I'm in Czechia.

I really don't know more about resolving complaints as I haven't had any problems. I guess at some point things would go to courts.

Employment is the thing that's defined as employment by the labor law, where the employer signs an employment contract with you and then pays you salary and sorts out your taxes/insurance... Contracting is having a business licence and sending invoices to a customer - with zero relation to labor law. In particular, no concept of vacation, and you pay your own taxes and insurance.