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Outsourcing of IT personnel

From other posts on our website, you can read more about so-called body leasing (also in the context of the GDPR), which is a specific form of outsourcing of IT personnel, not directly regulated by law, and how the liability of entities in the field of outsourcing of IT services is being shaped. In this article, we will focus solely on the legal responsibility of the parties under a body leasing contract and the "hired" consultant himself.

For greater clarity, we will refer to the entity that hires the consultant as the "provider", while the entity that uses the consultant's services will be referred to as the "user."

The legal responsibility of the provider.

The fundamental determiner of the provider's liability is the contract law. It is mainly the contract that will regulate the legal rights and responsibilities of the provider, who is obliged to act with due diligence, given the professional nature of his business.

According to the basic provision of contractual liability - Article 471 of the Civil Code - "the debtor is obliged to repair the damage resulting from the non-performance or improper performance of an obligation unless the non-performance or improper performance is a consequence of circumstances for which the debtor is not responsible." Hence, if the affected party proves to the court the prerequisites of such liability of the other party, the other party will be obliged to pay compensation that includes the damage inflicted, as well as loss of benefits.

What is characteristic for the body leasing model, is that the provider should not bear any responsibility regarding the performance of the provided employees. In a model body leasing contract, there should be no provisions referring to delays in completing the work, (the completion of the project) or to guarantees as for the quality of the delivered project. However, in the operation of software houses, it is extremely frequent to encounter agreements in which the customer, wishing to conclude a body leasing agreement, proposes to include a number of provisions that are contrary to the idea of body leasing.

A client who cares about acquiring a workforce that he will, in a sense, manage himself, also not so rarely expects responsibility for the punctuality and quality of the project - over which the provider usually has limited control. These aspects mentioned here are characteristic of the managed services model, in which the responsibility for the software house's outcome most certainly occurs because then the software house executes the project and not only provides the human resources to carry it out.

We point out that the provider concludes two contracts: one with the user and the other with their consultant, who is to be forwarded to provide services in favor of the user.

If the consultant is employed under an employment contract, in order to make him available to the user, it is necessary to include in the employment contract the possibility of directing the employee to work somewhere else, while temporarily placing him under the management of another subject. However, there is a possibility that the State Labor Inspectorate will recognize that the employment contract concluded by the parties is superficial and the consultant is employed by the user since the very essence of an employment contract is to be under the management of the employer and not under another subject.

Nevertheless, as the Supreme Court rightly acknowledged in its October 2, 2019 judgment (ref. II UK 103/18), such apparentness cannot be assumed automatically. As the Supreme Court pointed out, "the performance of work at a place specified by the employer or principal (service recipient), located in the workplace of another subject and under its management, does not automatically result in the establishment of an employment or contractual relationship with that other subject."

When it comes to the civil law relationship (including B2B) between the provider and the consultant, the principle of freedom of contract is what applies here. Thus, as long as the contract is not contrary to the law, the principles of social coexistence, or the nature of the legal relationship, its content can be shaped freely. There is nothing to stop it from writing into the contract that the consultant provides services on the premises of and for the benefit of the provider, but may also be directed to a third party to provide services to that third party, not to mention with the equipment provided by the user. What is crucial, no contractual relationship is established between the consultant and the third party - it is still the provider who is required to pay the employee for their services. Similarly, even though the consultant is providing services to the third party, they are performing services for the provider.

It is worth keeping in mind this kind of chain of relations and also the fact that such a relationship does not directly lead to obligations between the consultant and the user. We should also not forget that if the court, National Labour Inspectorate, Social Insurance Institution, or Internal Revenue Service found that the consultant is not independent and provides services in subordination to the provider or the user, this could lead to establishing the status of an employment relationship or at least questioning the status of an entrepreneur on the part of the consultant. Hence, such contracts should be made with great caution. After all, the line between body leasing and temporary work is extremely thin.

The legal responsibility of the user

The main obligation of the user is to pay the provider for making the consultants available to them. The consequences of failing with this basic obligation may result from the law (especially Article 471 of the Civil Code), but also from the contract.

As mentioned above, a contractual relationship does not form between the user and the consultant. Hence the issue of the user's liability to the consultant is of a limited nature and can be omitted in this article. Nevertheless, it should be noted that the user may be liable to the consultant under the general rules of the Civil Code. Thus, for example, according to Article 415 of the Civil Code, " anyone who causes damage to another due to their fault is obliged to compensate for it." The provisions on personal rights, protection of personal data, and liability for accidents occurring on the premises of the user will also apply. Users very often specify in contracts that the provider is obliged to cover any such claims.

The responsibility of the consultant

The consultant concludes a contract only with the provider. It is in this contract that we will first look for the grounds of the consultant's liability for his actions or omissions.

As mentioned previously, the consultant may be an employee of the provider who is employed under an employment contract, but may also be a provider of services under a civil law contract (also as a self-employed person).

In the first situation, the employee's obligations to the provider, (in addition to the employment contract), will be regulated by the provisions of the Labor Code. This includes, for example, the duty to take care of the employer's welfare, but also the duty to refrain from disclosing confidential information. If an employee violates their obligations, the employer may impose a penalty for breach of an order or even terminate the contract without notice. It is also worth remembering that an employment contract cannot contain provisions less favorable to the employee than the Labor Code - only clauses in favor of the employee can be included in the contract.

In a second situation, (in addition to the contract, which is primarily applicable), the provisions of the general regulations, especially the repeatedly mentioned regulations of the Civil Code, will come into play. It should be remembered that the provider will often also conclude other contracts with such a consultant - non-disclosure agreement and and non-competition agreement (although they do not have to be a separate documents, but be included in the main agreement). Violation of any of these agreements can lead to negative consequences for the consultant, such as an obligation to pay a contractual penalty or the possibility of immediate termination of the contract by the provider.

To sum up:

From the above considerations, an important conclusion emerges: contracts should be prepared with precision and must reflect the true will of the parties (the provider, the consultant, and the user). Each party should also be aware of its role and legal position in the cooperation. Body leasing is a complicated topic, not only from the perspective of the correctness of the contract, but also from the point of view of the protection of personal data, and the security of the secrecy of the provider and user enterprises.