Mandate Contract vs. Individual Work Agreement

The mandate agreement and the individual labor contract (“ILC”) are regulated differently from a legal perspective, so ILC is regulated by the Labor Code, while the mandate contract is regulated by Law 31/1990 regarding commercial companies.

In general, both contracts involve a benefit to a beneficiary as a rule within the work program. Both the individual labor contract and the mandate contract have a common feature, that is, the benefit is compensated with a remuneration.

The main differences between the two types of contracts are as follows:

  • the individual labor contract is a will-to-pay agreement between the employee and the employer, and the mandate contract is an agreement between the manager / director and the general meeting, or, as the case may be, the board of directors of the company;
  • the individual employment contract implies a relationship of subordination between the employee and the employer, while in the mandate contract the person mandated has the independence to act, as he thinks fit, in order to fulfill the mandate received;
  • the individual labor contract is usually concluded for an indefinite period; instead, the mandate contract is concluded for a determined period;
  • the work of directors / directors with mandate is a leading one, and the case of representation, while the work done by the employees is in most cases an execution.

The conclusion of a mandate contract implies that the company draws up the document both advantages and disadvantages compared to ILC.

We consider that from the company’s perspective, the mandate contract has advantages over the individual labor contract, especially regarding the termination of the contract.

There is the possibility of revoking the mandate contract without the need to motivate the revocation decision and without complying with any prior procedures. In case of termination of an individual labor contract, it is necessary to be included in one of the cases of termination expressly stipulated by Law no. 53/2003 – Labor Code. It may also be necessary to undergo a prior termination procedure, such as the collective dismissal procedure or the prior disciplinary inquiry procedure.

Also, the mandate contract has the advantage for the company not to be subjected to the necessary formalities in the case of an individual labor contract (which must contain certain minimum requirements imposed by law).

The company has the possibility to include in the mandate contract certain clauses that are not allowed in an individual employment contract, such as a notice period of less than 20 working days upon the termination of the contract or payment of the quarterly remuneration and not monthly.

On the other hand, within the mandate relationship, the person mandated is not in a relationship of subordination with the company. This may be a disadvantage for the company because it cannot govern the actions of the person mandated in the same way as the actions of an employee.

For a person mandated, a mandate contract has advantages, as he can act as he thinks necessary to fulfill his mandate, unlike an employee who always carries out work under the authority of the employer and according to his instructions. At the same time, from the mandator’s point of view, the conclusion of a mandate contract presents disadvantages, mainly due to the fact that the person mandated does not benefit from the protection measures offered to the employees by the labor legislation (eg the redundancy protection offered to the employees in certain situations expressly stipulated by the law, granting a minimum number of days of rest leave, setting a maximum number of hours worked).

Contact an Advisor

If you have any questions regarding this topic and how it might have an impact on your business, please contact the Mirus Consultant with whom you regularly work, or:

Irina Craciun

  • Legal Contributions
  • Bucharest
  • +40 724 000 173