New Powers of the National Labour Inspectorate (PIP) – Draft Act Published

The Ministry of Family, Labour and Social Policy has published a draft Act amending the Act on the National Labour Inspectorate (PIP) and certain other statutes. The planned effective date of the new regulations is 1 January 2026. The draft is currently at the stage of governmental legislative work – in the fourth quarter of 2025 it is expected to be submitted to the Council of Ministers.

Key Assumption – PIP’s Decision on the Existence of an Employment Relationship

The National Labour Inspectorate will be granted the authority to issue decisions converting civil law contracts into employment contracts. The draft provides that regional labour inspectors will be empowered to issue administrative decisions establishing the existence of an employment relationship. Article 11 point 7a of the draft Act on PIP stipulates that such a decision may be issued in cases where an employment relationship exists, but a civil law contract was concluded under conditions which, pursuant to Article 22 § 1 of the Labour Code of 26 June 1974, should give rise to an employment contract.

The proposed Article 34(2e) of the Act on PIP provides that the filing of an appeal with a labour court suspends the enforceability of the decision – but only with respect to the consequences under tax and social security law arising before the date of issuance of the decision. Tax and social security effects will therefore be suspended until the lapse of the deadline for filing an appeal, and, in the case of an appeal, until the date of the final court ruling.

The inspector’s decision may be appealed to the Chief Labour Inspector (within 7 days from delivery of the decision), and subsequently challenged before a labour court (within 1 month from delivery of the Chief Inspector’s decision).

The inspector’s decision will be immediately enforceable with respect to the effects under labour law connected with the establishment of an employment relationship, as well as obligations under tax and social security law arising from the date of issuance of the decision. This means that an employer – irrespective of pending judicial proceedings – will be obliged to settle liabilities towards the Social Insurance Institution (ZUS) and tax authorities.

Retroactive Effects – How Far Back Do They Reach?

The draft provides that the PIP’s decision will indicate the commencement date of the employment relationship, which entails the possibility of recognising the employment relationship retroactively. As a consequence:

• The employee will acquire employee rights (e.g. the right to annual leave, minimum wage) from the indicated date.
• Upon the decision becoming final – the employer will be obliged to pay social security contributions and taxes for the period indicated in the decision. This obligation is not limited to the future, but may also cover past periods, provided they are encompassed by the decision.

In practice, this means that the employer will be required to pay contributions and taxes on remuneration for the period indicated in the decision – potentially up to 5 years retroactively, in accordance with the general limitation rules for contribution and tax liabilities. The employer will have to recalculate invoices into salaries, pay arrears of ZUS contributions and PIT advances, issue corrected PIT-11 and PIT-4R forms, and amend declarations submitted to ZUS.

What Else Changes?

The draft introduces further significant changes, including:

• Digitisation of PIP activities: possibility to conduct remote inspections (e.g. on-site inspections via video camera), to hear witnesses online, to transmit document copies electronically, and to prepare protocols and decisions in electronic form;
• Scope of inspections: inspections may be carried out not only in relation to employers, but also with respect to other entities for whom work was actually performed;
• Higher penalties: the draft doubles the maximum fines for infringements of labour law – from PLN 30,000 and PLN 45,000 to PLN 60,000 and PLN 90,000 respectively.

Practical Consequences

The draft Act heralds a revolution in the functioning of the National Labour Inspectorate. The most significant change is the power of inspectors to issue decisions converting civil law contracts into employment contracts with immediate effect – without awaiting a court ruling and with a very short period for appeal (7 days).

• For employees – easier and quicker confirmation of the existence of an employment relationship, without the need to sue the employer.
• For employers – increased legal risk and uncertainty in business operations. Even when an appeal is filed, employers will have to recognise employee rights and comply with them immediately, while also facing the risk of retroactive contributions and taxes if the decision becomes final.

Our Commentary

From the employee’s perspective, the proposed changes provide the possibility of obtaining virtually immediate protection – where the contract indeed exhibits features of an employment relationship. While we acknowledge that such protection may be necessary and justified in specific cases, we evaluate the general direction of the changes negatively, primarily because:

• The entire burden of consequences of contract reclassification is shifted to the employer – which contradicts the principle of social justice. According to the principle of freedom of contract and economic activity, it should primarily be up to the parties to decide the nature of their relationship. If a contract is challenged by a state authority (for being contrary to mandatory provisions), the consequences should be borne equally by both parties. After all, contracts are concluded voluntarily, and it is often the worker who requests a more flexible (and often more advantageous for tax and social security purposes) form of cooperation.
• The immediate enforceability of decisions, requiring that the worker be treated as an employee from the moment of issuance, prior to judicial review by an independent court, increases the sense of legal uncertainty in business. The draft does not address the situation in which an employer treats an individual as an employee throughout lengthy appellate proceedings (often lasting at least 2 years), only for the court to annul the PIP decision and confirm that the relationship should have been governed by a civil law contract.
• The 7-day period for lodging an appeal is entirely unrealistic in market practice, where it often takes several weeks to gather the necessary data and evidence to prepare a substantive appeal, not to mention drafting a full legal and factual argumentation – usually requiring specialist involvement.

Practitioners note that despite its revolutionary wording, the amendment is unlikely to bring about a genuine revolution, as the PIP is underfunded, understaffed, and has long acted more on request than ex officio – which significantly limits the scope of routine inspections. However, this argument does not reassure us – quite the contrary, it heightens our concern – since once again, instead of practical solutions that would genuinely improve the system, empty concepts and excessive burdens on entrepreneurs, the backbone of the Polish economy, appear to be introduced.