May 5, 2017 / Law /

A managerial contract is a very popular form of employment among executive and managerial staff. It is an unnamed agreement, usually concluded by persons who simultaneously run a one-man business.

According to the Act on social insurance system, it is a case where bases for social insurances, i.e. a one-man business and a managerial contract, coincide.  ZUS (Social Insurance Institution) is of the opinion that the selection of a one-man business as a basis for insurance is often fictitious and its purpose is only to achieve the exemption for the contracting party from paying significantly higher insurance premiums (calculated from the revenue earned under the managerial contract).

However, the Supreme Court in its judgement of March 29, 2017, Ref. No. I UK 116/16 pointed out that ZUS cannot demand from a manager or a director employed under a managerial contract to pay premiums from such a contract if the interested party has a one-man business insurance coverage.

The Supreme Court pointed out that a business activity insurance instead of the managerial contract is also possible if the business is provided solely to the benefit of a single business entity.

The decision of the Supreme Court applies only to the managers who are not, simultaneously, members of the board of the company. The basis for social insurance for a member of the board of directors, who had concluded an agreement with that company for the provision of managerial services (managerial contract) as part of the non-agricultural economic business they run, is the managerial contract, not self-employment. It was also confirmed by the Supreme Court in the resolution of 7 judges of June 17, 2015, III UZP 2/15, which was given the power of a legal principle. A system of premiums for managerial contracts will therefore only apply to members of the board.