"PIP decisions with immediate enforceability." Does this threaten B2B contracts?

The planned extension of the powers of the National Labor Inspectorate is a revolution in the relations between companies and their employees and may affect the functioning of thousands of enterprises in Poland, says Eliza Skotnicka, senior manager in the People Advisory Services Tax team at EY Polska.

According to the announcements of the Ministry of Family, Labor and Social Policy, a draft law is to be prepared by the end of August, based on which the National Labor Inspectorate (PIP) will be able to independently transform civil law contracts – including B2B contracts – into employment contracts if the inspector determines that the terms of cooperation meet the requirements of an employment relationship.

These decisions will be immediately enforceable, which means they will be effective immediately – regardless of any possible appeal to the court.

According to Eliza Skotnicka, senior manager in the People Advisory Services Tax team at EY Polska, this is a huge change that may affect the functioning of thousands of companies in Poland.

Inspections will be able to be conducted remotely, based on data from the Social Insurance Institution (ZUS) and the National Revenue Administration (KAS), and inspectors will gain access to modern analytical tools. Although the changes are intended to protect employees from abuse, the lack of precise criteria for assessing the "fictitiousness" of self-employment raises concerns among entrepreneurs, wrote Eliza Skotnicka in a commentary sent to PAP Biznes.

"The inspector's discretionary decision may lead to sudden changes in the employment structure, which in the case of companies based on a flexible cooperation model – e.g. in IT, consulting or the creative sector – may mean serious operational disruptions," she added.

The EY Polska expert points out that the changes do not mean that mandate or B2B contracts will cease to be safe and legal.

"Companies that have approached their employment model honestly and transparently from the outset, have well-documented foundations for cooperation that actually deviate from the legal-employee relationship, and are able to defend their arguments should emerge from this situation unscathed," she wrote.

It will be crucial to prepare for possible inspections, review documentation and ensure that the method of cooperation and the relationship with contractors/contractors is consistent in content and form with its name included in the contract of mandate or service provision, and is not just a "smokescreen," added Eliza Skotnicka.

Poland is one of the leaders in Europe in terms of the share of self-employed – in 2023 it was 19.9%, which means nearly 3 million people.

"For many of them, this is a conscious choice, stemming from the need for flexibility, tax preferences, and professional independence. Self-employment can also be an effective tool for professional activation of people over 50, who often find it difficult to find their place in traditional employment structures," wrote an EY Polska expert.

For three years, EY, together with GIGLIKE, has been conducting research (GIGbarometer) on labor market flexibility in Poland. The analysis shows that a flexible collaboration model – including B2B – is not a passing fad, but a lasting trend.

"It is important that the new regulations do not undermine trust in this model as a legal and effective form of cooperation," wrote Eliza Skotnicka. (PAP Biznes)

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