Guide
Service contracts and temporary work
We advise which engagement is legally correct, prepare the contracts, and accurately calculate taxes and contributions on each payment.
Service contracts and temporary and occasional work fall under engagement outside employment, when you need occasional help or a specific job done without establishing permanent employment. Unlike an employment contract, these arrangements do not carry the same rights (annual leave, notice period, sick leave compensation) and have a different calculation of taxes and contributions. Choosing the wrong arrangement carries the risk that the labor inspection finds a disguised employment relationship and orders reclassification, with retroactive obligations and fines. That is why it matters to choose the correct legal basis from the start and to have every payment correctly calculated and reported.
What you should know
- A service contract is concluded for the production or repair of a specific item, an independent task, or an intellectual service that is outside the employer's primary activity, while temporary and occasional work covers short-term jobs that may also be part of the activity but last at most up to 120 working days in a calendar year with the same person.
- Neither of these contracts establishes employment, so the engaged person has no right to annual leave, a notice period, a minimum wage, or sick leave salary compensation that apply to employees under the Labor Law.
- A service contract is subject to personal income tax at a rate of 20 percent on the base reduced by standardized costs, plus contributions for pension (PIO) and health insurance; the exact rates and bases are set by the regulations in force, so the calculation is done under the rules applicable at the time of payment.
- Temporary and occasional work can be agreed with an unemployed person, a pension beneficiary, or a person who works part-time for another employer, and the payment is subject to tax and full mandatory social insurance contributions similar to a salary.
- Persons in regular education can be engaged through a youth or student cooperative: the cooperative issues a referral, pays the compensation, and calculates the prescribed taxes, contributions, and the cooperative membership fee, sparing the employer the direct relationship and the registration administration.
- The biggest risk is reclassification into employment: if the person works fixed hours, under supervision, and continuously on tasks within your activity, the labor inspection can find a disguised employment relationship and order permanent employment with all obligations retroactively.
How we handle it
- 01 Engagement analysis We analyze the nature of the work, its duration, and your relationship with the person, then assess whether a service contract, temporary and occasional work, or actually an employment contract is correct.
- 02 Reclassification risk assessment We point out the elements that could signal a disguised employment relationship to the labor inspection and suggest how to keep the engagement legally sustainable.
- 03 Contract preparation We draft the service contract or the temporary and occasional work contract with a clearly defined subject, compensation, and deadlines, in line with regulations.
- 04 Tax and contribution calculation For every payment we accurately calculate income tax and the applicable contributions at the rates in force and prepare the tax return.
- 05 Filing and payment We submit the consolidated tax return to the Tax Authority and prepare the payment order for the net compensation, along with the required insurance registrations where mandatory.
- 06 Cooperation with cooperatives When engagement through a youth or student cooperative is more favorable, we keep records of the cooperative referrals and reconcile them with your bookkeeping.
Company formation
We register your company with APR and handle all tax and banking obligations.
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