At the turn of the year, the proposed reform of Poland’s National Labour Inspectorate (PIP) generated considerable debate – from the first reports about a rather radical version of the draft legislation, through its subsequent softening, to the Prime Minister’s announcement that work on the reform had been suspended.
However, that is now in the past. In reality, something else is becoming increasingly clear: the reform has not been abandoned. On the contrary – legislative work appears to be continuing, and the state is preparing for its implementation both organisationally and financially. It is highly likely that this is linked to the need to meet the conditions for unlocking further funding under the National Recovery Plan.
For companies in the technology sector – where B2B cooperation models are common – this is a signal that should not be ignored.
What does the draft actually change?
The most important elements of the current draft amendment include:
Administrative decision confirming the existence of an employment relationship
The draft provides for the possibility that a labour inspector may determine the existence of an employment relationship through an administrative decision if cooperation formally based on a civil law contract displays the characteristics of an employment relationship (until now, such authority has primarily rested with labour courts).
Two-stage mechanism
If a violation is identified, the inspector’s actions are expected to follow a two-stage process:
- First, the inspector issues an order to remedy the violation;
- If the order is not complied with, this may lead to the issuance of a decision confirming the existence of an employment relationship or to filing a claim with the labour court to establish such a relationship.
Individual interpretations issued by the Labour Inspectorate
The reform is also expected to introduce the institution of individual interpretations issued by the Chief Labour Inspector, which would allow businesses to obtain an official position on the classification of a given cooperation model.
This solution resembles the mechanism of tax rulings, which allow taxpayers to understand the authority’s position and protect themselves against negative consequences in the future.
More enforcement and control tools
The draft also assumes:
- Broader data exchange between the National Labour Inspectorate, the Social Insurance Institution (ZUS), and the tax administration;
• Higher penalties for violations of labour law;
• The possibility of conducting remote inspections.
What may be even more important than the provisions themselves?
Alongside the reform, strengthening the Labour Inspectorate itself is planned – including increased funding and the development of analytical tools and IT systems designed to identify risks of labour law violations.
Why the IT sector should pay attention?
Poland’s technology sector relies heavily on flexible cooperation models, particularly B2B arrangements.
Such models are, of course, legal – as long as they reflect the actual nature of the cooperation. However, the direction of the proposed changes suggests that the classification of such arrangements may be examined much more frequently by supervisory authorities in the future.
Although the current draft is less radical than originally anticipated, there is a clear consistency in building enforcement tools. Therefore, it can be assumed with a high degree of probability that the issue of contract reclassification risk will not disappear from the regulators’ agenda in the coming years.
What companies may want to do already now?
For companies in the technology sector, this may be a good moment to:
- Review the cooperation models currently in use;
- Identify areas where practical risks may arise.
Although the reform has not yet entered into force, many signals suggest that existing relationships with contractors may soon be subject to more detailed scrutiny. The potential consequences may be particularly severe – not only under labour law but also in the areas of taxation and social security contributions, especially as they may extend several years back.
For example, for a single individual with a monthly remuneration of PLN 20,000, the estimated amount of tax and social security arrears alone, excluding interest, could reach approximately PLN 600,000.
Mikołaj Ratajczak
Partner
