B2B contract or employment contract – which to choose?

When faced with the decision of taking on a new job, many candidates are confronted with a dilemma: what is more advantageous – B2B or an employment contract? Both employment models have their own advantages and disadvantages, which can significantly impact career development and quality of life. In today’s article, we will explain what an employment contract is and what B2B entails. We will also take a closer look at the differences between an employment contract and a B2B contract, analyzing the benefits and challenges associated with each form of employment in the IT industry. Stay with us, and we will help you make an informed decision regarding your professional career.

In this article, you will learn:

• What is contract of employment?
• How does B2B work?
• Differences between B2B and an employment contract?
• B2B vs contract of employment – advantages and disadvantages?
• Is it possible to switch to B2B with the same employer?
• Does switching to B2B pay off?

B2B vs Employment Contract

If these abbreviations – B2B and contract of employment – are unfamiliar to you, be sure to read this part of the article. Before we present a comparison of both employment models, we will briefly describe what each of them entails and provide insights on what you should know when deciding on either.

Employment Contract – What is it?

Employment Contract, or employment contract, is still a popular form of employment regulated by labor law. It is a formal agreement between the employer and the employee that specifies the obligations and rights of both parties. The most important element of an employment contract is its stability and the protection of the employee’s rights. The contract specifies the duties the employee will perform, their position, the amount of remuneration, and the method and timing of its payment. The employee also has the right to additional benefits such as bonuses, overtime pay, and paid leave. This document specifies the working hours, which are typically 40 hours per week. Employees on an employment contract are protected by labor law provisions. They are entitled to vacation, maternity, and parental leave, as well as protection against unjustified dismissal.

B2B Work – What is it?

Have you often heard B2B and don’t know what it means? The B2B model, or “Business to Business,” refers to all commercial transactions and business relationships between two companies. It involves a specialist providing services as an independent contractor, running their own business. In the IT industry, this model is particularly popular and crucial for technological development and innovation. Individuals collaborating under a B2B contract are engaged in self-employment-based agreements. They settle payments through invoices. A B2B contract is governed by civil law, and unlike employment under Employment Contract, labor law does not apply to those working in the B2B model. What does this mean? The worker cannot benefit from the privileges granted to employees on a Contract of Employment. Although a B2B worker can expect a higher “take-home” amount, they are responsible for paying their contributions and taxes on time.

B2B Employment in the IT Industry

How does B2B work in the IT industry? In the B2B model in the IT sector, a company sells its products or services to other companies. This can include providing software to other enterprises or offering cloud services. B2B relationships are usually long-term and based on trust. Establishing and maintaining solid business relationships requires regular communication, flexibility, and transparency. In B2B, it is essential to recognize and understand the specific needs and challenges faced by other companies. A thorough analysis of needs and tailoring offers to individual client requirements is crucial in the B2B model.

Employment Contract vs B2B Contract – Pros and Cons

Advantages of an Employment Contract:

• Job Stability: The employee is protected by labor law provisions.
• Social Benefits: Employees are entitled to benefits such as paid leave, sick leave, and health and social insurance.
• Sick and Maternity Benefits: Employment Contract guarantees the payment of sick and maternity benefits, which is crucial for those planning a family or in the event of long-term illness.
• Regular Payments: Employment Contract remuneration is paid regularly every month, allowing for household budget planning and greater predictability.

Disadvantages of an Employment Contract in the IT Industry:

• Lower Net Salary: Due to high social and health insurance contributions and taxes, the net salary on Employment Contract is often lower than on B2B contracts for the same gross amount.
• Less Flexibility: Employment Contract may offer less flexibility compared to B2B contracts. In practice, this means your working hours are predetermined, and you may not have the option to work remotely.
• Less Freedom in Choosing Projects: Employees on Contract of Employment generally have fewer opportunities to choose the projects they want to work on. They are assigned tasks by the employer, which can limit their development and affect job satisfaction.

If you value stability and predictability, an employment contract is the ideal solution for you. However, you must remember that if you also seek independence and flexibility, it will be challenging to achieve them in this employment model.

Does B2B Pay Off?

Advantages of the B2B Model:

• Higher Net Salary: One of the main advantages of working on B2B is the possibility of obtaining a higher net salary. With various tax optimization options and the deduction of business expenses, it is possible to retain a larger portion of earned money.
• Flexibility and Independence: The B2B model offers greater flexibility in choosing projects, working hours, and workplace.
• Variety of Projects: Working on B2B, specialists often have the opportunity to engage in diverse projects for different clients.

Disadvantages of the B2B Employment Model:

• Lack of Job Stability: Remember that working on a B2B contract does not offer the same stability as Contract of Employment. You may have periods without projects, which means no steady income.
• Lack of Social Benefits: This is probably the biggest challenge – you need to secure yourself against illness or other unexpected situations.
• Self-Management of Finances: Working on B2B involves managing your own accounting, paying taxes, and social insurance contributions.
• Lack of Legal Protection: In the B2B model, labor law does not apply to the same extent as for employees on Employment Contract. In case of conflicts with a client, service providers have fewer options to assert their rights.
• Financial Instability: The B2B model entails greater financial instability. Contractors must account for variable incomes, which requires good financial organization and planning in advance.

Are you in the recruitment process and need to decide which employment model to choose? We have presented the advantages and disadvantages of both models. The final decision between Employment Contract and B2B depends on your individual needs, priorities, and lifestyle. If you value stability, full social benefits, and predictability, Contract of Employment will be a better choice. This is especially important for people with families who need the certainty of a steady income and protection in case of illness or other unexpected situations.

On the other hand, if you are a specialist seeking higher earnings, flexibility (e.g., taking longer vacations and independence), and the opportunity to work on various projects, the B2B model might be more attractive for you. Working on a B2B contract, however, requires greater self-discipline and readiness to manage your own business, which can be quite challenging.

Despite the growing popularity of the B2B model, the employment contract still holds its important place in the IT industry, especially in corporations and stable tech companies. Ultimately, the key to choosing the right employment model is to carefully consider your needs, career goals, and willingness to accept the associated challenges. The IT industry, with its dynamism and diversity, offers the possibility to tailor the form of employment to individual preferences, which is a significant advantage.

Switching from an Employment Contract to B2B

More and more people are considering changing their employment form. A B2B contract can be an attractive alternative to an employment contract, but not always. The most common reason for switching to B2B is finances. Since the employer does not pay social security contributions for the self-employed, a person running a sole proprietorship receives a higher net amount. Before deciding to switch to B2B with the same employer, it is worth using salary calculators. This way, you can compare your salary in both cases.

From What Amount is B2B Worth It?

When does B2B pay off? Changing the form of employment from Employment Contract to B2B will be most beneficial for those who receive a high gross salary on Employment Contract. Currently, switching from Employment Contract to B2B may be more advantageous when the monthly gross salary exceeds a certain amount, usually starting from around 12,000 – 15,000 PLN gross.