Employee vs. Contractor: How to Classify Workers in Poland (Quiz included) [2024]
Misclassification is a big problem—the European Union says that 5.5 million people across the EU may be misclassified.
So when hiring workers in Poland, it's crucial to classify them correctly—otherwise, you risk significant fines and penalties under Polish law.
In Poland, classifying employees incorrectly as contractors can result in a fine of PLN (Polish zloty) 1,000 to PLN 30,000, in addition to back taxes (for example, the worker's income tax), compulsory social insurance contributions, and other harsh penalties—plus interest.
Learn about how to classify your workers correctly—and stay compliant with Polish labor and employment laws—in this guide.
Classifying workers in Poland
As in many countries, Poland categorizes employees and contractors (including those doing remote work) differently—and classifying them correctly can be the difference between smoothly running your global team and stumbling into enormous fines and penalties (more on those below).
Under Polish and European Union law, certain general criteria can help distinguish between dependent work and contract work. An independent contractor is self-employed, offers their services on a contract basis, determines their own hours, and method of work, and can work for more than one client. They do not receive benefits and they file and pay their own taxes at the correct tax rates. Compensation is not based on Poland’s minimum wage and is not paid monthly.
What is an employee in Poland?
In Poland, an employee is defined as an individual who works for an employer in return for wages or other remuneration. Employees are defined by Polish law and labor code, but the most important distinction is that Poland’s robust worker protection laws always apply to employees—meaning they're always eligible for statutory benefits, like social security entitlements administered by the Social Insurance Institution (Zakład Ubezpieczeń Społecznych—ZUS). Other benefits include:
- Pension insurance
- Disability insurance
- Work accident insurance
- Employee Capital Plan (PPK)
- Occupational health and safety training and medical examinations
- Minimum wage
- Severance pay
- Unemployment insurance
- Vacation pay and annual leave (paid time off)
- Statutory or public holidays
- Health insurance contributions
- Sick leave
- Overtime pay
- Maternity leave
- Parental leave
- Social security contributions
- Notice period
- Other employee benefits in Poland’s labor code
Note that the provisions in Polish labor law apply to employees who have an employment contract or agreement. Independent contractors in Poland aren’t entitled to any benefits.
What is a contractor in Poland?
In Poland, a contractor is defined as an individual who provides services to a business or organization, but who is not an employee of that business or organization. Independent contractors are also known as self-employed individuals, consultants, entrepreneurs, or freelancers.
Worker classification overview: Employees vs contractors in Poland
Contractors
Employees
- High level of worker control.
Contractors are generally given more autonomy to determine how to complete the work and when to do it. - Equipment and tools are owned by the worker.
- Less integrated. Contractors tend to be independent, they’re more likely to work remotely, and they use their own tools and equipment.
- No entitlement to benefits. Contractors are not entitled to the same benefits and protections as employees, and they are responsible for paying their own taxes.
- Time-bound engagement. Contractors are typically engaged for a specific project or period of working time.
- Risk of loss. Contractors may assume more risk and liability for the work they perform.
- Non-exclusive services. Contractors cannot be contractually bound to a single company; they can provide their services to more than one organization.
- More direction from the employer. Employees are generally subject to more control and direction from their employer, who will provide guidance on how to perform the work and may set specific hours of work.
- Equipment and tools are typically provided by the company.
- Highly integrated. Employees are typically more integrated into the employer's organization, for example, they may work at the employer's premises.
- Entitled to benefits. Employees are entitled to certain employment benefits and protections, such as minimum wage, overtime pay, and vacation pay. They may also be entitled to benefits like health insurance, retirement plans, and paid sick leave.
- Indefinite engagement. Employees are generally hired for an indefinite period of time.
- No risk of loss. Employees are generally protected from liability for work-related issues
- Exclusive services. Employees can be contractually bound to provide services to just one company.
Penalties for misclassifying workers in Poland
Businesses found to have misclassified employees as contractors in Poland face serious financial risk. Misclassifying an employee as a contractor can result in fines worth hundreds of thousands, back taxes, and other penalties, including interest.
In 2017, the State Employment Inspectorate (PIP) took action against several employers for the misclassification of workers. The PIP imposed fines in 435 cases, many over the minimum penalty. The PIP's actions demonstrate the government's commitment to enforcing Poland's labor laws.
There's more than just the financial risk. Companies found to be misclassifying workers can suffer from other consequences, such as legal disputes, reputational damage, difficulty recruiting new workers, negative impact on employee morale and working relationships, and increased scrutiny from government agencies.
Misclassification, whether accidental or intentional, is risky and potentially very costly.
Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
