A significant impact on civil law agreements is looming; state authorities are determined to revise laws. New powers for the National Labour Inspectorate (PIP) may harm businesses, particularly the smallest ones.
The Ministry of Family, Labour and Social Policy (MRPiPS) plans to extend the PIP’s powers, including the right to convert civil law agreements (including the so-called B2B) into employment contracts not only through court proceedings (as it is currently the case) but also through administrative decision. While the Ministry confirms its work on such solution, experts criticize it, arguing that it may infringe the freedom to conclude agreements, and some even say that such regulations could be unconstitutional. Furthermore, these changes could mean an increase in costs for both employees and companies. Experts anticipate that, due to additional costs, some businesses, especially the smallest ones, might be forced to close down.
The Ministry of Family, Labor and Social Policy collaborates with the State Labor Inspection to ensure that employers comply with labor law regulations and is consulting on the proposed legal changes aiming to regulate workers’ conditions and provide their protection. Even though they do not provide many details, the works are advanced and major changes are predicted.
The target of the changes are employees engaged by digital platforms – taxi drivers, couriers, or food deliverers working for restaurants or transport companies. The actions seem to curtail unfair self-employment and increase the number of employment contracts, instead of the currently used sham civil law agreements.
The proposed directive is in the final stages and will likely be formally adopted in the autumn of 2024. EU countries will then have two years from its inception to incorporate it into their national legislation – the Ministry adds.
The Chief Labour Inspector Marcin Stanecki claims that the State Labour Inspectorate is not an enemy of the self-employed. He says this group is a natural element of the job market, resulting from the freedom to conclude agreements. Many people, mainly those with high qualifications and unique skills, consciously choose self-employment instead of employment. In this case, they are equal partners for the employer.
The problem arises when a person working under the conditions characteristic of an employment relationship is forced to sign a civil law contract. Stanecki hopes that the new solutions will significantly reduce the number of such abuses. He believes that the mere possibility of effective intervention by labour inspectors will curb the appetites of dishonest employers and encourage those employed on junk contracts not to succumb to such pressure.
The current powers of labour inspectors in questioning civil law contracts concluded instead of employment contracts are quite limited. They can only file a motion to the employer or bring an action to court to establish an employment relationship, but that is not enough. The new solutions, which are being worked on, will significantly change their powers in this respect and they will be able to, by administrative decision, order the conversion of a civil law contract into a job contract.
Experts from employer organizations criticize such aspirations, emphasizing that civil law contracts are often attractive as they provide greater freedom and flexibility in terms of time and place of work. As a rule, they are also cheaper for employees. Thanks to them, employees can ultimately earn a higher net amount. And the new solutions that aim to limit them are raising doubts.
Such changes infringe upon the principle of freedom to conclude agreements. Suppliers, regardless of whether it is in the form of B2B or on a civil law contract, shape the terms of the service. Katarzyna Lorenc, an expert from Business Centre Club states that she believes the provision will be unconstitutional. She fears of civil service automation and additional rules allowing officials to decide.
Szymon Witkowski, a socio-economic expert from the Employers of the Republic of Poland, notes that each of these forms of employment regulation has its advantages and disadvantages. An employment contract offers greater stability and additional employee privileges, outlined in the labour law regulations. Civil agreements, on the other hand, generally offer greater earning opportunities. Employees get to keep more ‘take-home pay’ and these contracts are also cheaper for employers.
Witkowski warns against the attempt to make all employees happy and try to fit them all into the realm of an employment contract, emphasizing that it is harmful to the market. Currently, it is the court that has the ability to determine whether a contract is an employment contract, and this is fully understandable as there are disputed situations. However, entrusting the PIP with the power to interfere in the worker-employer relationship, through an administrative decision, is not a particularly good solution – adds the expert from Employers of the Republic of Poland.
Moreover, Witkowski believes that the new powers of the Inspection are likely to cause that inspectors will become particularly interested in all types of platform workers and those working in B2B relationships. The increase in employment costs and a reduction in net wages for people working in this manner are to be expected. This fear is shared by Łukasz Goszczyński, a legal counsel from the Law Office of GKPG. He adds that businesses should already start calculating additional costs since the broadly understood market and business will get affected. Companies would have to offload these extra costs elsewhere.
Goszczyński highlights that conducting a business, especially in the first years, when it is possible to take advantage of the social security contribution relief, is simply cheaper for the employee. If in an employment contract a certain sum would have to be contributed to the Social Insurance Institution (ZUS), that money is kept by the employees. The employer also saves, because in the case of B2B, they do not have to make additional contributions for the employee. Employees should be given the opportunity to choose whether they want to earn more net income and have more flexible conditions on a civil law agreement or whether they prefer more stability on an employment contract – that’s how the expert from the Employers of the Republic of Poland assesses it.
According to Katarzyna Lorenc, further inspections and proving to officials that no one is being harmed and that the parties are shaping their relationships voluntarily should be expected. The expert stresses that the burden of administrative obligations on employers has been excessive for a long time. Łukasz Goszczyński adds that at present, it is really hard for entrepreneurs due to all taxes and contributions, and after the introduction of the regulations, some of them might find it not worthwhile to conduct any business activity. Therefore, processes of closing down companies will begin, or in the best-case scenario, suspensions, especially of the smallest market entities. Other experts share the same opinion.
The experts anticipate further difficulties in the small business and micro-firm sectors, which have been in a challenging situation for many months due to disproportionately rising labor costs against price increase and efficiency. In her opinion, this is more about searching for additional revenues for the Social Insurance Institution (ZUS) rather than caring about employee rights – summarises an expert from the BCC.
Source: https://ceo.com.pl/rzad-zabiera-sie-za-umowy-smieciowe-eksperci-alarmuja-48042
