised) contract may be ordered to pay damages under Article 390 § 1 of the Civil Code
Preliminary employment contracts are particularly common in industries where recruitment is long and complicated and employers want to avoid losing valuable candidates. They are also popular when hiring specialists for new projects that are due to start in the future, or when planning to expand a business.
Key elements of a preliminary employment contract
The content of a preliminary employment contract must be worded precisely and unambiguously to avoid later disputes between the parties. The most important thing is to set out all the essential elements of the future employment contract that will apply once the final contract is concluded.
A preliminary employment contract should contain detailed information on the terms of the promised contract that will be signed in the future. These elements form the foundation of the future employment relationship and must be set out with due precision to give the parties legal certainty and the ability to enforce their rights effectively if either party fails to meet its obligations.
A preliminary employment contract should contain all the essential elements of the future employment contract, such as the type of contract, type of work, place of work, working time and the employee's pay. A preliminary contract should set out the essential terms of the promised contract (Article 389 § 1 of the Civil Code), and their absence may make the preliminary contract invalid
The basic elements that must be included in a preliminary employment contract are:
- Type of contract - whether it will be a probationary, fixed-term or open-ended employment contract (Article 25 § 1 of the Labour Code)
- Type of work - a precise description of the position, scope of duties and nature of the tasks
- Place of work - the exact address or whether the work will be performed at the employer's premises, in the field or remotely
- Working time - whether it will be full-time or part-time, and any working time systems
- Employee's pay - the amount of basic pay and any allowances and additional benefits
Each of these elements should be set out so precisely that, when the final employment contract is concluded, there is no doubt about the terms of employment. Particular attention should be paid to the description of the type of work, which should be detailed enough for the future employee to have a clear idea of their duties and responsibilities. The employment contract itself must also state, among other things, the start date of work (Article 29 § 1 of the Labour Code), and since 26 April 2023 the employer has also been required to inform the employee on paper or electronically of the terms of employment listed in Article 29 § 3 of the Labour Code (for example working time standards, the amount of leave, the rules for terminating the contract) – as a rule within 7 days of allowing them to start work.
The date for concluding the final contract
One of the most important aspects of a preliminary employment contract is setting the point at which the parties will be obliged to conclude the final contract. The Civil Code does not expressly require a specific date for concluding the promised contract to be set, which can lead to differing interpretations and practical problems.
Under Article 389 § 2 of the Civil Code, if the date for concluding the contract was not set in the preliminary contract, the contract should be signed by the date set by the party to the preliminary contract that is entitled to demand the conclusion of the promised contract. This means that each party entitled to make the demand can request the conclusion of the final contract, setting an appropriate date for signing it at the same time. If both parties have set different dates, the date set by the party that did so first is binding. If the employer also wants to protect its interests, a non-compete agreement template may come in handy.
If the preliminary contract does not set a date and no date for concluding the promised contract has been set within one year of concluding it, its conclusion can no longer be demanded (Article 389 § 2 of the Civil Code). This one-year period is preclusive, and its expiry means that the rights under the preliminary contract lapse
Practice shows that the best solution is to set a specific date or event in the preliminary contract that will determine when the final contract is concluded. This may be:
- A specific date - for example the first day of the following month, a specified calendar day
- A future event - for example the end of the recruitment procedure, obtaining the necessary permits, the start of a new project
- A relative deadline - for example within 30 days of certain conditions being met
- The possibility of a demand by the parties - with a minimum notice period for such a demand
Remember the two one-year periods in the Civil Code. If no date was set in the contract and neither party sets one within one year of concluding it, the conclusion of the final contract can no longer be demanded (Article 389 § 2 of the Civil Code). If a date was set, claims under the preliminary contract become time-barred one year after the day on which the final contract was to be concluded (Article 390 § 3 of the Civil Code).
Consequences of refusing to conclude the final contract
Situations in which one party fails to meet its obligations under a preliminary employment contract may lead to serious legal and financial consequences. The Civil Code contains detailed rules on the consequences of failing to perform a preliminary contract, which are designed to protect the interests of the injured party.
If an employer that undertook in a preliminary employment contract to hire an employee fails to meet the terms of the contract, the would-be employee can choose between two types of claim. First, they can demand compensation for the damage they suffered because they relied on the promised contract being concluded (Article 390 § 1 of the Civil Code). Second, they can seek the conclusion of the employment contract in court, which means they can obtain a court judgment replacing the employer's declaration of intent (Article 390 § 2 of the Civil Code). Drafting employment contracts and keeping personnel files is covered by our payroll outsourcing.
Compensation under Article 390 § 1 of the Civil Code as a rule covers only the so-called negative contractual interest – the damage suffered because the party relied on the promised contract being concluded, not the benefits that performing that contract would have brought. The Civil Code does not provide for a limit of three months' pay, and the parties may set the scope of compensation differently in the preliminary contract
Limiting compensation to the negative contractual interest is of particular practical importance. It means that the employee can claim damage such as turning down other job offers, the costs of preparing for the new job or the loss of other earning opportunities, but as a rule not the pay they would have received under the employment contract that was not concluded – unless the parties agreed otherwise.
On the other hand, if it is the employee who refuses to conclude the employment contract, the employer has the right to claim compensation for the losses it suffered by relying on establishing an employment relationship with that particular employee. The same limit of the negative contractual interest applies in this case (Article 390 § 1 of the Civil Code), unless the parties have set the scope of compensation differently.
Damage on the employer's side may include, among other things:
- The costs of the recruitment carried out
- Losses resulting from delays in carrying out projects
- The costs of searching for a candidate again
- Other lost opportunities, for example turning down another candidate
Contractual penalties in preliminary employment contracts
The parties to a preliminary employment contract can strengthen their obligations by including contractual penalty clauses. This is a particularly useful tool that can effectively discourage failure to meet obligations and provide a quick and predictable solution if the contract is breached.
A preliminary employment contract may include a contractual penalty that the parties will have to pay if they evade concluding the promised contract. The amount of the contractual penalty should be proportionate to the importance of the obligation – a grossly excessive penalty may be reduced by the court at the debtor's request (Article 484 § 2 of the Civil Code)
Contractual penalties in preliminary employment contracts can be structured in various ways. The most common solutions provide for the same penalty for both parties or different penalties depending on which party breaches the contract. The amount of the penalty should be set reasonably, taking into account the economic importance of the contract and the potential losses that may result from its breach.
When setting the amount of the contractual penalty, it is worth considering the following factors:
| Factor | Effect on the amount of the penalty | Example of application | Legal notes |
|---|---|---|---|
| Amount of future pay | Direct - higher pay justifies a higher penalty | A penalty equal to one month's pay | Must not exceed reasonable limits |
| Specialist nature of the position | High - difficulty finding a replacement | An extra 50% for management positions | Justification in the contract |
| Recruitment costs | Medium - the employer's actual expenses | Reimbursement of headhunter costs | Documenting expenses |
| Time until the contract is concluded | Increasing - a longer wait binds the parties for longer | A higher penalty for a longer waiting period | Stability of the obligation |
It is also important to state in the contract whether the contractual penalty is exclusive or whether it can be claimed together with compensation for damage exceeding the amount of the penalty. Without an express provision in the contract, claiming compensation exceeding the amount of the contractual penalty is not permitted (Article 484 § 1 of the Civil Code), so if the parties want to keep this option, they must provide for it.
Practical aspects of drafting the contract
Drafting an effective preliminary employment contract requires taking into account many practical aspects that may be crucial for its enforceability and legal effectiveness. The first step should be a thorough analysis of the legal and factual situation of both parties and setting the goals to be achieved by concluding the preliminary contract.
The form of a preliminary contract is not specifically regulated, which means it can be concluded in writing, orally or even through the conduct of the parties (implied form). However, for evidential and practical reasons, it is strongly recommended to draw up the contract in writing, which will allow the rights and obligations of the parties to be clearly set out and make it easier to pursue claims in the event of a dispute.
The process of preparing a preliminary employment contract should include the following stages:
- Analysis of the parties' needs - setting the goals and expectations of the employer and the future employee
- Agreeing the terms of future employment - a detailed discussion of all aspects of the employment contract
- Setting the date for concluding the final contract - agreeing a specific date or triggering event
- Negotiating safeguards - discussing contractual penalties and other safeguards
- Drafting the contract - preparing a text reflecting all the arrangements
- Legal review - checking compliance with the law and case law
- Signing the contract - formal conclusion of the contract by both parties
Particular attention should be paid to the precise wording of the provisions on the terms of future employment. Each element should be described unambiguously, leaving no room for different interpretations. This applies in particular to the description of the position, the scope of duties, the place of work and the pay system.
When drafting a preliminary employment contract, it is worth consulting a lawyer specialising in labour law. This will help reduce the risk of errors that could make the contract invalid or cause problems with its performance in the future
Termination and expiry of a preliminary contract
A preliminary employment contract may be terminated or expire by operation of law in various circumstances. Knowing these situations is key for parties that want to manage their obligations under the preliminary contract properly.
The most common way a preliminary employment contract ends is by being performed, that is by concluding the final contract. In this case the preliminary contract expires by operation of law when the actual employment contract is signed on the terms set out in the preliminary contract. If the final contract is concluded on terms different from those provided for in the preliminary contract, this may raise doubts as to whether the obligation was properly performed.
Other ways a preliminary employment contract can end include:
- Expiry of the preclusive period - the rights lapse one year after the contract was concluded, if the contract did not set a date and no date for concluding the final contract was set
- Termination by mutual agreement - possible at any time on the basis of a joint declaration by both parties
- Withdrawal from the contract - if the contract provides for this possibility in certain circumstances
- Impossibility of performance - when concluding the final contract has become impossible for reasons beyond the parties' control
- Breach of contract - when one party breaches essential terms of the preliminary contract
A technology company concluded a preliminary employment contract with a programmer for the position of lead developer in a new project. The contract provided for employment once funding for the project was obtained. After six months it turned out that the project would not receive funding, which made concluding the employment contract impossible. In this situation the preliminary contract expired because performance had become impossible, and neither party was liable for its non-performance.
Remember that terminating a preliminary contract early may give rise to liability for damages if it is not justified by objective reasons. That is why the parties should carefully consider the consequences of their actions before deciding to withdraw from the contract.
Differences between a preliminary contract and other instruments
In business practice, various legal instruments are used that may resemble a preliminary employment contract but differ from it legally and practically. Understanding these differences is important for choosing the right legal tool in a specific situation.
A letter of intent is a document expressing an intention to cooperate, but usually without legally binding force. Unlike a preliminary employment contract, a letter of intent is declaratory and does not create a legal obligation to conclude an employment contract. It serves rather as a basis for further negotiations and an expression of the parties' good will.
A non-disclosure agreement (NDA) may accompany the recruitment process, but it has a completely different purpose from a preliminary employment contract. Its task is to protect confidential information shared during job interviews, not to create an obligation to conclude an employment contract.
Reserving a position is an informal arrangement that is not legally binding. The employer may "reserve" a position for a candidate, but without formal legal consequences if it changes its mind.
A preliminary employment contract differs from other instruments in that it creates a legally binding obligation to conclude an employment contract. If it is breached, the injured party can claim compensation or demand the conclusion of the contract in court
Comparison of the key features of the different instruments:
| Instrument | Binding force | Possibility of claiming compensation | Purpose | Legal form |
|---|---|---|---|---|
| Preliminary employment contract | Full | Yes, within the negative contractual interest (Article 390 § 1 of the Civil Code) | Obligation to employ | Civil law contract |
| Letter of intent | Limited or none | Usually not | Expressing an intention to cooperate | Information document |
| NDA | Full as regards confidentiality | Yes, for breach of confidentiality | Protecting information | Civil law contract |
| Reserving a position | None | No | Temporary pause in recruitment | Informal arrangement |
The most common mistakes and how to avoid them
Practice with preliminary employment contracts shows that the parties often make mistakes that can make the contract invalid or cause problems with its performance. Knowing these pitfalls helps you avoid them and makes this legal instrument more effective.
Imprecise terms of future employment are one of the most common mistakes. Wording that is too general may lead to disputes about which specific terms were to apply in the final contract. Ambiguous descriptions of the position, unclear pay terms or an imprecise place of work are particularly problematic.
Failing to set a date for concluding the final contract may lead to a situation in which neither party knows when it can demand performance of the contract. Although the law allows the entitled party to set a date, it is better to avoid this uncertainty by clearly setting the date in the contract.
Setting contractual penalties incorrectly may make them unenforceable. The court may reduce grossly excessive penalties at the debtor's request (Article 484 § 2 of the Civil Code), while penalties that are too low may not fulfil their motivating function.
The most common mistakes in practice:
- Leaving out essential elements of the future employment contract
- Using unclear or ambiguous wording
- Failing to provide for extraordinary situations (force majeure)
- Failing to take changes in the law into account
- Calculating contractual penalties incorrectly
- Ignoring the one-year periods in Article 389 § 2 and Article 390 § 3 of the Civil Code
- Failing to provide for dispute resolution procedures
To avoid the most common mistakes, it is worth getting help from a lawyer when drafting a preliminary employment contract. The cost of legal advice may turn out to be lower than the potential losses resulting from a badly drafted contract
A small accounting firm concluded a preliminary contract with an accountant, describing the pay as "competitive on the market". When the time came to conclude the final contract, it turned out that the parties had different ideas of what "competitive pay" meant. The accountant expected PLN 6,000, while the employer planned PLN 4,500. Because the preliminary contract did not set the pay – an essential term of the promised contract (Article 389 § 1 of the Civil Code) – the accountant could not effectively demand the conclusion of an employment contract on terms the parties had never agreed.
