Labor Inspectors Empowered to Reclassify “Junk Contracts” as Employment

As of July 7, Poland’s National Labor Inspectorate (PIP) gained the authority to administratively reclassify civil law contracts and B2B agreements into standard employment contracts if they reflect a traditional subordinate work relationship.

Shifting focus from contract names to actual practice

New regulations do not signal a blanket ban on civil law contracts or B2B agreements. Instead, inspectors will evaluate the practical execution of work based on Article 22 of the Labor Code. If a contractor follows fixed working hours, operates under direct supervision, uses company equipment, and performs tasks personally within the firm’s hierarchy, the inspector may deem the arrangement an employment relationship.

Joanna Łuksza of IFIRMA.PL notes that the name of the contract is no longer the sole determinant. Inspectors will now analyze daily operations, communication channels, and task autonomy. The process involves an initial notification period for the employer to rectify irregularities before an administrative decision is issued, which remains subject to appeal in labor courts.

A one-year window for compliance

Employers have a 12-month grace period until July 8, 2027, to voluntarily transition existing contracts that mirror employment relationships into formal employment agreements. This “abolition period” allows companies to avoid penalties, which can range from 2,000 to 60,000 PLN, while retroactively adjusting documentation and social security contributions.

Potential for widespread labor market disruption

The Ministry of Labor expects a significant wave of inspections, driven by high volumes of worker complaints. While the government aims to protect workers from “sham self-employment,” experts warn of negative consequences. Business organizations argue that these changes may force small companies to close due to increased administrative burdens and labor costs.

Critics also highlight that many workers prefer the flexibility and higher net income of civil law contracts. There are concerns that forcing these individuals into standard employment will lower their take-home pay and reduce the agility of the labor market, potentially causing employers to pass these added costs onto the broader economy.