How should an employee’s foreign trip be classified? How should remuneration be settled during the posting period? Is the A1 certificate mandatory? We answer these questions and provide solutions to the challenges faced by our international Client.

#POSTING #GLOBAL MOBILITY #INTERNATIONAL BUSINESS TRAVEL

In the second half of 2024, we had the pleasure of working with a client — an international capital group with facilities in Poland, Germany, France, and China — producing high-quality carbon and graphite products, including components for furnaces and materials used in aluminum smelting for metallurgy and the chemical industry.

Due to the specific nature of the industry and the international scope of operations, our client’s technical and senior-level employees made numerous business trips abroad (dozens to hundreds annually) to both EU and non-EU countries.

1. The client struggled to classify the trips correctly as either business travel or posting, which impacted the risk of incorrect calculation of social security contributions and employee income tax.

2. Due to the dynamic travel schedules, the client was unable to obtain appropriate certificates from the Polish Social Insurance Institution (ZUS) confirming social security coverage for the vast majority of employees in a timely manner.

3. As a result, the client was also unable to verify when the obligation to report these trips to foreign labor inspections arose, nor submit timely notifications.

4. Failure to provide employees with ZUS certificates and to report trips — at such a scale — exposed the client to fines of up to several tens of thousands of euros per violation (in total potentially even several hundred thousand euros). Moreover, without proof of coverage under the Polish social security system, employees would have to be registered in the foreign system and retroactively pay contributions with interest.
 
 

WHAT ACTIONS DID WE TAKE?

We prepared comprehensive information on the differences between business travel and posting, indicating the correct method for calculating ZUS contributions and tax. We took over the client’s responsibilities related to verifying the obligation to report to foreign labor inspections and submitting those notifications. We also handled applications for ZUS certificates confirming Polish social security coverage. Furthermore, we conducted training sessions for the HR department and employees, streamlining the reporting process and preparing employees for possible inspections.

WHAT WERE THE RESULTS OF OUR ACTIONS?

The client avoided potential fines amounting to several hundred thousand euros. Thanks to the compliance procedures implemented by our law firm, the risk of issues during inspections by Polish and foreign authorities was significantly minimized. By outsourcing the procedures for notifying foreign labor authorities and obtaining ZUS certificates for each trip, the client saved time and operationally relieved their HR department.