New Polish legislation grants labor inspectors the authority to determine employment relationships even when civil law contracts are in place, impacting businesses utilizing B2B models.
New Tools for the Labor Inspectorate
The Polish State Labor Inspectorate (PIP) will gain new tools following the enactment of an amendment to the Act on the State Labor Inspectorate. This requires entities employing individuals under civil law contracts – including B2B arrangements – to verify existing cooperation practices.
Inspector Authority to Determine Employment Status
The law, signed by the President of Poland, empowers labor inspectors to determine the existence of an employment relationship even when parties have formally entered into a civil law agreement (e.g., contract for services, contract for specific work, or B2B contract). This decision requires prior non-compliance with an inspector’s directive to establish an employment contract.
Abolition for Past Non-Compliance
The amendment includes a form of “abolition” for companies that previously used civil law contracts in situations resembling employment relationships. These entities can avoid fines (up to 60,000 PLN) by bringing their practices into compliance within one year by establishing employment contracts.
Individual Interpretation Mechanism
The new regulations also introduce a mechanism for individual interpretations. Upon request, the Chief Labor Inspector will issue an assessment of whether a given legal relationship constitutes an employment relationship. While not binding on businesses, adherence to the interpretation offers protection against administrative, financial, and criminal sanctions.
Limitations of the Interpretation Instrument
The practical utility of this instrument may be limited. The new law allows the State Labor Inspectorate to deviate from its own interpretation if, during an inspection, it finds discrepancies between the actual situation and the information provided in the request.
Even with due diligence, such discrepancies can arise, as employment relationships are dynamic and can change over time, making it easy for inspectors to identify elements inconsistent with the initial description.
Discrepancies in Interpretation
Disagreements can also arise in the interpretation of the same circumstances. An entrepreneur may consider the provision of identical work uniforms as insignificant, while an inspector may view it as evidence of actual subordination.
Voluntary Agreement Not a Shield
Companies cannot avoid the consequences of reclassifying a civil law contract to an employment contract by citing the mutual will of both parties to enter into a civil law agreement. The new regulations state that the parties’ intent is considered only if it does not conflict with the law, principles of social coexistence, or circumvent the law.
Importance of Self-Assessment
In this context, a self-assessment of the employment model used within an organization becomes crucial. Businesses should analyze not only the content of contracts but also the actual manner in which they are performed. The content of a contract alone is not decisive in determining whether it exhibits characteristics of an employment contract.
Key Areas for Analysis
Five key areas require detailed analysis, including issues of subordination, organization of work time and place, and the scope of tasks performed. However, no single factor is decisive; a holistic assessment of all elements is essential.
Challenges for Businesses
The new regulations pose a significant challenge for businesses. They must proactively identify potential risks and adapt their cooperation models to comply with the new provisions. Failure to do so may result not only in the need to change the form of employment but also in substantial financial consequences.
