Change of civil law contract to employment contract

The draft bill of 1 September 2025 primarily provides for granting the National Labour Inspectorate (PIP) a new power – the ability to determine the existence of an employment relationship in a situation where the parties have concluded a civil law contract, even though, pursuant to Article 22 § 1 of the Labour Code, an employment contract should have been concluded.

The decision of the Labour Inspectorate confirming the existence of an employment relationship will specify:

1. the type of employment contract concluded between the parties;

2. the date of conclusion of the employment contract and the date of commencement of work;

3. the type of work;

4. the place of work;

5. the working time and

6. the amount of remuneration for work –

i.e. all the essential elements of an employment contract within the meaning of Article 29 of the Labour Code.

The draft also provides that if the labour inspector is unable to determine the remuneration on the basis of the evidence gathered, the decision will indicate an amount corresponding to the minimum wage.

Immediate enforceability of the decision

According to the draft, the decision establishing the employment relationship would be immediately enforceable in terms of the effects that labour law provisions attach to the establishment of an employment relationship and the obligations in respect of taxes and social security arising from the date of its issuance. Even if an appeal is lodged against the decision, the appeal will not suspend the enforcement of the decision in this respect.

At the same time, an exception to the above immediate enforceability is provided for. The enforcement of the decision will be suspended with regard to:

· tax obligations arising before the date of its issuance,

· social security obligations arising before the date of its issuance.

The suspension will remain in force until the deadline for lodging an appeal, and if an appeal is lodged, until a final court ruling is issued.

New procedure for determining the employment relationship

Under the new regulations, the decision of the district labour inspector on the existence of an employment contract would be subject to appeal to the Chief Labour Inspector (GIP), who will be able to uphold the contested decision, overturn it in whole or in part and decide on the merits of the case, or overturn the decision and refer the case back to the competent district inspector for reconsideration. The decision of the Chief Labour Inspector may be appealed to the court in accordance with the rules set out in the Code of Civil Procedure.

The draft also provides for an amendment to the Code of Civil Procedure by distinguishing between two types of proceedings:

· proceedings to determine the existence of an employment relationship – conducted as before before a court,

· proceedings in cases of appeals against decisions of the Chief Labour Inspector – as a new, separate type of proceedings.

The Ministry emphasises that cases concerning appeals against decisions of the Chief Labour Inspectorate are of a public law nature and result from the statutory tasks of the state in the field of employee rights protection. Therefore, importantly, the draft amendments exclude the possibility of concluding a court or out-of-court settlement and resolving the dispute through arbitration.

Impact of the changes on employers

The proposed changes pose significant risks for employers. In the event of a dispute

over the existence of an employment relationship, the case will have to be heard before a labour court, without the possibility of reaching a settlement or submitting the case to arbitration. In practice, this means a limitation of the parties’ freedom of choice, as even if the employee has chosen a civil law contract, the inspector will be able to consider it an employment relationship. Employers must also expect greater procedural burdens, as the inspectorate may issue separate decisions against many people, which may translate into an increase in the number of court cases. However, the most serious risk concerns the financial consequences. The inspector will specify the date of commencement of the employment relationship in their decision, which may lead to the accumulation of tax and contribution liabilities, together with interest, which the employer will have to settle even after several years of litigation.

Tax risks of the new powers of inspectors

The draft does not regulate many specific issues in the case of the transformation of a civil law contract into an employment relationship. A particular potential risk is the possibility of recognising the amount paid to a collaborator as net remuneration. This means that the employer should pay income tax and social security contributions on it. The tax authority may then demand additional payments for the previous five years, until the expiry of the limitation period. It does not matter if the employee has paid tax and social security contributions on account of their business activity. However, the employer will have a civil law claim for reimbursement. In such a situation, the employee should apply to the tax office for a refund of the overpayment, as they have unduly paid tax on their business activity. Otherwise, their remuneration would in fact be double taxed.

Potential inaccuracies also concern VAT settlement. After all, the prospective employer deducted VAT from the invoices received and recognised the net remuneration amounts as tax-deductible costs. In such a case, however, the recognition and settlement of such an ‘unreliable’ invoice will be incorrect, and the employer may be accused of tax fraud. In addition, risks also arise on the part of the collaborator who, as a result of the decision, has become an employee – the current wording of the draft law leads to the conclusion that invoices issued by an entrepreneur within the framework of B2B cooperation may be considered ‘empty’, which in turn gives rise to liability, including criminal tax liability.

Justification for the changes and summary

The authors of the draft argue that the current tools available to labour inspectors do not provide effective protection against the abuse of civil law contracts as a basis for the provision of work. In the ministry’s opinion, they are primarily non-authoritative in nature, require lengthy action and carry the risk of being rejected by the court in the event of an employee’s lack of cooperation in bringing an action to establish an employment relationship. Other available measures, such as proceedings in misdemeanour cases, have a limited scope of impact.

As discussed above, the proposed solutions are intended to counteract abuses in the labour market, while at the same time having serious consequences for employers – from limiting the parties’ freedom of choice, through an increase in the number of proceedings and costs, to tax and contribution risks dating back several years. The lack of detailed regulations on financial settlements further increases uncertainty about the practical application of the new provisions.

The draft is currently at the consultation stage, and according to the ministry’s declaration, the planned date for its adoption by the Council of Ministers is the fourth quarter of 2025. We invite you to follow our news – we will keep you informed about the legislative process.

Authors: attorney Martyna Kulikowska, Hubert Roszyk