Last year, businesses in Poland were surprised by legislative proposals aimed at cracking down on sham employment relationships. The draft bill sought to grant the Labour Inspectorate new powers allowing it to reclassify virtually any contractual relationship as an employment relationship.
Until now, such authority was vested exclusively in the labour courts, and has never been exercised lightly. Also, the original draft provided that reclassification decisions would become effective immediately and could apply retroactively for up to three years.
Market turmoil
These proposed changes triggered turmoil across the market. In recent years, the Polish labour market has benefited from flexible engagement models that allow professionals to work under legal regimes other than employment law. For highly skilled workers, this has meant so-called business-to-business (B2B) arrangements. Such models have enabled both contractors and businesses to reduce tax and social security burdens,
