Major reform of the Polish Labour Inspectorate (PIP) signed into law

On 2 April, the President of Poland signed a significant amendment to the Act on the National Labour Inspectorate (Państwowa Inspekcja Pracy – “PIP”), substantially expanding the powers of labour inspectors. At the same time, the law was referred to the Constitutional Tribunal for review.

The reform aims to strengthen enforcement of existing labour law, with a particular focus on situations where civil‑law contracts or B2B cooperation replace employment contracts, despite the actual working conditions resembling an employment relationship.

As a rule, the new provisions will enter into force three months after publication.

What is changing? – New powers of the Labour Inspectorate (PIP) 

Administrative reclassification of contracts into employment

The most consequential change for businesses is that PIP will gain the authority to formally confirm the existence of an employment relationship by way of an administrative decision.

In practice, this means that a labour inspector will no longer be limited to issuing recommendations or referring cases to court. Instead, a multi‑stage administrative procedure will apply:

1. Inspection phase
   If, during an inspection, PIP concludes that the relationship between the parties displays dominant features of employment (e.g. subordination, fixed working hours, integration into the organisation), the inspector may intervene.
2. Order to remedy breaches
   As a first step, the inspector may issue an order to remedy identified violations, giving the parties an opportunity to adjust the cooperation model.
3. Administrative decision
   If the order is not complied with, PIP may issue a binding decision reclassifying a civil‑law contract or B2B cooperation into an employment contract.

Importantly, both the employer and the individual performing work will have the right to challenge such a decision before a labour court.

Additional elements of the reform relevant for foreign groups

The amendment also introduces several systemic changes that significantly increase enforcement effectiveness:

• Individual interpretation procedure
  Employers will be able to apply to PIP for an official assessment of whether their employment or cooperation model complies with labour law, and – if not – how it should be corrected. This may become an important preventive tool for multinational groups.
• Data exchange with other authorities
  PIP will be allowed to exchange data with the Social Security Institution (ZUS) and the National Revenue Administration (KAS).
  This means that labour, social security and tax risks may be assessed in parallel and in a coordinated manner.
• Remote inspections
  PIP will be able to conduct remote (off‑site) inspections, increasing the likelihood and frequency of controls, especially for entities operating digitally or with distributed teams.
• Risk‑based inspection planning
  Labour inspections will be carried out based on annual and multi‑annual action plans, developed using risk analysis. Companies relying heavily on civil‑law or B2B models may be considered higher‑risk.
• Significantly higher fines
  The maximum fine that PIP can impose through penalty proceedings will be at least doubled.
  In certain cases, fines may reach up to PLN 90,000 (approx. EUR 20,000).

Practical implications for international groups

No ban on B2B or civil‑law contracts – but higher reclassification risk

The reform does not prohibit the use of civil‑law contracts or B2B cooperation in Poland. However, it materially increases the likelihood that such arrangements will be challenged if the actual manner of performing work resembles employment.

For international groups, this is particularly relevant where:

• contractors work almost exclusively for one entity,
• work is performed under managerial control,
• working hours and place are fixed,
• the same duties are performed by both: employees and contractors (B2B),
• the contractor is integrated into internal structures,
• business risk does not genuinely rest with the contractor.

Broader exposure: labour, social security and tax consequences

While the amendment directly concerns labour inspections, its impact is broader due to data sharing between authorities:

Employment reclassification may trigger:

• • social security contributions (ZUS),
  • personal income tax reassessments,
  • VAT reassessments,
  • potential disputes with tax authorities (KAS),
  • fines and administrative sanctions.

This is particularly relevant for cross‑border structures, shared service centres, IT teams and consulting models.

Transition period – a limited window to act

The law introduces an important risk‑mitigation mechanism:

Entities that, within 12 months from the date the law enters into force, voluntarily align their civil‑law or B2B cooperation with labour law requirements will not be held liable for past violations related to improper use of such contracts.

This effectively creates a one‑year grace period for restructuring cooperation models without historical exposure.

What foreign CFOs and Tax Directors should do now:

1. Review existing cooperation models in Poland, especially B2B and civil‑law arrangements.
2. Assess the reality of work performance, not only contract wording.
3. Identify reclassification risk areas with potential labour, ZUS and tax exposure.
4. Consider preventive engagement with PIP, including the new interpretation procedure.
5. Use the transition period strategically to restructure high‑risk arrangements.
6. Coordinate labour, tax and HR compliance – siloed analysis will no longer be sufficient.

Key takeaway:
Poland is moving towards a much more assertive and coordinated enforcement model in the labour market. For international groups, this reform materially increases compliance expectations around B2B and civil‑law cooperation – and makes early, proactive action essential.

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