Employers vs. the State: More Fines, Remote Control, and Less Freedom

• The National Labour Inspectorate is preparing for a major reform as part of the National Reconstruction Plan, the implementation of which is scheduled for 2026.
• Employers are sharply criticizing the plan to grant the National Labour Inspectorate (PIP) such broad powers over contract classification. "Granting the PIP the right to unilaterally decide to convert civil law contracts into employment contracts is, in my opinion, a far-fetched mechanism," commented Professor Jan Klimek, president of the Polish Craft Association.
• The planned increase in penalties for companies violating labor law is being criticized by employer organizations. Experts are calling for the focus to be on educational and supportive measures to help micro-entrepreneurs comply with the regulations, rather than tightening sanctions.

Changes are coming to the National Labor Inspectorate due to the reforms outlined in the National Recovery Plan. They are scheduled to be implemented in 2026.

"The Council of the European Union has given the green light to reform our office. The changes negotiated by the government with the European Commission will provide better protection for people working in Poland against unfair treatment and exploitation. In the coming months, the National Labor Inspectorate will be modernized, equipped with new IT systems, provided with additional funding, and most importantly, with new powers adapted to the current situation in our economy, " says Chief Labor Inspector Marcin Stanecki.

However, employers have many reservations about the proposed reforms - the most important one is the possibility of converting a civil law contract into an employment contract by a National Labor Inspectorate (PIP) inspector, and not - as was the case so far - through labor court proceedings.

Changes at the National Labor Inspectorate. The National Labor Inspectorate will address this.

The National Labor Inspectorate announced the gradual implementation of five key changes resulting from the revision of the National Recovery Plan. These include:

• authorizing the National Labor Inspectorate to issue administrative decisions transforming improperly concluded civil law contracts into employment contracts,
• enabling the exchange of data between PIP, ZUS and KAS for labor inspection purposes,
• introducing the possibility of conducting remote inspections,
• introducing into the National Labor Inspectorate the obligation to prepare annual and long-term action plans that include targeted inspections based on risk analysis,
• at least doubling the maximum amount of penalties that the National Labor Inspectorate may impose in penalty proceedings.

A number of measures are also planned to improve the efficiency of the National Labor Inspectorate, including improving employment conditions within the institution and a 10% increase in the National Labor Inspectorate's budget for 2026, compared to that planned for 2025.

An employment contract drawn up by an inspector? "This should be handled by the court."

By far the most controversial point is the one concerning the transformation of civil law contracts into employment contracts.

"When it comes to the transformation of civil law contracts, we will always act solely on the basis of complaints and insist that such a decision only impact the future. We will also act only if the person interested in the transformation clearly expresses their will. In practice, this means that we will not force anyone to accept a permanent position," emphasizes Marcin Stanecki.

However, employers agree that the classification of contracts should be handled by the court.

"The abuse of civil contracts has long been a real problem in Poland. However, granting the National Labour Inspectorate (PIP) the right to unilaterally decide to convert civil contracts into employment contracts is, in my opinion, an overreaching mechanism that could impact the flexibility of employers' contracting. A much better solution is to increase the educational and preventative role of the PIP," said Professor Jan Klimek, president of the Polish Craft Association, in an interview with PulsHR.pl.

Katarzyna Lorenc, BCC expert on the labor market, also believes that disputes should be resolved by the court, but to streamline the process, a specialized unit should be created that would be able to make such decisions more efficiently.

"Official interference, whether procedural or discretionary, will harm both employees and employers. We oppose the management of employment and subcontracting relationships within a company by external officials. This undermines the rights of entrepreneurs to organize their businesses according to market needs. The consequences of such retraining are very severe, and the issues are ambiguous – they require a thorough understanding of the nature of work and cooperation within the company, as well as the will of the parties to the business or employment relationship," he points out.

Szymon Witkowski, labor counselor and board representative for social dialogue at Employers of Poland, emphasizes that allowing the National Labor Inspectorate to take such actions may cause significant uncertainty on the part of entrepreneurs as to the application of the new regulations and prolong potential disputes.

" If both parties agree to specific terms, and the relationship between the employer and the contractor does not meet the requirements of Article 22 § 1 of the Labor Code, the parties' will is what counts. Of course, we realize that these issues are linked to the achievement of milestones under the Labor Code, so significant pressure should be expected to implement these regulations. In such a case, the Chief Labor Inspector himself takes a reasonable approach, repeatedly declaring that such a decision must have a standard appeals process, and ultimately, any dispute should be resolved by a court. Such a decision cannot be immediately enforceable and cannot have retroactive effect. Such a solution will maintain a balance between the expectations of the legislature and the common sense needs of the market," concludes Szymon Witkowski.

Remote inspections by the National Labor Inspectorate. "A sign of the times"

Employer organizations, however, support the introduction of remote inspections by the National Labor Inspectorate. Katarzyna Lorenc from BCC told us that in a world of hybrid work, and assuming principles of good cooperation are maintained, remote inspections can be more convenient for both parties.

"Remote inspections are a sign of our times. We are increasingly influenced by digitalization, and as the Polish Craft Association, we see no problem in using the new forms of inspection offered by technology," says Professor Jan Klimek.

Szymon Witkowski emphasizes that the idea itself "seems promising."

" It's important to remember that workplace inspections can be burdensome and sometimes disrupt business operations. If it's possible to conduct some inspections remotely, this will certainly be a convenience for both the National Labor Inspectorate (PIP) and the businesses themselves," he points out in an interview with PulsHR.pl.

Data exchange between PIP, ZUS, and KAS. Threat of cyberattacks?

The proposed changes, in connection with the revision of the National Labour Inspectorate, also propose enabling data exchange between the National Labour Inspectorate, the Social Insurance Institution (ZUS), and the National Revenue Administration (KAS). Employers do not support this solution.

Why? According to Katarzyna Lorenc, establishing the facts through data exchange may be justified in cases of serious violations, as part of court proceedings.

"However, this shouldn't be a routine in which officials select groups of data and conduct inspections based on them. The National Labor Inspectorate (PIP) should intervene in complaints, investigate them, and if irregularities are found, have a short legal process. Data from the Social Insurance Institution (ZUS) and the National Revenue Administration (KAS) are highly sensitive to economic issues, and in the case of individuals, also to personal data protection. Therefore, universal access is an exaggerated demand and inappropriate for the PIP's role," the BCC representative believes.

Professor Jan Klimek believes that enabling the exchange of data between these organizations creates the risk of increased threats related to cyberattacks , which is why appropriate mechanisms and system security measures are needed to protect entrepreneurs and employees from such risks.

Higher penalties for entrepreneurs? Strong opposition

Entrepreneurs are undoubtedly against the proposal to double the maximum amount of fines, even though the fines currently imposed are not high, as Marcin Stanecki himself argues.

"The KPO's goal is to at least double the upper limit on fines. However, it should be taken into account that our average fine is PLN 1,300, and the average fine in court is PLN 2,400, while the average fine for violating employment law regulations in the Czech Republic, for example, is approximately PLN 30,000," explains the Chief Labor Inspector in an interview published on the institution's website.

"97.2% of entrepreneurs are micro-enterprises, employing 1-9 people. Threatening with fines instead of building a system that supports micro-entrepreneurs in choosing the right form of implementing their company's tasks in a balanced mix—employment contracts, civil law contracts, and B2B—is counterproductive and discourages organizational building , encouraging chain labor and abandoning employment contracts altogether. Today, this is an increasingly popular model of cooperation," says Katarzyna Lorenc.

Szymon Witkowski, in turn, talks to us about education instead of punishment in some cases.

"Entrepreneurs point out that what matters most is the detectability of violations and the inevitability of a penalty, not the severity of the penalty. Although there are situations in which entrepreneurs deliberately violate regulations because the potential penalty is not a problem for them. Sometimes it's more profitable for them to knowingly violate regulations than to comply with them. Of course, such situations should not occur, and combating market dysfunctions is in the interest not only of employees but also of all honest employers. However, penalties should not be excessively high. Furthermore, in the case of minor or unintentional violations, the focus should be on educating the entrepreneur rather than punishing them," comments an expert from Employers of Poland.