Author: kancelaria

The amendment of the rules on the posting of workers, undertaken due to the need to implement Directive (EU) 2018/957 of the European Parliament and of the Council dated 28 June 2018 into the legal systems of EU Member States, requires, among other things, the obligation to determine and grant remuneration according to the legislation of the host country and limits the application of local law regarding working conditions to 12 or 18 months, unless local provisions are more favourable to the employee.

The new requirements impose numerous obligations on European entrepreneurs, far exceeding those envisaged by previous law. This will naturally result in increased operational costs. In times of such dynamic changes, it is advisable to prepare the company meticulously for the new regulations, reducing the risk of errors and thus costs. The following guidelines should assist in this regard.

Calculation of the posting period

The first step should be to determine the posting period of the employee. This is important because it conditions to what extent the new obligation introduced by the amendment will apply — namely, to provide the posted worker with working conditions applicable in the host country. The type and number of conditions to be ensured depend on the type of posting — either “regular” or long-term — lasting over 12 months (or 18 months if an appropriate application is submitted). It is necessary to include the posting periods of previous employees sent to the same place for the same task.

Unfortunately, the directive itself lacks a clear scheme for calculating the term, which means that the method of calculating the posting period varies between countries. For example, in Germany, posting periods accumulate when an employee, immediately after the end of one posting for one service, is posted to perform work for another service. According to the European Commission’s position, the posting period must be counted separately for each service. It should not be forgotten that posting periods of subsequent employees accumulate if they are sent by the same employer to the same place for the same task. If the employer, posting address, or task changes, the posting period for the next employee is “reset” and must be counted anew.

Note

The 12-month posting period described in the directive must be distinguished from the 24-month posting period under social security regulations. The directive does not provide for a 2-month break after which the posting period restarts. After 12 months, there is no requirement to register the employee for social security. There is no need to shorten or withdraw the A1 certificate due to the expiry of 12 months of posting.

Areas where the host country’s working conditions must apply
• maximum working periods and minimum rest periods
• minimum paid annual leave entitlement
• remuneration including overtime pay rates; this point does not apply to supplementary occupational pension schemes
• terms of employee leasing, in particular by temporary employment agencies
• health, safety and hygiene at work
• protective measures for the employment conditions of pregnant workers or workers who have recently given birth, children and young people
• equal treatment of men and women and other non-discrimination provisions
• accommodation conditions for workers where accommodation is provided by the employer to workers located far from their usual place of work
• rates of allowances or reimbursement of travel, food and accommodation expenses for workers far from home for professional reasons (only concerning travel starting and ending in the host country)

Calculation of remuneration

According to the new regulations, the employee’s salary must include all mandatory components and allowances provided for an employee performing the same type of work in the same occupation and region in the host country. Aside from temporary workers performing work for the user employer, there is no obligation to compare the amount of remuneration or to pay remuneration equal to that of a worker in the host country. However, all allowances must be identified and paid, taking into account the occupation, sector and region of the work performed. These are most often regulated in collective labour agreements, sometimes even in national laws. If a given allowance has an equivalent purpose to an allowance under the sending country’s law, the more favourable one for the employee is applied (but only one). It is important to observe the timing and form of payment.

Extension of posting

The regulations regarding the application for extension of the posting period effectively prevent the host country authorities from refusing or even questioning the reasons for the extension. The application must be submitted before 12 months from the start of posting at the competent office or online. Even though it cannot be rejected, it must include justification. If the host country has an electronic system for reporting posted workers, the notification must be submitted via this system. It is advisable to verify which institution is responsible for receiving the applications.

Long-term posting

The specificity of long-term posting places the entrepreneur before a choice — organising the service so that the posting does not exceed 12 months (or 18 months if an application is submitted), or selecting the host country to avoid changes during service provision. The third option is to apply Polish law for up to 12 (or 18) months (except for elements where host country law must be applied mandatorily), and then submit an application to extend this period by 6 months. It is best to do this separately for each posted employee, as their individual posting periods may differ depending on the tasks performed and breaks. After 12 (or 18) months, the employment conditions of the host country must be applied.

Legal sources

Searching for information about employment conditions under Article 3(1) of the directive (i.e. conditions to be applied from the first day of posting) should begin with the national single website. However, the information provided there is usually very basic, often relating to the existence of collective labour agreements in some sectors but not always providing their content, which is key to establishing the applicable working conditions corresponding to local workers. A good way to obtain the required knowledge is to request the contractor to provide or share the collective agreement in force in their territory.

For long-term posting, the search unfortunately does not end there. The entrepreneur must establish additional employment conditions beyond those listed in Article 3(1) of the directive, applicable when posting exceeds 12 months (or 18 months with a justified notification). Remember that regarding rules on concluding and terminating contracts, non-compete clauses and occupational pension schemes, the law chosen by the parties applies, so these elements do not need to be checked.

The employer cannot even count on reduced information from the national single website, as it does not include the catalogue of employment conditions applicable after 12 (or 18) months of posting. This catalogue must be determined practically from scratch, considering the sector, occupation and region. It is also advisable to refer primarily to generally binding legal sources, collective labour agreements recognised as generally binding, or simply the most representative for a given sector. The entrepreneur will not avoid an in-depth analysis of the local labour law of each country and region where the service will be provided.

Note on the principle of favourability

The obligation to apply the host country’s employment conditions does not exempt the employer from applying employment conditions more favourable to employees. These primarily concern remuneration (including frequency and timing of payments!) and the amount of leave.

Jeśli chcesz, mogę przygotować to również w formacie pliku.

Pursuant to the Supreme Court ruling of 8 May 2019 (case ref. V CSK 109/18), a spouse who did not participate in the transaction of acquiring shares in a limited liability company (spółka z o.o.) cannot exercise rights related to those shares, even if statutory marital community property applies within the marriage.

In such a case, only the acquirer is considered a shareholder of the company. The spouse of the acquirer does not obtain shareholder status, in particular, this does not arise from community property. Consequently, the spouse of the acquirer is not entitled to a claim for admission as a shareholder.

The Supreme Court, based on the facts of the case, presented the specific situation of shares held in the spouses’ joint property from two perspectives — the Family and Guardianship Code and the spouses’ relationship with the company:

The Court, taking into account that the acquisition of 96 shares by the deceased K. J. in E. Limited Liability Company with its registered office in K. took place during his marriage to the applicant, stated that from the perspective of the Family and Guardianship Code, these shares entered the joint marital property. However, since only K. J. personally carried out the acquisition of these shares, only K. J. is to be regarded as the shareholder exercising the rights arising from those shares vis-à-vis the spółka z o.o. E.

Such an interpretation of the provisions on shares in a limited liability company forming part of the spouses’ joint property leads to the need to treat these shares differently from the perspective of the Family and Guardianship Code provisions, which constitutionally guarantee protection of marital community property and grant the other spouse rights to these shares that, upon dissolution of the marriage, transform into co-ownership, generally amounting to 1/2 of these shares. On the other hand, from the perspective of the spouses’ relationship with the company whose shares are involved, only the spouse who performed the transaction with the company exercises the rights arising from the shares.

This legal assessment of the rights holders to shares within the marital community property results from the lack of coherent regulation between the provisions of the Family and Guardianship Code and those of the Commercial Companies Code. That shares acquired during the marital community property enter the joint property is indisputable from the perspective of the constitutional protection of each spouse’s property. On the other hand, it is impossible to impose on the company to which the shares belong, and on the spouse who is not a party to the transaction with the company, the status of shareholder.

Therefore, according to the prevailing stance in the Supreme Court’s case law, only the spouse who was party to the transaction with the company should be regarded as a shareholder. Until the legislature explicitly regulates the exercise of rights from shares differently, such a position may not fully protect the interests of the other spouse, particularly where the spouses are in conflict. Currently, however, there is no basis for the other spouse to claim admission as a shareholder or to guarantee the same rights in exercising powers from joint shares as the spouse who concluded the transaction with the company.

In the case at hand, this means that only the deceased K. J. was entitled to exercise rights arising from the 96 shares in E. spółka z o.o. Accordingly, he effectively disposed of these shares by a donation agreement dated 17 February 2010 in favour of his daughter M. W. Contrary to the cassation complaint’s allegations, the applicant’s consent, given in the form required by Article 180 of the Commercial Companies Code in conjunction with Article 63 of the Civil Code, was not required for the disposal of these shares.

The situation of inability of the other spouse to dispose of the shares may change only after the death of the shareholder spouse. Shares in a limited liability company are inherited on the basis of the deceased shareholder’s will as well as by law. In the case decided by the Supreme Court, the owner of the shares died before the shareholders’ meeting adopted the resolution on the profit distribution for the financial year. According to the Supreme Court’s position, this meant that those entitled to the dividend for that year are the shareholders who held the shares on the date the profit distribution resolution was adopted. Since the person died earlier, they were no longer a shareholder on the dividend distribution date, and their place in the company was taken by the heirs. Therefore, the right to the dividend was acquired not by the former shareholder – the deceased – but by their heirs. The dividend was due to them.

If the shareholders wished to maintain control over the inheritance process of shares, they should limit or exclude the possibility of the deceased’s heirs joining the company in the company agreement. Regulation of inheritance of shares thus remains in the interest of shareholders, heirs, as well as the limited liability company itself. The consequence of lacking appropriate provisions in the agreement may be conflicts with heirs and paralysis of the company’s functioning.

As of 1 January 2021, an amendment to the Public Procurement Law is scheduled to come into force. Currently, the Ministry of Development’s draft is at the stage of public consultations. One of the planned changes is the specification of the maximum amount of contractual penalties. These are to be no more than 20% of the net value of the contract.

Let us recall that under the current legal framework, there are no special regulations governing the amount of contractual penalties in public procurement. The provisions merely refer to the Civil Code, which emphasises the parties’ freedom to determine the amount of penalties. The rationale of the new law is to counteract the problem of contracting authorities inflating penalties, who often set sanctions disproportionate to the damage incurred.

In 2018, the Public Procurement Office prepared a report which showed that two-thirds of contracting authorities use contractual penalties, and contractors are most often penalised for delays. The report highlighted that overly harsh liability rules for contractual penalties may discourage the submission of bids and cause a lack of interest from contractors. Previous regulations even allowed for penalties exceeding the value of the contract. The amendment to the Public Procurement Law aims to resolve this issue.

According to the new wording of Article 436 point 3 of the Public Procurement Law, the contract is to specify the total maximum amount of contractual penalties that the parties may claim, with their total amount not exceeding 20% of the net value of the contract.

Moreover, the new Article 431 of the Act provides that the contracting authority and the contractor are obliged to cooperate in the performance of the public procurement contract in order to properly execute the contract. The introduction of a statutory cap on penalties is intended to ensure balance in this cooperation.

It should be emphasised, however, that there is no guarantee the Act will come into force in its current wording. The draft may be modified in subsequent stages of the legislative process. These potential changes raise concerns within the legal community, which almost unanimously supports the draft proposed by the Ministry of Development in its current form.

Aside from the issue of contractual penalties, the amendment includes changes regarding contract terms. The new Article 434 of the Public Procurement Law no longer contains the 4-year maximum term for which a contract may be concluded. It only requires the contract to be concluded for a specified period, which, according to the draft’s justification, will apply primarily to multi-year contracts for construction works.

The amendment also modifies the rules on indexation of remuneration in contracts for construction works or services specified in Article 439 paragraph 3 of the Public Procurement Law. Under the planned changes, where a contract was concluded after 180 days from the expiry of the deadline for submitting bids, the initial date for determining the change in remuneration is the date of bid opening.

In the judgment of 12 August 2020 (case reference III SA/Wa 2235/19), the Warsaw Voivodeship Administrative Court ruled that since income from the disposal of shares is classified as capital gains, by analogy, interest and exchange rate differences arising from a loan taken to purchase those shares should also be attributed to this source.

In the factual situation examined by the court, a Polish company purchased 10% of the shares of a foreign company, having taken out a loan in euros from another enterprise for this purpose. Due to an amendment to the provisions of the Corporate Income Tax Act in 2018, a question arose as to which source the company should assign the exchange rate differences and costs of earning income related to interest on the loan. According to the company, these costs fall within operating activities and should therefore be assigned to other sources of income. However, the Director of the National Tax Information, in the issued interpretation, held that the company incurs indirect costs related to the acquisition of shares, which should be assigned to the source of capital gains. In this judgment, the Voivodeship Administrative Court upheld the tax authority’s position.

The complex-sounding yet popular in business practice limited liability limited partnership combines the advantages of both capital companies and partnerships, making it an optimal solution for conducting business activities.

Starting with the basics, it should be noted that this is a type of limited partnership where the general partner is a limited liability company (sp. z o.o.). A limited partnership is a partnership in which at least one partner (the general partner) bears unlimited liability for the partnership’s obligations, i.e., with all their assets, while at least one partner (the limited partner) has liability limited to their contribution.

Advantages of forming a limited partnership where the general partner is a limited liability company include:

1. Optimisation of liability rules for the partnership’s obligations.
In this model, full liability for the partnership’s obligations as the general partner lies with the limited liability company (sp. z o.o.). A limited liability company is a capital company in which shareholders are not liable for the company’s obligations. Therefore, if enforcement against the limited partnership itself proves ineffective, creditors will direct their claims to the assets of the limited liability company.
Besides the general partner (the sp. z o.o.), the limited partnership includes limited partners whose liability for the partnership’s obligations is limited to the amount of their limited contribution (“sum komandytowa”), which can be freely determined in the partnership agreement. If the limited partner’s contribution equals or exceeds this sum, their liability for the partnership’s obligations is excluded.
In practice, the same individuals may found and be shareholders of the limited liability company acting as the general partner and simultaneously be limited partners in the limited partnership.

2. Freedom to define profit-sharing rules.
According to Article 123 § 1 of the Polish Commercial Companies Code (Kodeks spółek handlowych, KSH), the default rule is that limited partners share profits proportionally to their actual contributions. However, an exception allows partners to specify a different profit-sharing arrangement in the partnership agreement. In practice, the right of the general partner (sp. z o.o.) to profits may be limited to the benefit of limited partners, but the general partner cannot be completely excluded from profit participation.
It is also worth noting that the partnership agreement may provide for the payment of advance profit distributions (prepayments) to partners.

3. Representation rules of the limited partnership.
The partnership is represented and managed internally by the general partners. When the general partner is a limited liability company, legal acts on behalf of the limited partnership are performed by that company’s management board. In business practice, it often happens that the same persons who are limited partners also serve as members of the management board of the general partner (the sp. z o.o.), allowing them effective control over the limited partnership.
Those opting for this arrangement should remember that although limited partners’ liability is limited to their contributions, they may still bear extended liability for the limited partnership’s obligations under Article 299 KSH. However, before this liability applies, enforcement must first fail against the limited partnership’s assets and then the sp. z o.o.’s assets. Management board members may be exempt from liability if they prove, for example, that a bankruptcy petition for the sp. z o.o. was filed on time, or that the failure to file was not their fault, or that creditors did not suffer damage even if no petition was filed.

4. No double taxation of profits.
Unlike capital companies or joint-stock limited partnerships, the limited partnership itself does not have a separate tax capacity regarding income tax. This means the limited partnership does not pay income tax; the tax is paid directly by its partners.

The Ministry has announced that the draft amendments to the Commercial Companies Code (hereinafter referred to as the CCC), submitted for consultation, include the introduction of the law on corporate groups, i.e. so-called holding law. This concept, new to Polish law, would allow parent companies to issue binding instructions to other companies within the group aimed at implementing joint strategies. The consultation process will continue until 19 September 2020.

As stated in the explanatory memorandum, the act is intended to consist of two main parts. The first part concerns the introduction into Polish company law of regulations on so-called holding law (law of corporate groups, concern law), which — in a broad doctrinal sense — governs private-law relations between a parent company and its subsidiaries, taking into account the interests of creditors, members of corporate bodies and minority shareholders, especially of the subsidiary. The second part focuses on increasing the effectiveness of oversight exercised by the supervisory boards of capital companies.

The authors of the draft state that, during the legislative work on the CCC in 2000, a concept of limited (residual) regulation of holding law was adopted. This regulation was limited to the now-repealed Article 7 of the CCC, which referred to so-called contractual holdings, i.e. where the parent and subsidiary entered into a contract either for the management of the subsidiary by the parent or for the transfer of profits from the subsidiary to the parent. However, this regulation did not address the legal aspects of so-called de facto holdings, i.e. where a dominance-dependence relationship exists without a formal agreement. De facto holdings dominate Polish business practice. Contractual holdings are rare, as are so-called tax capital groups (Article 1a(1) of the Corporate Income Tax Act), which is why the existing regulation of corporate groups did not meet market needs. The proposed draft aims to address these needs.

Foundations of Holding Law

The amendment is based on the assumption that a distinction must be made between a “corporate group” (which is essentially the subject of holding law regulations) and the dominance-dependence relationship between companies, as referred to in Article 4 § 1 point 4 of the CCC. A corporate group is a “qualified” dominance-dependence relationship between specific companies that follow a common business strategy, allowing the parent company to exercise uniform management over one or more subsidiaries. This introduces a new legal category seen in both Polish and foreign corporate practice — the “interest of the corporate group”. Therefore, the need arose to normatively define a “corporate group” as a legal category separate from the dominance-dependence relationship. This is addressed in the proposed Article 4 § 1 point 51 of the draft CCC. Moreover, the general provision in Article 211 § 1 of the draft CCC states that both the parent company and subsidiaries within a corporate group should act in the “interest of the corporate group”, even though, by nature of company law, they should act in the interest of their own company — that is, the interest of the parent or subsidiary, respectively.

A corporate group, as a qualified dominance-dependence relationship based on the existence of a common group interest (Article 4 § 1 point 51 of the draft CCC), does not — under the adopted concept — require the formation of a formal organisational structure with a distinct name, quasi-bodies, rules of procedure, or admission criteria. Such a concept would imply the legal personhood of the group itself, which would be systemically difficult to accept due to the principle of numerus clausus of company types. Moreover, such a concept would fail to address the practical needs of the market, which focus primarily on regulating de facto rather than contractual holdings, and would drift towards a concept of full regulation of holding law — a concept rejected in this draft.

The provisions in the draft can be divided into two categories (excluding general provisions such as Article 4 § 1 point 51, Article 211, and the referral provision in Article 2115 of the draft CCC):

a) those facilitating effective “management” of the group by the parent company in connection with implementing the group’s business strategy (Articles 212–213 and 216–217 of the draft CCC);

b) those ensuring protection of certain interest groups arising within a corporate group, primarily the subsidiary (Articles 214 and 2112), also the parent company and indirectly the whole group (Article 2111), creditors of group companies, especially subsidiaries (Articles 218 and 2114), minority shareholders of subsidiaries (Articles 218–2110 and 2113), and members of management bodies of both subsidiaries and parent companies (Article 211 § 3 and Article 215).

The draft also provides for the liability of the parent company for the consequences of issuing binding instructions that are executed by a subsidiary within the group. This liability extends to the subsidiary itself, its creditors, and its minority shareholders.

Specific Legal Instruments for Group Management

In addition to binding instructions, the draft includes provisions enabling effective management of the group by the parent company, such as:

a) the parent company’s right of access to information about its subsidiaries (Article 216). This is particularly important where the subsidiary is a joint-stock company. Otherwise, such broad access would be excluded under Article 428 of the CCC;

b) the right of the parent company’s supervisory board to conduct ongoing supervision of subsidiaries in matters relating to the group’s interest (Article 217);

c) the right to a compulsory buyout of shares or stock held by minority shareholders in the subsidiary (squeeze-out — Article 2111).

Protection of Minority Shareholders

Specific provisions aimed at protecting minority shareholders of subsidiaries include:

a) the obligation for subsidiaries to prepare an annual report on their relations with the parent company, including all binding instructions received (Article 218). This may also serve to protect the subsidiary’s creditors;

b) the right to request that the registry court appoint an entity authorised to audit financial statements to review the accounting and operations of the corporate group (Article 219);

c) the right to a compulsory sale of shares or stock held by minority shareholders (sell-out — Article 2110).

New Powers of Supervisory Boards

The proposed regulation creates legal conditions conducive to strengthening oversight exercised by owners and supervisory boards. With real access to accurate and comprehensive information about the company, these bodies will be able to professionally engage in meaningful discussions with management.

In addition, the draft includes provisions for:

a) clarifying the terms of office and mandates of management board members;

b) introducing a duty of loyalty and confidentiality even after the expiration of a supervisory board member’s term;

c) enshrining the Business Judgement Rule in the CCC;

d) extending Article 203 § 3 and Article 307 § 3 to include new cases of mandate expiration;

systematising rules for adopting resolutions and holding meetings of management and supervisory boards.

Selected Proposed Amendments to the Commercial Companies Code:

A. Management board’s obligation to provide certain information to the supervisory board on its own initiative;
B. Clarification of the supervisory board’s right to request information, documents, reports or explanations;
C. Right to appoint a supervisory board adviser without management board involvement;
D. Approval requirement for significant transactions with the parent company, subsidiaries, or affiliates;
E. Clarification of terms of office and mandates of management board members;
F. Duty of loyalty and confidentiality even after the expiry of a supervisory board member’s term;
G. Introduction of the Business Judgement Rule into the CCC;
H. Expansion of Article 203 § 3 and Article 307 § 3 to include additional cases of mandate expiration;
I. Procedural provisions — obligation to minute resolutions adopted via remote communication, and determination of the voting majority for resolutions of a limited liability company’s supervisory board.

The Personal Data Protection Office has published guidelines on its website regarding the use of video surveillance in the workplace. It also includes answers to frequently asked questions. Among many useful pieces of information, particular attention should be given to the reminder about the employer’s obligation to inform employees, including where surveillance is located and the requirement to provide recordings to employees upon request.

Not only labour law

The principles for using video surveillance in the workplace are regulated by the Labour Code. However, it should be remembered that when an image is recorded by cameras and includes employees’ likenesses, this constitutes the processing of personal data. Therefore, in such cases, the employer must also take into account the provisions of the GDPR.

On 10 July 2019, the European Data Protection Board adopted Guidelines 3/2019 on the processing of personal data through video devices, aimed at clarifying how the GDPR applies to the processing of personal data through video devices and ensuring consistent application of the General Data Protection Regulation in this area. These guidelines indicate, among other things, that when selecting technical solutions, the data controller should consider privacy-friendly technologies that enhance security. Examples of such technologies include systems that enable masking or blurring of areas not relevant to the monitored zone.

An employer choosing to implement video surveillance in the workplace should specify the exact purpose for which it will be used. Surveillance should serve to ensure the safety of employees, protect property, monitor production, or safeguard confidentiality of information, the disclosure of which could harm the employer. The area under surveillance may include the workplace or its surrounding premises.

Employer’s information obligation

An employer using video surveillance should inform individuals who may potentially be affected that monitoring is in use and indicate the area it covers. The employer must also fulfil the information obligation under Article 13 of the GDPR, which includes providing its name, address, the area and purpose of monitoring, the period for which data is processed — which is also important for asserting claims — and the possible recipients of the data.

Employees must be aware that surveillance has been implemented in the area in which they are present. In accordance with the Labour Code, the employer must mark monitored rooms and areas in a visible and legible way, using appropriate signs or audible notices, no later than one day before surveillance is activated.

Information boards about installed monitoring should be clearly visible, permanently placed, and not too far from the monitored area. Their dimensions must be proportional to the location in which they are displayed. Additionally, pictograms indicating camera surveillance may be used. However, due to the requirement to fulfil the information obligation set out in Article 13 of the GDPR, it is not sufficient to mark the monitored area with pictograms alone. This does not mean, however, that all the information specified in this provision must be placed on the information board. In such cases, layered information notices may be used. Thus, it is sufficient for the board to contain information on who is conducting the surveillance, the purpose and legal basis for monitoring, and the contact details of the Data Protection Officer (if appointed). It should also indicate the area covered by the surveillance, the rights of the observed person, and where further details can be found.

At the same time, it should be emphasised that the employer must include information about the objectives, scope, and method of applying video surveillance in a collective labour agreement or work regulations, or in an announcement if the employer is not covered by a collective agreement or not obliged to establish work regulations.

What about recording audio?

Surveillance is a technical measure that enables the recording of images. Consequently, video surveillance must not record sound. The use of cameras that also record audio — in cases not regulated by law — may be considered a violation of privacy and an excessive form of data processing, potentially resulting in administrative, civil, and even criminal liability. Moreover, recording both image and sound may reveal legally protected secrets.

The Labour Code contains a closed list of areas where surveillance is prohibited, such as toilets, changing rooms, or social rooms — unless such monitoring is necessary to achieve a specific aim and does not violate the dignity or other personal rights of employees, particularly by using techniques that prevent identification of individuals present in those rooms. Surveillance of sanitary facilities requires prior consent from the workplace trade union organisation, or if none exists, from employee representatives elected in accordance with procedures in place at the employer.

The monitored area should also be limited to what is strictly necessary, so as to process only data required to achieve the intended surveillance purpose.

It is important to stress that this regulation gives the employer the right to use video surveillance, but it is not an obligation. Introducing this form of surveillance should be preceded by a thorough analysis of its necessity, determining that no less privacy-intrusive means are available to ensure, for example, employee safety.

The Labour Code provides a closed list of situations in which this specific form of data processing may be introduced. Therefore, it must not be extended beyond this scope and used, for example, to evaluate employee performance. This would violate their privacy, which employees retain even in the workplace.

An employer using tools that interfere with employees’ privacy must follow specific rules and remember that private life may extend into the professional sphere of the individual.

Employee rights under the GDPR

An employer, when asked by an employee to provide recordings from video surveillance concerning them, should consider such a request. The basis for this is Article 15(1) of the GDPR. The controller is required to provide the individual with information regarding the processing of their personal data, such as the purpose of processing, the categories of personal data, recipients or categories of recipients to whom the personal data have been or will be disclosed, the planned data retention period, and other information listed in the aforementioned article.

It is important to remember that under Article 15(1) of the GDPR — the data subject has the right to obtain from the controller confirmation as to whether or not personal data concerning them are being processed. The controller must provide the data subject with a copy of the personal data being processed (e.g. a copy of the video recordings). If the data subject requests the copy in electronic form, and does not specify otherwise, the information should be provided in a commonly used electronic format.

According to information published on the website of the Ministry of Finance, the government is planning to introduce “regulations aimed at tightening the income tax system by, inter alia, bringing limited partnerships and those general partnerships with income tax payers participating in profits who are not disclosed, within the scope of the CIT Act”. This is intended as a response to “tax structures created by taxpayers using limited partnerships by granting them the status of income tax payers”. The changes are expected to be adopted by the end of the third quarter of the current year.

From the content of the document presented by the government, it can be seen that the proposed amendments to the CIT Act include:
• increasing the annual revenue threshold for the current tax year from EUR 1.2 million to EUR 2 million, entitling taxpayers to apply the reduced 9% CIT rate;
• tightening the tax system and addressing tax optimisation structures involving limited partnerships by granting such entities the status of income tax payers;
• ensuring the possibility of verifying the correctness of income tax settlements by general partnership partners who are income tax payers;
• aligning domestic regulations concerning sources of income earned by non-residents in the territory of the Republic of Poland with the standards of double taxation agreements amended under the MLI;
• restricting the ability to offset losses in cases where the taxpayer has taken over another entity, or a contribution in kind was made to the taxpayer in the form of an enterprise or an organised part thereof, or a cash contribution for which the taxpayer acquired such an enterprise or its organised part;
• clarifying the provision of Article 14a by explicitly stating that it also covers the transfer of tangible assets by a liquidated company (cooperative) to its partners (shareholders, cooperative members) as part of the division of the liquidated legal entity’s assets;
• preventing artificial depreciation of fixed assets by reducing the discrepancy between the income declared by the taxpayer in a tax year before income tax and the gross profit (profit before tax) for the same period (tax/financial year), through aligning depreciation rules in the CIT Act with those in the Accounting Act;
• clarifying the name and calculation method of the indicator used to determine the maximum allowable amount of debt financing costs that may reduce the taxpayer’s tax result (profit/loss) in connection with their business activities in a given tax year;
• eliminating interpretative doubts regarding the limitation of excess debt financing costs;
• limiting the possibility of manipulating depreciation rates when the taxpayer benefits from tax exemptions;
• shifting the obligation to account for tax on the sale of shares in so-called real estate companies from the seller to the real estate company itself;
• extending the scope of transactions subject to arm’s length principle verification, particularly where the beneficial owner is based in a so-called “tax haven”, and increasing documentation requirements for such transactions (transfer pricing);
• introducing an obligation for CIT taxpayers to prepare and publicly disclose their tax policy for the tax year;
• introducing a solution entitling taxpayers to benefit from the exemption from tax on income from buildings also if, after 31 December 2020 (the current expiry date of the exemption), a state of epidemic related to the spread of the SARS-CoV-2 virus remains in force in the Republic of Poland. According to the draft, in such circumstances, the exemption will also apply after 31 December 2020.

In addition, changes are planned to the PIT Act. These include one of the most controversial proposals in the amendment, namely the abolition of the relief referred to in Article 27g of the PIT Act (so-called abolition relief), as well as:
• aligning the regulations with changes introduced to the CIT Act;
• limiting the possibility of manipulating depreciation rates when the taxpayer benefits from exemptions;
• preventing artificial depreciation of fixed assets by reducing the discrepancy between the income declared by the taxpayer in a tax year before income tax and the gross profit (profit before tax) for the same period (tax/financial year), through aligning depreciation rules in the PIT Act with those in the Accounting Act;
• introducing a solution entitling taxpayers to benefit from the exemption from tax on income from buildings – analogous to the CIT Act.

The final segment of changes to be introduced as part of the amendment relates to flat-rate taxation. The draft provides for:
• increasing the revenue limit entitling taxpayers to choose the lump-sum tax on recorded revenues and the limit allowing quarterly payments of this tax;
• eliminating most cases in which certain types of activity exclude the application of lump-sum tax on recorded revenues, including by amending the definition of liberal professions;
• reducing certain flat-rate tax rates on recorded revenues;
• unifying the flat-rate tax rate for rental and accommodation-related services;
• removing the exclusion from taxation using a tax card in cases where a spouse conducts the same type of business activity;
• allowing temporary increases in employment levels by entrepreneurs using the tax card system;
• abolishing the abolition relief (repeal of Article 13a);
• extending the scope of transactions subject to verification for compliance with the arm’s length principle, particularly where the beneficial owner is based in a so-called “tax haven”, and increasing documentation requirements for such transactions (transfer pricing).

Article 56 of the Treaty on the Functioning of the European Union guarantees the freedom to provide services in both active (freedom to provide services) and passive (freedom to receive services) dimensions. This principle applies not only to EU citizens but also, inter alia, to posted third-country nationals (non-EU). It therefore also concerns situations in which a Polish company employing workers from Ukraine, Belarus or Russia uses them to carry out a foreign contract in a neighbouring western country. Although the procedure for such posting has, by virtue of European Court of Justice case law, been stripped of many restrictions, employers are still subject to certain obligations, the failure to fulfil which may result in negative consequences.

The key concept that an employer posting workers should become familiar with is the Vander Elst visa. It is issued to foreigners posted to Germany to perform services by a Polish company. It can be obtained at the German Embassy in Warsaw for €75. It should be noted that the visa can only be obtained by the employee in person. The appointment at the embassy must be booked using an online registration system. The visa issuance process is simplified and does not require special permits, but it must be accompanied by an employment contract, proof of registration in Poland, a work permit or other documents confirming residence and work authorisation in Poland, a contract between the employer and the service recipient in Germany, and an A1 certificate for the foreigner.

The most difficult step in the visa application process is arranging an appointment at the embassy. The waiting period can extend to as long as six months. A problem arises from the fact that Polish companies often post workers shortly after accepting a contract, which leads to situations where employers decide to post workers without a visa. It is important to remember that this carries serious consequences, including a fine of up to €500,000. Among Polish entrepreneurs, there is a false belief that this problem can be resolved by having a non-EU employee establish their own business activity. However, even self-employed individuals are obliged to obtain a Vander Elst visa.

There are several exceptions to the visa requirement under the law. The first relates to third-country nationals who are long-term EU residents.
A long-term EU resident granted such status in another EU country may work in Germany without a Vander Elst visa for 90 days within a 12-month period. The long-term resident permit is granted to foreigners who have been residing legally and continuously in Poland for at least 5 years immediately prior to submitting the application and who meet the following conditions:
• they have a stable and regular source of income sufficient to support themselves and their dependants;
• they have health insurance;
• they have a confirmed knowledge of the Polish language.

Another exception applies to business trips. In this case, the employee may carry out remunerated activities in Germany without a Vander Elst visa for 90 days within 180 days. This applies only to:
• sales department employees of a German company who perform their tasks abroad;
• an employee of a foreign company who conducts talks or negotiations, concludes contracts or supervises the execution of contracts in Germany;
• an employee of a foreign company who is responsible for establishing, supervising or managing a company branch or office in Germany.
A foreigner who is part of the managerial staff of a German company may also work in Germany for 90 days within 180 days.

Another exception to the visa requirement applies to the performance of certain services by an employee within 90 days in a 12-month period. The services specified in the legislation include:
• assembly, configuration, maintenance or repair of machinery, equipment (installations) and computer software used for economic purposes which were ordered from the employer, as well as implementation during the operation of such machines, equipment and electronic programs;
• acceptance or familiarisation with the operation of purchased machines, equipment or other items;
• disassembly of purchased used equipment for the purpose of reassembly in the employer’s home country;
• construction and dismantling of trade fair stands for their own or another foreign company;
• participation in training as part of export activities or licensing.

In order to benefit from the exception granted to foreigners, the Federal Employment Agency must be notified using a dedicated form. Polish companies should bear in mind that the Agency thoroughly examines each notification and the grounds for invoking an exception are interpreted narrowly. For example, the category concerning assembly and repair of machines and equipment applies only to the installation of units that form an independent, self-contained, ready-to-use technical system. Therefore, the installation of steel structures or building components forming part of a building will not be taken into account.

The final exception to the visa requirement applies to drivers engaged in international transport. It concerns the remunerated activity of a driver in Germany who is employed by a company based in another EU country. Such an employee is entitled to:
• pick-up or delivery of cross-border transport to or from Germany;
• cabotage: after the first partial or full unloading following international transport, up to three transport operations may be carried out. If the foreign company has neither a registered office nor a branch in Germany, the last unloading must take place within 7 days of the first partial or full unloading;
• passenger transport on behalf of an employer based outside Germany, using a vehicle registered in the employer’s country.

Fulfilling the above formalities does not exhaust all the requirements faced by Polish companies when posting third-country nationals to Germany. In addition to matters concerning the legalisation of work and residence, various formal requirements must also be met, such as registration with the tax office or customs notification.

On 28 July 2020, the Council of Ministers adopted the assumptions for the draft state budget for 2021. According to government estimates, the average salary — which also serves as the basis for calculating contributions to the Social Insurance Institution (ZUS) — will increase by 4.3%. Compared to the amount of PLN 5,227 calculated for 2020, this represents an increase of PLN 225, meaning that the average salary projected by the Ministry of Finance for the coming year is expected to be PLN 5,452. It is worth noting that the contribution base for ZUS is set at 60% of the forecast average salary.

Given the above, in 2021, the retirement, disability, sickness, accident, and Labour Fund contributions will be calculated based on the projected amount of PLN 3,271.20 (which is 60% of PLN 5,452). In this case, the ZUS contributions for 2021 would be as follows:
• Retirement contribution – PLN 638.54
• Disability contribution – PLN 261.70
• Sickness contribution – PLN 80.14
• Accident contribution – PLN 54.63
• Labour Fund contribution – PLN 80.14

This represents an average increase of several dozen zlotys compared to the contributions in force in the current year, amounting to a total of PLN 1,115.15. The increase in ZUS contributions will be felt by entrepreneurs, even though the above figures do not include the voluntary health insurance contribution, which currently amounts to PLN 362.34. Its exact amount will be determined at the beginning of 2021. The monthly increase in ZUS contributions will be PLN 46.01 (PLN 552.12 annually).

2020 Contributions
• Retirement: PLN 612.19
• Disability: PLN 250.90
• Sickness: PLN 76.84
• Accident: PLN 52.37
• Labour Fund: PLN 76.84
Total: PLN 1,069.14

2021 Contributions
• Retirement: PLN 638.54
• Disability: PLN 261.70
• Sickness: PLN 80.14
• Accident: PLN 54.63
• Labour Fund: PLN 80.14
Total: PLN 1,115.15