This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
As early as April 2025, the Ministry of Labor established a team to oversee reforms of the National Labor Inspectorate (PIP). The result was a bill that came to light after the summer recess. The legislature assumed that the expanded powers of PIP would align with the milestones of the National Recovery Plan (Krajowy Plan Odbudowy, KPO), effectively replacing the blanket social security contributions on all civil-law contracts. Instead of the so-called “contribution coverage” of gig-type contracts, the proposal would have allowed them to be converted into full-time employment.
Explainer
Employment contracts vs B2B vs task contract
This is one of the most important and contentious issues in the Polish labor market - the tension between “traditional” employment contracts (umowa o pracę) and self-employment/contractor arrangements (B2B, business-to-business contracts) or task contracts (umowa zlecenie). It affects huge numbers of workers, especially in IT, consulting, and professional services as well as retail.
Many Polish companies, especially in IT and professional services, essentially require B2B arrangements even for roles that are really full-time employment in everything but name. You work exclusively for one company, in their office, with their equipment, following their schedule - but legally you're a “contractor.”
Or, you may chose a “task contract” which is – generally speaking – a middle ground between full employment and pure self-employment.
This is technically illegal – it’s often referred to in Polish as disguised employment or junk-contracts (umowy śmieciowe). Labor courts have ruled that if the relationship looks like employment, it should be treated as employment regardless of the contract type. But enforcement is the difficult part.
For employees, this would have meant greater protection against dismissal, guaranteed entitlement to leave, and social security coverage through ZUS (Social Security Institution) contributions. For employers, as they themselves noted, it would have mainly brought uncertainty, interference with the freedom to structure contracts, and the risk of inspections going back as far as five years. In essence, the draft would have granted PIP inspectors the authority to convert a civil-law contract into a full-time employment contract via an administrative decision
Plans for reforming the National Labor Inspectorate
Among more than 100 pages of comments and proposed amendments to the bill, the central issue was the constitutionality of the proposed measures. The principle most frequently cited was the freedom to structure contracts.
“Transferring to the level of an administrative decision matters related to the content of employment contracts could, in the view of the Government Legislation Centre, be considered a violation of constitutional principles: freedom to conduct business, freedom to choose and practice a profession, and freedom to choose a place of work,” the Government Legislation Centre (RCL) noted.
Employers largely echoed these concerns, highlighting the uncertainty arising from such contract conversions. These changes would have entailed additional costs for businesses and obligations toward ZUS (Social Insurance Institution) and tax authorities. Moreover, employers would have been required to immediately provide employees with occupational health and safety training before permitting them to work, arrange initial medical examinations, and grant any outstanding vacation leave.
Other business organizations voiced similar concerns. While the ministry introduced amendments, these were largely cosmetic changes.
Prime Minister on “excessive power in the hands of bureaucrats”
As recently as December 4, the Standing Committee of the Council of Ministers approved the draft bill on PIP reform. The following day, Maciej Berek – the committee chair and minister responsible for overseeing the implementation of government policy – reminded viewers on TVP Info channel (state broadcaster -ed.) that the draft was intended to fulfill a milestone of the National Recovery Plan (KPO).
On Tuesday, January 6, during a coalition meeting in Paris, Prime Minister Donald Tusk announced that he had decided to abandon work on the reform.
“Excessive power for officials who would decide how people are employed would be extremely destructive for many companies and could also result in job losses for numerous people. This is the conclusion of my analysis,” Mr. Tusk said.
“And that is why I spoke very firmly and, with justified emotion, to the ministers, explaining the risks I see and why I decided not to continue work on this type of reform. From my point of view, the matter is now closed,” the Prime Minister added.
The Prime Minister’s sudden decision
The matter is far from settled, as Poland remains obliged to meet the milestones of the National Recovery Plan. These milestones determine the disbursement of the next tranche of European funds. Failure to achieve them could result not only in withheld payments but also in financial penalties.
On January 3, 2026, Sejm Speaker Włodzimierz Czarzasty (New Left) defended the PIP reform on Polsat News, warning of potential fines of PLN 11 billion (EUR 2.3 billion) for failing to implement the milestone.
According to the legislature, the PIP reform represents partial fulfillment of milestone A71G, “Implementation of the National Labor Inspectorate and Labor Code reforms,” and milestone A72G, “Actions to build the capacity of the National Labor Inspectorate,” under reform A.4.7, “Reducing segmentation in the labor market,” within the framework of the National Recovery and Resilience Plan (KPO). The full reform is expected to be completed by June 30, 2026, with milestone A71G scheduled for completion by the end of 2025.
Equally surprising was the decision to halt work on a bill whose draft had been approved just a month earlier by the Standing Committee of the Council of Ministers (SKRM), as confirmed by Minister Maciej Berek, a close collaborator of Prime Minister Tusk. In the final days of last year, media reports highlighted a dispute at a government session, during which the Prime Minister reportedly expressed dissatisfaction with the shape of the draft legislation.
An MP from Civic Coalition (KO): “We cannot contradict ourselves”
When asked about the Prime Minister’s decision, Mariusz Witczak, a Civic Coalition (KO) MP, acknowledged that the measures proposed in the Ministry of Family’s draft went too far.
“This is a rational decision by Prime Minister Donald Tusk. Deregulation is a hallmark of this government, with a clear goal: to make Polish businesses operate more efficiently, as they are often burdened by an excessive number of regulations. Deregulation is intended to support economic growth. If that is our priority, we cannot contradict ourselves – on the one hand, promoting deregulation and creating better conditions for economic development, while on the other, establishing a ‘labor police.’ Such measures would be chilling and act as a lead weight on entrepreneurs. They would run counter to deregulation and efforts to boost economic growth. The solution proposed by the New Left could create more problems than benefits – and paradoxically, it could also generate issues for employees,” Mr. Witczak said.
What about workers’ rights?
The KO politician insists that neither the government nor his party are neglecting workers’ rights. He points out that in this parliamentary term, decisions were made to apply social security contributions to civil-law contracts and to count such contracts toward seniority – even retroactively. He also notes that the coalition approved the New Left’s proposal for a work-free Christmas Eve, despite its controversial nature.
“ZUS (Social Security Institution) and other institutions monitor employment. Many precarious contracts and sham self-employment agreements have been eliminated where they made no sense. We have amended the Labor Code. Thanks to these changes, employers will be required to disclose wages during the hiring process, preventing the undervaluation of conditions in negotiations. Regarding the functioning of Polish businesses and their employees, there is a symbiosis. Employees earn the most and enjoy the most stable employment conditions in firms that are performing well. When Polish enterprises face difficulties, employees are the first to feel the impact. I would not frame this as a conflict between employers and employees. I believe their interests are aligned, and one does not exclude the other,” Mr. Witczak said.
When asked about the withdrawal of the draft bill approved by the Standing Committee of the Council of Ministers, the KO MP responded that the effects of the regulations are still under analysis.
New Left surprised by Prime Minister’s decision
The New Left was the most taken aback by the Prime Minister’s move. PIP reform had been one of the party’s political priorities. New Left politicians learned of the decision from the media, which quoted Donald Tusk.
“The Prime Minister surprised us. This matter had previously been agreed upon with Minister Maciej Berek. It’s strange that the Prime Minister is willing to take on the potential PLN 11 billion (EUR 2.3 billion) penalty for failing to implement the milestone,” sources within the New Left said.
Politically, the Prime Minister’s decision could be costly for the New Left. Their rivals on the left, from the Razem (Together) party, have criticized their former allies, arguing that the Prime Minister’s move exposes the limitations of Włodzimierz Czarzasty’s party in government.
The New Left does not intend to let the matter go. Włodzimierz Czarzasty announced on Radio Zet that he intends to meet with Donald Tusk.
Good to know
PIP reform: A hope for workers, a challenge for companies
More than 60% of respondents believe that granting the National Labor Inspectorate (PIP) new powers to convert civil-law contracts into employment relationships would be a positive development, according to an IBRiS survey commissioned by Rzeczpospolita daily.
Experts at Grant Thornton examined the perspective of employers. Their study, Employers Under the Inspectors’ Lens, found that 44% of businesses had experienced a PIP inspection. One in three entrepreneurs considered PIP controls among the most burdensome, alongside audits from ZUS, the tax office, sanitary authorities, and the Personal Data Protection Office (UODO).
At the same time, 42% of representatives of large and medium-sized companies in Poland did not oppose expanding PIP’s powers, while 35% were firmly against the government’s proposals.
The PIP reform has made waves in the market. Incidentally, it also inspired the nomination of the National Labor Inspectorate in the HR Word of the Year poll, with PIP reaching the final top ten concepts.
Abandoning PIP reform: What about the National Recovery Plan?
Government spokesperson Adam Szłapka took a different view. At a press conference following the cabinet meeting, he said that the meeting with the New Left would take place yet he stressed that the situation does not pose a threat to the coalition’s stability.
Mr. Szłapka was asked about the consequences of the Prime Minister’s decision. He said talks with the European Commission regarding the milestones would follow. He reminded that KPO reviews have taken place in the past. The PIP reform had originated from such a review and was scheduled for completion by the end of June 2026. However, past renegotiations of milestones have typically taken around three months. Another renegotiation would leave little time to prepare and pass new regulations required to meet the milestone.
“Extremely difficult” talks
Jan Szyszko, Deputy Minister for Funds and Regional Policy from Poland 2050 party, weighed in on the matter via X (formerly Twitter). In his post, he noted that after lengthy negotiations, the PIP reform had replaced the compulsory “social security coverage” of every civil-law contract in the KPO.
He also stressed that the Prime Minister’s decision on Tuesday creates a need for new discussions with the European Commission. Mr. Szyszko warned that talks on a new milestone “will be extremely difficult this time.” He added that, until now, Poland had avoided any penalties for failing to meet previous milestones.
PIP: The reform would be beneficial
We asked Chief Labor Inspector Marcin Stanecki for his view on Prime Minister Donald Tusk’s decision. He emphasized that, regardless of political decisions, he is ready to cooperate.
“I am prepared to assist in clarifying the concerns that underpinned the Prime Minister’s decision to halt work on the draft amendment to our regulations. Because the reform itself – even without the most controversial changes – is highly beneficial both for businesses and for PIP. For businesses, it introduces the possibility of remote communication with inspectors and a system for selecting entities for inspection similar to that used for years by ZUS (Social Security Institution) and the National Revenue Administration (KAS). This way, law-abiding employers will not have to prepare for a visit from a labor inspector. For precisely the same reasons, the amendment is also advantageous for PIP, as it streamlines our operations and adapts them to the needs of the Polish labor market,” Mr. Stanecki explained.
The Chief Labor Inspector added that, while events continue to unfold, PIP will operate as usual. Under current regulations, inspectors can order a contract to be modified or apply to a labor court to establish an employment relationship.
Inspectors can also sanction employers under Article 281 of the Labor Code. Fines for replacing a full-time contract with a civil-law contract can reach PLN 30,000 (EUR 6,300). In 2024, labor inspectors reviewed 38,881 civil-law contracts and challenged 1,408 agreements made under conditions indicating an employment relationship. Detailed data are presented below.
Interactive chart “Communication gaps within the government”
Experts are weighing in on the Prime Minister’s decision. Beyond the substantive legal issues, they are also highlighting internal government coordination problems.
“I’m not surprised by the Prime Minister’s decision. However, it shows that there are communication gaps within government units. Several months ago, Minister Maciej Berek had already submitted comments on the draft. The Ministry of Labor only introduced cosmetic changes. This points primarily to communication problems,” explained Kajetan Bartosiak from the Sawicki & Partners law firm.
The legal advisor also described the draft itself as “form over substance.” Within the framework of the KPO, the Polish government was supposed to regulate the so-called social security coverage of civil-law contracts. According to Bartosiak, the government already has tools to address this.
“Currently, ZUS can determine that a given contract should be subject to social security contributions. The office then establishes under which title the individual is covered by social insurance. Both the employer and the insured can appeal this decision, although the process is time-consuming. Perhaps simply streamlining this procedure would be sufficient?” he said.
The expert noted that the effects of ZUS decisions could also be extended to non-contribution-related aspects. He added that under the PIP draft law, authorities such as PIP, tax offices, and ZUS should cooperate. He suggested that it is worth considering whether they should be allowed to participate in proceedings initiated under current regulations by ZUS.
Good to know
Are ZUS inspections enough? They are effective but expensive
In 2022–2023, the number of inspections conducted by ZUS (Social Insurance Institution) hovered around 27,000 annually. By the following year, ZUS carried out nearly 30,000 inspections. Over the past five years, the average annual growth in inspections conducted by its inspectors has been 25%.
Each year, the proportion of inspections that uncover irregularities has also risen. While five years ago, issues were detected in around 75% of inspections, in the past two years that figure has exceeded 90%.
ZUS has become increasingly efficient, partly thanks to algorithms – but such technology comes at a cost. Grant Thornton notes that the annual cost of carrying out inspections rose to nearly PLN 200 million (EUR 42 million) in 2024, almost doubling compared with 2021, when it amounted to PLN 108.3 million (EUR 22.7 million).
FPP: “We felt deceived”
The Prime Minister’s decision was welcomed by the Federation of Polish Entrepreneurs (FPP).
“FPP thanks the Prime Minister for listening to the voice of entrepreneurs. We are grateful that Prime Minister Donald Tusk considered the substantive arguments presented by FPP regarding the proposed regulation, which would have granted the Labor Inspectorate the power to reclassify contracts,” the Federation said in a statement.
The statement also noted that the government had wrongly abandoned the idea of fully applying social security contributions to so-called gig contracts in favor of new PIP powers. The FPP criticized the legislative process itself as leaving much to be desired.
“We felt deceived when changes so crucial for the Polish labor market and economy were not agreed upon with social partners or discussed in the Social Dialogue Council with the participation of the draft’s authors. Equally incomprehensible to us is the attempt by the Ministry of Labor to push through changes that lack employer support and have not been approved by the Standing Committee of the Council of Ministers. There was no openness to dialogue from the Ministry of Family, Labor, and Social Policy (MRPiPS), and the discussion of the draft within the Council of Ministers only highlights the lack of transparency in the process and the absence of full backing for the Ministry’s proposed solutions,” the FPP statement said.
According to the business organization, the reform could have introduced “chaos on the scale of the Polish Deal,” potentially fueling the grey economy and creating backlogs in labor courts.
“At the same time, we continue to call for the full application of social security contributions to civil-law contracts, as was originally included in the KPO. In our view, this is the only way to eliminate irregularities in the market, reduce competition based on labor costs, and ensure pension security for workers,” FPP concluded.
Tribute to “predatory entrepreneurs”?
While employers are thanking the Prime Minister, trade unions – who supported the bill from the start – express their disappointment. The union group Związkowa Alternatywa wrote that the Prime Minister blocked measures intended to “curb market abuses.”
“Halting the Labor Inspectorate’s ability to convert illegal civil-law contracts and sham B2B arrangements into employment contracts represents a political decision to protect the interests of a narrow lobby of predatory entrepreneurs at the expense of over two million workers,” the union statement said.
The unions reject the narrative promoted by employers, who emphasize the costs of the reform. In their view, the greatest burden falls on employees, particularly those working under precarious “gig” contracts, whose rights are frequently violated.
“It is time to restore respect for labor law, similar to the way the tax or banking systems operate. When a citizen falls behind on taxes or a loan repayment, they face the full weight of the state, bailiffs, and interest. When an employer violates labor law for years, they can expect leniency and political protection. (…) That is why we call on the government to take immediate and decisive action. All contracts that violate the law should be administratively converted into employment contracts, and unscrupulous employers should face substantial fines,” Związkowa Alternatywa concluded.
Contrary to the Prime Minister’s claims that the matter is closed, the issue remains highly relevant. The Polish government faces obligations not only to the European Commission but also to Polish workers and employers. One thing is certain: both sides expect measures to combat abuses that distort market competition and undermine workers’ rights.
Key Takeaways
- A market expecting change. Both sides of the market – employers and employees – recognize existing abuses. The problem of so-called gig contracts will not be resolved without compromise.
- Months of work cut short. After months of work on reforming the National Labor Inspectorate (PIP), efforts came to an unexpected halt. The Prime Minister decided to withdraw the draft, a move welcomed by employers, but the issue is far from settled.
- Obligations to Brussels. The Polish government still faces commitments to the European Commission. Failing to meet the milestones could cost taxpayers billions of zlotys.