Outsourcing and the Labor Code: Key Legal Regulations

A poorly structured external cooperation model can expose your company to allegations of sham employment, carrying severe legal and financial consequences. Although the issue of outsourcing versus the Labor Code is not directly regulated, gaining a precise understanding of current outsourcing legal regulations is the only way to fully protect your company’s interests. In this article, we explain how to draft secure contracts and implement effective management of outsourced personnel to avoid litigation and the risk of losing key staff. This is essential knowledge for managers and lawyers who want to turn operational flexibility into stable business success.

Legal regulations regarding outsourcing

Outsourcing, or delegating specific tasks or processes to an external company, is governed by various legal provisions depending on the business sector and the specifics of the outsourcing agreements. Special regulations apply to financial institutions, but for most other companies, general civil and labor law provisions apply. It is important to precisely define the scope of entrusted activities, the rights and obligations of the parties, and liability within the outsourcing agreement. This may include mandate contracts, service agreements, or specific-task contracts, depending on the nature and scope of the activities. If outsourcing involves the processing of personal data, the agreement must contain provisions regarding this activity, and the organizational and technical requirements specified by law for the data controller must be met. Confidential information must also be handled in accordance with the law, particularly in the context of banking law. There are also tripartite agreements used to avoid problems related to the transfer of employees. They ensure that employees retain rights resulting from their length of service with the previous employer, such as notice periods or the number of vacation days. Such agreements must also be carefully prepared so as not to violate employee rights or lead to legal disputes. Generally speaking, the legal regulations for outsourcing are quite complex because outsourcing is not a standard work model and there are no direct outsourcing regulations. Therefore, in case of any potential legal doubts, it is worth consulting an expert, a lawyer specializing in labor and commercial law, or, in the case of tax issues, a tax advisor.

The Labor Code and outsourcing

The Labor Code does not contain direct provisions regarding employee outsourcing. Outsourcing services are treated as “unnamed services,” meaning they are not described in detail in the Labor Code or other acts. However, the Labor Code may apply to outsourcing in two cases. First, in a situation where an outsourcing company takes over existing employees. The transfer of a workplace to a new employer who previously provided outsourcing to that workplace results in the new employer automatically becoming a party to existing employment relationships. This is related to Article 23 of the Labor Code, which is worth reviewing in case of such a scenario. The second situation where the Labor Code may apply to outsourcing arises when there is a suspicion that the outsourcing is a sham. In such cases, a court examines whether employees are still performing key tasks for their former employer and are subject to their supervision.

Examples of legal problems with outsourcing

Legal problems with outsourcing most often arise from ambiguities, varying interpretations of regulations, and the specifics of outsourcing agreements. An example could be a workplace accident. When liability rests with both the outsourcing company and the company using the outsourcing, legal disputes regarding compensation may occur. Another example of potential sources of conflict could be inaccuracies in outsourcing agreements regarding service quality or deadlines. Changes to agreements can also be problematic, especially when it comes to unexpected price list changes. One should also be wary of inconsistent control practices by various institutions, which can make it difficult for companies to prepare for audits. Improperly managed outsourcing can lead to employee turnover, which is why skilled outsourcing management is so important. You can read more about the reasons why IT specialists quit their jobs at this address.

How to properly manage outsourced employees?

Outsourcing can be an effective and efficient solution for many companies if we know how to properly manage outsourced employees. Managing outsourcing requires diligence and consideration of many legal and organizational aspects, and key practices primarily include:

1. Precise outsourcing agreements

Agreements should clearly define which processes and functions will be outsourced, specify quality standards and their metrics, and indicate which parties bear responsibility for accidents and other incidents. Agreements should also include clauses protecting against unexpected changes in contract terms;

2. Control and supervision of services

Monitoring services rather than directly managing outsourced employees is the foundation of outsourcing. This eliminates the suspicion of sham outsourcing;

3. Employee protection

Tripartite agreements and retention bonuses are the best way to prevent the loss of key personnel. Employee rights must be protected;

4. Compliance with legal regulations

The aforementioned civil law provisions are the basis for creating outsourcing agreements, but it is important to familiarize yourself with the specifics of the given sector;

5. Communication and cooperation

Clear reporting procedures and regular meetings between the parties are crucial for monitoring agreements and resolving potential problems. For specific issues such as calculating working hours for non-standard tasks or copyright issues in B2B, it is worth exploring the topic further by starting with our articles on these subjects. We also encourage you to expand your knowledge on the differences between employment contracts and B2B contracts in IT.