2. Re-Characterisation of Independent Contractors as Employees

a. Laws and Guiding Principles

Replacement of the contract of employment by any civil law contract while maintaining the terms and conditions of labour employment is not admissible under the regulations of the Polish Labour Code. Conclusion of a contract by which one of the parties undertakes to perform work of a specified type for the other party, under its direction and in the indicated place and time, and the other party commits itself to pay remuneration for work causes ex lege the emergence of the employment relationship between the contracting parties, irrespective of the name of the contract concluded by the parties. The main intention of this regulation is to prevent the pathology consisting in labour law evasion in relations between employers and employees.

b. The Legal Consequences of a Re-Characterisation

The reclassification of a civil law contract as an employment relationship has serious consequences. The most severe consequence is the recognition of an employment relationship with a person who was previously working on a B2B basis:

1. Consequences for the Social Insurance Institution (ZUS) (up to 5 years back)

Recognising a civil law contract as an employment relationship means an obligation to pay full social security contributions on the contract in accordance with employee rules. The employer must then also pay the portion that would normally be deducted from the employee’s salary. Interest for late payment is added to the amount of contributions, and ZUS may impose an additional penalty charge of up to 100% of unpaid social security contributions and a fine of up to PLN 46,000. Additionally, a separate fine may be imposed for breaches relating to health insurance.

2. Tax implications (up to 5 years back)

Income from a B2B contract is treated as income from employment, which is taxed according to the tax scale (12% and 32%). The employer is obliged to calculate and pay any outstanding personal income tax advances for a period of 5 years. Furthermore, the employer loses the right to deduct input VAT from output VAT arising from invoices issued by the ‘employee’ (provided the services are subject to VAT). The employer’s actions may be also classified as aiding and abetting fiscal offences (submitting false declarations and failing to fulfil the obligations of a tax payer).

3. Employee claims (up to 3 years back)

It is considered particularly risky that the contractor obtains employee claims, such as the right to claim, up to 3 years back:

• payment of remuneration together with allowances (50% or 100%) for overtime and night work.
• granting of outstanding annual leave, payment of holiday pay, and, furthermore, if the contract has already ended, payment of a cash equivalent.

The employer must retrospectively compile full employee records and – in the event of termination of employment – issue a certificate of employment.

If a B2B contract has been terminated, the court may deem this to be an unlawful termination of the employment contract, which gives rise to an obligation to pay compensation, severance pay (in the case of collective redundancies or for reasons not attributable to the employee) or reinstatement.

If an employee has suffered an accident at work, they may also claim compensation, damages or a disability pension.

Self-employed persons are not subject to the PPK, but following reclassification, the employer must pay outstanding PPK contributions retrospectively. Failure to fulfil the obligation to conclude a PPK management agreement on time or late payments may result in a fine ranging from PLN 1,000 to as much as PLN 1,000,000.

4. Misdemeanour and criminal liability

Entering into a civil law contract in circumstances where an employment contract should have been concluded constitutes a misdemeanour against the employee’s rights. This is punishable by a fine of PLN 1,000 to PLN 30,000 for the person acting on behalf of the employer. It should also be noted that liability in this respect need not be the only offence – where an employment contract is replaced by a B2B contract, liability may also arise, for example, for breaching working time regulations, failing to grant leave or failing to ensure appropriate health and safety conditions.
Furthermore, challenging the B2B relationship in respect of even a single employee exposes the employer to the charge of persistently violating the employee’s rights arising from the employment relationship or social security in relation to other persons in the B2B relationship who are in analogous circumstances, which constitutes an offence under Article 218 § 1a of the Criminal Code.

c. Remedies Available to Persons Seeking ‘Employee’ Status

A person performing work under a civil law contract who considers that the actual conditions of their work correspond to an employment relationship has two available routes: a court action and, as of 8 July 2026, an administrative procedure before the National Labour Inspectorate (PIP).

Court action

The primary judicial remedy is an action for a declaration that an employment relationship exists, brought before the labour court. Standing to bring such an action is held by the person performing the work, the tax authority and a labour inspector of the National Labour Inspectorate. The court examines how the work was actually performed rather than how the contract was labelled, and determines whether the defining features of an employment relationship – personal performance, direction, fixed place and time, and the employer’s risk – predominate. A judgment in favour of the claimant is declaratory in nature and takes effect retroactively from the date on which the employment relationship commenced. This triggers the employer’s obligation to regularise all resulting public-law consequences (unpaid social insurance contributions, PPK contributions, tax advances etc.) for the entire period covered by the judgment.

PIP Decision (effective 8 July 2026)

On 8 July 2026, an amendment to the Act on the State Labour Inspectorate will come into force, which will grant the regional labour inspector the power to establish the existence of an employment relationship by means of an administrative decision.

The procedure for issuing a decision is a two-stage process. In the first stage, the inspector issues a written order to remedy the breaches, calling on the employer to regularise the employment relationship in accordance with the regulations. If the employer complies with the order and concludes an employment contract with the person performing the work, the proceedings are concluded without further sanctions.

If the order is not complied with within the specified time limit, the district labour inspector notifies the parties of the initiation of proceedings to issue a decision.  Where work is performed under conditions constituting an employment relationship, an administrative decision is issued confirming the existence of an employment relationship. This decision takes effect not only in the sphere of labour law, but also in relation to tax, social security and compulsory contributions to public funds – from the date of its issue.

The date of conclusion of the employment contract is the date of issue of the decision.

The employer is entitled to appeal against the decision of the regional labour inspector to the labour court.  As a general rule, lodging an appeal with the court suspends the enforcement of the decision, unless the decision has been declared immediately enforceable.