Reform of the national labour inspectorate in Poland – new powers and potential consequences for employers

The reform is clearly aimed at counteracting the use of so-called “sham” B2B models and strengthening control mechanisms in this area. As a rule, the new regulations are to enter into force after 3 months from the date of publication, i.e. on 8 July 2026. The Act has been referred to the Constitutional Tribunal for ex post review, which does not suspend its entry into force, although it may create uncertainty as to the durability of certain solutions.

Scope of the changes introduced

One of the most important changes is the granting of powers to the National Labour Inspectorate (PIP) to establish, by way of an administrative decision issued by a Regional Labour Inspector, the existence of an employment relationship where a civil law contract or the manner in which work is performed meets the criteria set out in Article 22 § 1 of the Labour Code. As a rule, such a decision will be preceded by an order to remedy the breach, and only failure to comply with such order may lead to the initiation of administrative proceedings.

The procedure will be multi-stage in nature:
•    in the first stage, the labour inspector will issue an order to remedy the breach,
•    in the event of non-compliance, an application may be submitted to the Regional Labour Inspector,
•    the decision on reclassification will be issued by the Regional Labour Inspector,
•    the decision may be appealed to the labour court, which will suspend its enforcement until the case is resolved.

It should be noted that, in the final version of the provisions, the most restrictive solutions considered at earlier stages of the legislative process were abandoned. In particular, such decisions will not, as a rule, be immediately enforceable, and their execution will be suspended until the appeal proceedings are completed. The Act also provides for the possibility to “remedy” the relationship at the inspection stage, i.e. adjusting the cooperation model or concluding an employment contract may lead to the closure of the case without further actions by the authority.

New supervisory instruments and strengthened inter-agency cooperation

The Act also introduces individual rulings issued by the Chief Labour Inspector. These rulings will serve to assess whether a given factual situation constitutes an employment relationship and may become an important tool for reducing regulatory risk for employers.

The scope of the National Labour Inspectorate’s inspection powers is also extended. The Inspectorate will be able to conduct remote inspections, use additional IT tools, and document activities in electronic form. At the same time, the Inspectorate will be entitled to inspect entities that have lost the status of employer or engaging entity within up to one year prior to the initiation of the inspection, which is intended to prevent avoidance of supervision through formal organizational transformations.

The amendment also strengthens cooperation between the National Labour Inspectorate, the Social Insurance Institution (ZUS) and the National Revenue Administration (KAS), including in the area of data exchange and the analysis of the risk of breaches of labour, tax and social security regulations. In practice, this means increased efficiency and coordination of control activities between different authorities.

B2B contracts – selected tax security aspects

The reform does not change the rules for recognizing a given activity as a business activity or the classification of contracts as B2B for tax purposes. However, in light of the existing practice of tax authorities, as well as the strengthened inspection powers of the National Labour Inspectorate and the enhanced cooperation between the National Labour Inspectorate, the Social Insurance Institution and the National Revenue Administration, the proper structuring of B2B relationships becomes particularly important.

In particular, attention should be paid to:
•    the scope of independence of the service provider – avoiding provisions indicating performance of work at a place and time designated by the client and ensuring the possibility of independently determining how services are provided,
•    bearing economic risk – the use of own work tools or covering the costs of their provision is preferred,
•    liability towards third parties – it is advisable to properly regulate liability for the result of services,
•    scope of services (including managerial activities) – managerial activities may result in the loss of the right to taxation as business activity; in practice, a hybrid model is sometimes considered,
•    additional benefits – expenses for training, equipment or other benefits for contractors may affect the assessment of the nature of the relationship and be subject to disputes regarding costs and VAT deduction.

Potential consequences

Reclassification of a B2B arrangement into an employment relationship, in addition to potential sanctions related to incorrect classification, may result in significant tax and social security consequences, including for past periods (up to 5 years back). In particular, this may involve the need to verify and correct personal income tax settlements, including a change in taxation rules depending on the previously applied form (e.g. lump sum taxation, flat tax), as well as the emergence of arrears together with interest.

Additionally, challenging the status of a business activity may lead to the questioning of VAT settlements, including the right to deduct input tax on the part of the service recipient, as well as the obligation to pay outstanding social security and health insurance contributions.

From a practical perspective, it is recommended to review cooperation models both in terms of contractual provisions and the actual manner of performing work in order to limit the risk of potential reclassification and related tax consequences.
 

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