New powers of Poland’s Labour Inspectorate: A step forward or a step too far?

The reform addresses the long-standing practice of employers engaging individuals under civil law or B2B contracts even if the working relationship meets the conditions of employment. Under the Polish Labour Code, an employment relationship exists when work is performed personally and continuously, for remuneration, under the employer’s direction and at a designated place and time. The amendment does not change this definition but strengthens the enforcement powers of administrative authorities.

Under the new framework, where an inspector identifies worker misclassification, they will first order the parties to remedy the violation. If the order is not complied with, a regional labour inspector may issue a decision establishing an employment relationship. Previously, only labour courts could make such a determination following full court proceedings. The decision takes effect under employment, tax, social security, and health insurance law from the date of issue, and may be challenged before a labour court.

Supporters of the reform argue that it will improve protections for workers as PIP’s previous inspection powers were ineffective. In practice, many individuals were reluctant to pursue court proceedings to establish an employment relationship. Stronger PIP powers are expected to give workers faster means to protect their rights.

Advocates also contend that the amendment promotes fair competition; businesses using standard employment contracts have long competed with companies gaining an unfair labour-cost advantage by circumventing labour law. More effective enforcement should help create a level playing field and discourage attempts to evade employment regulations.

The reform has attracted substantial criticism. Business organisations and some legal scholars argue that determining whether an employment relationship exists often requires complex factual and legal assessment. In their view, this should remain the exclusive domain of independent courts rather than administrative authorities.

Critics also raise concerns about legal certainty and perceptions of entrepreneurs. Many businesses lawfully engage independent contractors, particularly in sectors where flexible work is common. Opponents of the amendment fear PIP’s broad enforcement powers could lead to inconsistent decisions, discourage legitimate business models, and reduce investment. 

Concerns have also been raised about the impact of PIP determinations on past social security contributions and employment benefits. PIP decisions may prompt tax and social security authorities to conduct further audits, potentially creating retrospective liabilities for employers.

The amendment reflects a broader debate about balancing worker protection, contractual freedom, and free competition. Supporters view it as a necessary tool to combat employment law abuses, while critics warn that excessive administrative intervention could reduce labour market flexibility. Ultimately, the impact of the reform may, to a large extent, depend on how the new powers are exercised. Although entrepreneurs who lawfully engage independent contractors should not be affected by the new law, businesses are advised to review their employment structures. 

---

A much sought-after expert, Piotr Bobrowski advises both Polish and foreign entities in dispute resolution cases concerning high-level commercial and employment matters.