2020 brought unprecedented challenges to employers and employees. Many of them were tackled by the Act on Special Arrangements for the Prevention, Control and Management of COVID‑19, Other Infectious Diseases and the Resulting Emergencies (hereinafter: the COVID Act), which provided for a raft of emergency aid measures targeted at businesses most affected by the epidemic outbreak. Some solutions are to remain in force in 2021, as long as the state of epidemic in the territory of Poland is not revoked.
They include, inter alia, increased cap on PIT exemptions, including the value of payments made under the Company’s Social Benefits Fund (from PLN 1k to PLN 2k), along with various reliefs and deductions available to businesses. Yet, a particular emphasis should be put on the solution that have already become an inseparable element of the Polish legal environment.
Civil law contracts
In January 2021, a new regulation, seeming of particular importance to ZUS contribution remitters who employ individuals under contracts of commission, is to enter into force. Under the regulation, contribution remitters (including natural persons) acting as contracting parties will be required to notify the Polish Social Security Administration (ZUS) of each contract of commission concluded, provided that it is entered into with a person who is not their employee or that it is not concluded for performance of work for the employer, by whom they are employed, within 7 days from the date of concluding such contract.
Although the new provision does not seem to pose a threat to remitters, especially given that contracts of commission are excluded from social security contributions, filling the ZUS RUD form, used for reporting purposes, may be an actual challenge. This is because, apart from data identifying the remitter and the work creator, the form must include the information on the subject matter of the contract and the number of contracts of commission concluded.
Simultaneously, for some time now, there has been a growing need to extend the scope of social insurance coverage to individuals employed under contracts of mandate. Specific measures in this regard are still to be unveiled, however, given the recent announcements, the possible amendments would be aimed at revoking a number of exemptions resulting from overlapping claims for insurance coverage.
The goal of the amendments discussed above is to counteract abusive use of civil law contracts as casual forms of employment, by instituting tools for tightening up the Polish social security control system.
Remote work, as a new legal category, was introduced by way of the COVID Act and the Act amending the Act on the posting of workers in the framework of the provision of services and certain other acts.
Under the provisions thereof, during the state of epidemic emergency or the state of epidemic announced due to COVID-19 and within 3 months after their recall, in order to counteract the negative impact of the COVID-19 pandemic, the employer may instruct their employees to perform, for a specified period, work laid down in the employment contract outside the place of its regular performance (remote work).
The currently applicable tax provisions have no significant impact on remotely working individuals employed under Polish employment contracts. It must be noted, however, that some benefits granted to such employees may be exempt from tax, given that the joint conditions provided for by the judgment of the Polish Constitutional Tribunal No. 7/13 of 2014, the most controversial of which is that the benefit is incurred to the advantage of the employer, not the employee, are not met. Moreover, benefits may be subject to an objective tax exemption under the PIT Act (applicable to the use of own tools, materials and hardware).
Remote work considerations may also be of interest to cross-border workers. The PIT and social security-related implications for cross-border employees depend on many factors, including the length of their stay abroad and their tax resident status, determined pursuant to the Polish regulations and relevant double tax treaties.
Up to now, no changes in this regard have been made to the PIT Act. Nevertheless, it should be kept in mind that Poland and Germany concluded a mutual agreement on the principles of taxation of remote work performed by cross-border workers during the COVID-19 pandemic. Pursuant to the agreement, work performed at home (i.e. in the country of residence) by an employee for an employer from the other country may be considered as work performed in the country where the employee would have performed this work, had no measures been taken to counter the COVID-19 pandemic. In other words, in a situation where a Pole working in Germany is delegated by an employer to work from their home in Poland due to the COVID-19 pandemic, they are treated as if they were working in Germany all the time.
Posting of Workers Directive
The principles of posting of workers to another EU or EEA state by an employer under employment relationship are regulated by Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services, amended by Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018.
The amending Directive 2018/957 brought a number of changes to Directive 96/71/EC. Yet, the core part of the provisions of Directive 96/71/EC was upheld, with amendments relating in particular to:
- extending the repertoire of minimum conditions of employment in force in the host country guaranteed to a posted worker,
- guaranteeing posted workers terms and conditions that apply to temporary agency workers in the Member State where the work is carried out,
- extending the scope of minimum conditions of employment in force in the host country guaranteed to a posted worker in case of long-term posting,
- introducing rules for replacing posted workers,
- extending the application of collective agreements and arbitration awards which have been declared universally applicable to all employment sectors.
The national legislation incorporating the Directive provisions has been in force from 30 July 2020 and applies both to new contracts and contracts already in place. It imposes not only the obligation to pay remuneration at market level instead of the minimum rates, but also provides for the rules for calculating the long-term posting period (12 months), which are also to apply to contracts already in place, with the posting period to be calculated from the moment of its commencement.