Poland’s labor minister has announced a campaign to persuade firms to switch employees from contracts that offer little security to full-time employment agreements.
Nearly 2.4 million people in Poland are employed on a shaky “mandate” contract, newly released government statistics show.
The scale of work on civil contracts in Poland is on a wider scale if B2B contracts with sole traders and other similar arrangements that are “low risk” for employers are taken into consideration. The Labor Ministry needs to bring Poland into line with European law on the subject and has proposals for how to do so.
In addition to so-called mandate contracts, Poland had 2.6 million sole traders in 2023, according to Statistics Poland. Of these, nearly 400,000 worked for one employer.
Meanwhile, the Polish Social Security Office (ZUS) registered 1.4 million of another type of agreements known as “contracts for a specific piece of work.”
Many people choose that form of engagement in order to pay less tax and social security contributions, while B2B workers can also write off expenses like a car or a computer.
The main benefactors of the looser forms of employment are employers, who save on certain taxes and charges and can often hire and fire without notice or compensation.
Workers are often enticed into such arrangements by employers who say such staff will pay lower tax and social security.
Over the past few years, however, social security payments have been introduced on “specific piece of work” contracts. Meanwhile, sole traders now pay higher social security contributions, albeit less than they would if they were on a contract.
The downside of paying lower contributions is that over 350,000 retired people now receive pensions of €150 per month or less, according to the ZUS social security office. And this number is growing. The statisticians point out that employment categorized as “administrative” for their analysis, has the biggest percentage of people working on the basis of shakier forms of employment, with no paid holidays or sick leave.
Poland’s Ministry of Family, Labor and Social Policy, headed by Agnieszka Dziemianowicz-Bąk, and the National Labor Inspectorate (PIP) are now looking into giving new instructions to inspectors who go out into the field and check on working conditions.
Dziemianowicz-Bąk said on Monday that inspectors will, in certain cases, be able to order an employer to convert a B2B contract, a contract for specific work, or a “mandate” contract into an employment contract.
Currently, a labor inspector has to apply through a court to establish the existence of an employment relationship. This existing approach requires the cooperation of the employee, who may not wish to jeopardize his relationship with his employer by giving evidence in court. Lawyers say there are traps involved in this kind of approach.
Firstly, there is the question of whether a permanent contract would be back-tracked to the date when the informal contract started to apply.
In many cases, these contracts go back years, and unpaid employer and employee social security contributions would have to be paid, involving up to 6 million people in long drawn-out processes of updating their papers with the appropriate state authorities.
Some 65% of companies make B2B contracts available to staff, according to GIGBarometer, a study by gig economy platform GIGLike and EY in Poland released in May.
This has prompted questions about whether we are going to see millions of companies going to the wall as a result of the new-style inspections.
Lawyer Małgorzata Masłowska, writing in the Infor legal website said the main focus of visits by labor inspectors would be to give recommendations.
“According to assurances from these changes are intended only to counteract abuses. PiP wants to look more closely at cases in which the parties were bound by an employment contract and then changed onto a B2B basis, and the only source of income from this B2B business is the former employer.”
In such cases, inspectors would have the opportunity to change the contract by issuing a decision against which it will be possible to appeal.”
Małgorzata Masłowska added, however, that there is an “inalienable right for people to avoid an employment contract and this right will not be taken away from them.”
The scale of work on civil contracts in Poland is on a wider scale if B2B contracts with sole traders and other similar arrangements that are “low risk” for employers are taken into consideration. The Labor Ministry needs to bring Poland into line with European law on the subject and has proposals for how to do so.
In addition to so-called mandate contracts, Poland had 2.6 million sole traders in 2023, according to Statistics Poland. Of these, nearly 400,000 worked for one employer.
Meanwhile, the Polish Social Security Office (ZUS) registered 1.4 million of another type of agreements known as “contracts for a specific piece of work.”
Many people choose that form of engagement in order to pay less tax and social security contributions, while B2B workers can also write off expenses like a car or a computer.
The main benefactors of the looser forms of employment are employers, who save on certain taxes and charges and can often hire and fire without notice or compensation.
Workers are often enticed into such arrangements by employers who say such staff will pay lower tax and social security.
Over the past few years, however, social security payments have been introduced on “specific piece of work” contracts. Meanwhile, sole traders now pay higher social security contributions, albeit less than they would if they were on a contract.
The downside of paying lower contributions is that over 350,000 retired people now receive pensions of €150 per month or less, according to the ZUS social security office. And this number is growing. The statisticians point out that employment categorized as “administrative” for their analysis, has the biggest percentage of people working on the basis of shakier forms of employment, with no paid holidays or sick leave.
Poland’s Ministry of Family, Labor and Social Policy, headed by Agnieszka Dziemianowicz-Bąk, and the National Labor Inspectorate (PIP) are now looking into giving new instructions to inspectors who go out into the field and check on working conditions.
Dziemianowicz-Bąk said on Monday that inspectors will, in certain cases, be able to order an employer to convert a B2B contract, a contract for specific work, or a “mandate” contract into an employment contract.
Currently, a labor inspector has to apply through a court to establish the existence of an employment relationship. This existing approach requires the cooperation of the employee, who may not wish to jeopardize his relationship with his employer by giving evidence in court. Lawyers say there are traps involved in this kind of approach.
Firstly, there is the question of whether a permanent contract would be back-tracked to the date when the informal contract started to apply.
In many cases, these contracts go back years, and unpaid employer and employee social security contributions would have to be paid, involving up to 6 million people in long drawn-out processes of updating their papers with the appropriate state authorities.
Some 65% of companies make B2B contracts available to staff, according to GIGBarometer, a study by gig economy platform GIGLike and EY in Poland released in May.
This has prompted questions about whether we are going to see millions of companies going to the wall as a result of the new-style inspections.
Lawyer Małgorzata Masłowska, writing in the Infor legal website said the main focus of visits by labor inspectors would be to give recommendations.
“According to assurances from these changes are intended only to counteract abuses. PiP wants to look more closely at cases in which the parties were bound by an employment contract and then changed onto a B2B basis, and the only source of income from this B2B business is the former employer.”
In such cases, inspectors would have the opportunity to change the contract by issuing a decision against which it will be possible to appeal.”
Małgorzata Masłowska added, however, that there is an “inalienable right for people to avoid an employment contract and this right will not be taken away from them.”
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