Independent Contractors & Employment Guidelines in Poland
Contract length allowance
Polish law does not restrict the length or use of independent contractors. However, if the relationship between the contractor and client has employment elements, the employment relationship may be recognized by the labour court.
Fixed-term contract limitation
Consecutive fixed-term employment contracts between employer and employee are restricted to a total number of three and a total maximum duration of 33 months.
What makes someone an employee
The following factors determine who is an employee and who is an independent contractor:
- The elements of every employment relationship, as stated by the Polish Labor Code:
- The employee performs work of a specified type for the employer;
- Under the employer’s supervision;
- In the place and time indicated by the employer;
- The employer commits to employing the worker for remuneration.
- According to the rulings of the Supreme Court, the constitutive elements of each employment relationship, which always have to occur jointly, are:
- The voluntary character of performing the work;
- Personal performance of the work in a continuous manner (cannot delegate to another person & either on an everyday basis or in specified intervals of time);
- The employee’s subordination to the employer (the employer manages and decides what work and the way it is to be performed);
- Performing work for the employer (the effects of an employee’s work and the profits thereof should belong to the employer);
- The paid character of employment.
- According to provisions of the Polish Civil Code and the Polish Supreme Court, these elements distinguish independent contractors:
- Non-analogous to employment relationship subordination of independent contractor (subject to different provisions in the cooperation agreement), which means:
- Freedom of the independent contractor to choose how, when and where to perform tasks;
- Autonomy and independence in the performance of duties (only about the indications and recommendations of the company);
- The independent contractor may subcontract tasks.
Employee vs contractor
Employees are protected by the labour legislation, in particular the Labor Code, which covers most aspects of employment, including the rights and obligations of the parties to the employment relationship, working time, holidays, issues regarding remuneration, including protection of remuneration, protection from termination, notice period and occupational health and safety matters. Independent contractors, on the other hand, are not protected by the same act - legal issues, in this case, are primarily governed by the Polish Civil Code and other applicable regulations; however, there is wide discretion in regulating the relationship between the parties in the cooperation agreement.
Employers must provide workers with accident insurance (employees do not participate) and employee funds. They are also responsible for employees\\\' mistakes and damages during work that impact other people or companies (the employee is liable to the employer under the terms of the Labor Code). In contrast, contractors are financially and legally responsible for mistakes and damages they make when performing work (unless otherwise specified in the cooperation agreement), and are not covered under the accident insurance and employee funds.
Taxation also varies according to the classification of the worker. Employers are responsible for calculating, deducting, filing and paying personal income tax on the employee’s behalf and contributing, along with the employee, to the Social Insurance Institution (ZUS), which gives employees access to many benefits such as retirement pension, disability pension, sick benefits, health insurance, Labor Fund and the Guaranteed Employee Benefits Fund.
Contractors, on the other hand, are responsible for calculating and filing income taxes themselves, as well as obtaining and paying for the following compulsory social insurance: retirement pension insurance, disability pension insurance, and health insurance. In addition, a contractor is liable for compulsory accident insurance. The sickness insurance is voluntary.
All employee benefits are regulated by the Labor Code and also other laws. Additional entitlements may also be granted to employees by internal sources of Labor Law, such as work and pay regulations, the collective agreement, and also by individual contracts of employment. Contractors, however, are not entitled (as a rule) to the same rights as any employee entitlements based on Labor Law. This means that regulations concerning issues such as working time standards, the admissible number of overtime hours and work on Sundays and public holidays, annual leave, or maternity leave do not apply to contractors.
Penalties for misclassification in Poland
Employment misclassification is considered an offence, and employers are liable to a fine of PLN 1,000 to 30,000 (EUR 220 to 6,650).