Forms of Employment in Poland – A Guide for Foreign Investors

Selecting the appropriate form of employment represents one of the key challenges for foreign investors commencing operations in Poland. The Polish legal system offers several basic models of cooperation with individuals performing work, each characterised by a different scope of obligations, costs, and level of flexibility. Understanding these differences enables optimal alignment of the employment structure with the specifics of conducted business activities and effective management of personnel costs.

Legal Framework for Employment in Poland

The Polish labour law system rests on two main regulatory pillars. The first is the Labour Code of 26 June 1974, which comprehensively regulates the employment relationship and constitutes the foundation for employee-based employment. The second pillar is the Civil Code, under which civil law contracts are concluded, primarily contracts of mandate and contracts for specific work.

The distinction between these two legal regimes holds fundamental practical significance. An employment relationship is characterised by the employee’s subordination to the employer, performance of work at a place and time designated by the employer, and personal provision of work. In return, the employee benefits from a broad range of protective entitlements, including guaranteed minimum remuneration, paid annual leave, and protection against unjustified termination. Civil law contracts offer considerably greater flexibility but simultaneously provide the contractor with limited legal protection.

It should be emphasised that Polish law prohibits replacing employment contracts with civil law contracts in situations where the actual conditions of work performance correspond to an employment relationship. The National Labour Inspectorate actively monitors the correct classification of contracts, and identification of irregularities may result in an order to transform the contract and financial sanctions.

Employment Contract as the Primary Form of Employment

The employment contract remains the dominant and most comprehensively regulated form of employment in Poland. The Labour Code provides for three basic types of employment contracts, differing primarily in duration and scope of employee protection.

Probationary Period Contract

A probationary period contract serves to verify the employee’s qualifications and suitability for performing specific work. The maximum probationary period is three months, although since 2023 its length should be proportionate to the planned period of employment. For contracts planned for less than six months, the probationary period may not exceed one month, and for contracts of six to twelve months – two months.

A probationary period contract may be concluded with the same employee only once, unless the employee is to be employed to perform a different type of work or at least three years have elapsed since the termination of the previous contract.

Fixed-Term Contract

A fixed-term contract constitutes a flexible form of employee-based employment, though limited by significant time and quantity restrictions. The total period of employment under fixed-term contracts between the same parties may not exceed 33 months, and the number of such contracts may not be greater than three. Upon exceeding either of these limits, the contract transforms by operation of law into an indefinite-term contract.

These limits do not apply to contracts concluded for the purpose of replacing an absent employee, performing work of a seasonal or casual nature, performing work for a term of office, and in cases where the employer indicates objective reasons on its part justifying fixed-term employment. In the latter case, notification of the competent district labour inspector is required.

Indefinite-Term Contract

An indefinite-term contract provides the employee with the broadest scope of legal protection. Its termination by the employer requires not only observance of the notice period but also indication of a specific and genuine reason justifying the notice. This reason is subject to judicial review, and where it is found to be groundless, the court may rule on the ineffectiveness of the notice, reinstatement of the employee, or award of compensation.

Notice periods for employment contracts depend on the length of service with the given employer and amount to two weeks for employment of less than six months, one month for employment from six months to three years, and three months for employment exceeding three years.

Costs of Employee-Based Employment

The total cost of employing an employee under an employment contract significantly exceeds the gross remuneration amount appearing on the contract. The employer is obligated to pay social insurance contributions and other public levies that substantially increase the actual cost of labour.

Social insurance contributions financed by the employer comprise pension insurance at 9.76% of the assessment base, disability insurance at 6.50%, and accident insurance, the percentage rate of which varies depending on the type of business conducted and number of employees, ranging from 0.67% to 3.33% for most employers. Additionally, the employer pays a Labour Fund contribution of 2.45% and a Guaranteed Employee Benefits Fund contribution of 0.10%.

In total, contributions financed by the employer amount to approximately 19-22% of gross remuneration, depending on the accident insurance rate. This means that with gross remuneration at the level of PLN 10,000, the total employer cost reaches approximately PLN 12,000 per month.

It is worth noting that in 2025 the minimum wage amounts to PLN 4,666 gross per month, which for full-time employment translates to a minimum total cost of employing an employee at approximately PLN 5,600 per month.

Employee Entitlements

Employment under an employment contract is associated with a range of guaranteed employee entitlements that the employer must respect regardless of contractual provisions. The most important of these include working time regulations, leave entitlements, and employment relationship protection.

The basic working time is 8 hours per day and an average of 40 hours in an average five-day working week. Work exceeding these norms constitutes overtime work, for which an allowance of 50% or 100% of remuneration is due depending on circumstances, or time off in lieu. The annual overtime limit is generally 150 hours, although this may be increased in a collective agreement or work regulations.

An employee is entitled to annual, uninterrupted, paid leave. The leave entitlement amounts to 20 working days with less than 10 years of service and 26 days with at least 10 years of service. Periods of education are also counted towards length of service, with completion of higher education equivalent to 8 years of service.

Special protection against dismissal applies to employees during justified absence from work, pregnant employees and those on maternity leave, employees of pre-retirement age, and trade union officials. Termination of contracts with these persons requires fulfilment of additional conditions or is entirely excluded.

Civil Law Contracts

An alternative to employee-based employment is civil law contracts, of which the contract of mandate and contract for specific work hold the greatest practical significance. Both are regulated by the provisions of the Civil Code and are characterised by considerably greater flexibility than the employment relationship.

Contract of Mandate

A contract of mandate is a contract of due diligence, under which the mandatary undertakes to perform specified activities for the mandator. Unlike an employment contract, the mandatary is not subject to the mandator’s direction to the same degree, may entrust performance of the mandate to a third party (if this results from the contract or custom), and may generally more freely shape the time and place of performing activities.

Since 2016, contracts of mandate are subject to compulsory social insurance on principles similar to employment contracts, except for sickness insurance, which remains voluntary. This means that cost savings associated with choosing a contract of mandate instead of an employment contract are now considerably smaller than before that date.

A significant limitation is also the minimum hourly rate, which in 2025 amounts to PLN 30.50 gross. The mandator is obligated to maintain records of hours of mandate performance and to store documentation for a period of three years.

Contract for Specific Work

A contract for specific work is a contract of result, under which the contractor undertakes to produce a specified work, and the ordering party undertakes to pay remuneration. The subject of a contract for specific work must be a concrete, individually defined result that can be verified for defects.

The fundamental advantage of a contract for specific work from a cost perspective is the absence of an obligation to pay social insurance contributions, provided the contract is not concluded with one’s own employee. Remuneration from a contract for specific work is subject only to income tax, whereby application of 50% tax-deductible costs is possible in cases of transfer of copyright.

It should be emphasised, however, that the Social Insurance Institution actively challenges contracts for specific work that do not meet the conditions for this legal form. ZUS inspections particularly frequently concern contracts for specific work concluded for repetitive activities, services, or work not requiring special qualifications. Reclassification of a contract for specific work as a contract of mandate results in an obligation to pay outstanding contributions with interest.

Since 2021, there is an obligation to report to ZUS all contracts for specific work concluded with persons who are not employees of the payer, within 7 days of concluding the contract.

Cooperation with Self-Employed Persons (B2B)

An increasingly popular form of cooperation, particularly in the professional services and IT sectors, is engaging persons conducting sole proprietorship business activities. This model, colloquially referred to as B2B (business-to-business), involves concluding a service agreement between two business entities.

From the perspective of the ordering party, B2B cooperation eliminates obligations related to labour law and social insurance contributions – the self-employed person is independently responsible for their settlements with ZUS and the tax office. Remuneration is paid on the basis of an issued invoice, and the only obligation of the ordering party is timely payment.

However, the B2B model involves significant legal risks. If cooperation has the characteristics of an employment relationship – in particular when the self-employed person performs work under the direction of the ordering party, at a designated place and time, personally and for fixed monthly remuneration – it may be classified as bogus self-employment. Consequences include reclassification of the contract as an employment contract, obligation to pay outstanding ZUS contributions, and potential sanctions from the National Labour Inspectorate.

To minimise legal risk, B2B cooperation should be characterised by genuine independence of the contractor in terms of work organisation, the possibility of providing services to multiple clients, responsibility for results rather than the work process itself, and flexible remuneration dependent on the scope of services performed.

Temporary Work and Employee Leasing

An alternative solution to direct employment is using the services of temporary employment agencies. In this model, the employee is formally employed by the agency, which then assigns them to perform work for the user employer. The agency is responsible for all employment formalities, payment of remuneration, and payment of contributions and taxes.

Temporary work is regulated by the Act of 9 July 2003 on Employment of Temporary Workers. The regulations introduce significant time limitations – a temporary worker may perform work for one user employer for a period not exceeding a total of 18 months within a period of 36 consecutive months. The catalogue of work that may be performed as temporary work is also limited.

The temporary work model works particularly well in cases of seasonal increases in demand for workers, projects of limited duration, and situations where the investor wishes to minimise administrative burdens associated with employment in the initial phase of operations.

Employment of Foreign Nationals

Foreign investors often plan to employ persons who are not Polish citizens in Poland, including workers posted from foreign group companies. The rules for employing foreign nationals depend primarily on the worker’s citizenship.

Citizens of European Union Member States, the European Economic Area, and Switzerland benefit from freedom of movement of workers and may be employed in Poland on the same terms as Polish citizens, without the need to obtain additional permits.

Ukrainian citizens are covered by special, simplified employment rules resulting from provisions on assistance to Ukrainian citizens in connection with the armed conflict. Legalisation of residence and work occurs on the basis of a notification submitted by the employer to the district employment office within 14 days of commencing work.

Citizens of other countries generally require obtaining a work permit issued by the voivode competent for the employer’s registered office. The procedure requires prior conduct of a labour market test, namely obtaining information from the starost on the impossibility of satisfying staffing needs based on the local labour market. The permit is issued for a period of up to three years and may be extended.

Exceptions to the permit requirement apply to, among others, foreign nationals holding a permanent residence permit or EU long-term resident permit, foreign nationals performing work in occupations specified in regulations as not requiring a permit, and foreign nationals posted to work in Poland for a period not exceeding three months in a calendar year.

Employer Obligations Regarding Documentation and Notifications

Regardless of the chosen form of employment, the employer or mandator is obligated to fulfil a range of formal obligations. Employment under an employment contract requires registration of the employee for social and health insurance with ZUS within 7 days of the insurance obligation arising. An analogous obligation applies to mandataries subject to insurance.

The employer is obligated to maintain employment documentation comprising personal files and documentation on matters related to the employment relationship. Since 2019, maintaining documentation in electronic form has been permissible. The documentation retention period is generally 10 years from the end of the calendar year in which the employment relationship was terminated.

Monthly obligations include timely payment of remuneration, payment of social and health insurance contributions by the 15th of the following month, and payment of income tax advances by the 20th of the following month. The employer also prepares annual PIT-11 information forms for employees and mandataries.

Practical Recommendations for Investors

Selection of the optimal employment structure should take into account the specifics of conducted business activities, development plans, and acceptable level of legal risk. For key positions requiring building long-term competencies and employee loyalty, an indefinite-term employment contract remains the most appropriate solution despite higher costs and less flexibility.

In the case of projects of limited duration or cooperation with highly qualified specialists, the B2B model may offer a more favourable cost-to-flexibility ratio, provided the cooperation is properly structured to eliminate characteristics of an employment relationship. Contracts of mandate work well for simple, repetitive activities not requiring organisational subordination.

Investors planning rapid scaling of employment should consider cooperation with a temporary employment agency at least in the initial phase of operations. This allows flexible adjustment of employee numbers to current needs without bearing the full costs and risks associated with direct employment.

Regardless of the chosen form of cooperation, compliance with labour law and social insurance regulations is of key importance. Bogus self-employment, incorrect classification of contracts, or understatement of contributions constitute risks whose materialisation may significantly exceed short-term cost savings. Engaging the support of professional legal and tax advisors when designing the employment structure and for ongoing payroll and HR services is recommended.