Red Flags in Contractor Agreements: Why ‘Man Day’ Rates Can Signal Disguised Employment
In today’s global economy, companies routinely engage independent contractors across borders. In theory, this arrangement benefits both sides. In practice, many contracts quietly recreate employment.
When a Contract Says “Contractor” But Means “Employee”
Many companies treat contractors like employees — just without benefits and without the protections provided by the Labour Code.
A well-drafted European B2B agreement reflects balance. Both parties carry risk, both have exit rights, and key terms are negotiable.
When a contract only protects one side — all obligations for the contractor, all flexibility for the company — it’s not a partnership.
It’s employment dressed up in business language.
🟥 Red Flag — Man Day Rates
You receive a contractor agreement that states “310$ per man day, equivalent to 80,600 $ per year.”
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Why is this a problem?
Independent contractors don’t have annual salary equivalents. If you’re priced like a full-time employee, you’re not contracting — you’re operating under the “Švarc system” also known as disguised employment.
The fix is simple: hourly rate, no annual projection
Contractor shall invoice at $50 per hour.
⚠️ Beware of the word compensation in “contractor agreements”.
The term “compensation” is what programmers would call a code smell. In contracts, lets call it a law smell.
Smells like employment
Contractor shall be compesated at 40$ per hour
Smell like business
The fee for Services is 40$ per hour.
If you pay a contractor like an employee — or an employee like a contractor, you have a problem.
