Social security contributions on mandate contracts are coming. What about contracts for specific work?

Due to the implementation of the National Recovery Plan (hereinafter: NRP), the government announced the social insurance coverage of civil law contracts starting from 1 March 2023. It is certain that contracts of mandate (umowy zlecenia) will be subject to contributions. However, among employers there has been a question regarding the social insurance coverage of other civil law contracts, which has not yet been clearly resolved.

Social insurance contributions on contracts of mandate: planned changes

According to the NRP, the aim of the reform is to reduce labour market segmentation by increasing the social protection of all persons working under successive contracts of mandate, by subjecting these contracts to social insurance contributions, regardless of the income earned. The planned changes are intended to help streamline the social insurance system, tighten the rules for insurance coverage, increase insurance protection, and raise future short- and long-term benefits. To achieve this, all civil law contracts of employment will be subject to social insurance contributions, except for contracts of mandate concluded with secondary school pupils and students up to the age of 26.

Social insurance coverage of all contracts?

Although the NRP does not explicitly refer to contracts for specific work (umowy o dzieło), the literal wording suggests that all civil law contracts will be subject to social insurance contributions. Furthermore, the rule according to which the social insurance contribution is paid based on the minimum wage for civil law contracts will be abolished. Employers disagree on which contracts will actually be subject to contributions. The doubts seem to be clarified by the content of the National Reform Programme implementing the NRP, which refers only to contracts of mandate.
A separate issue concerns contracts concluded within business activities. Naturally, in principle it is excluded that so-called B2B contracts will be covered by contributions, as these are concluded between entrepreneurs. However, it is not excluded that following the amendment, intensified inspections regarding the correctness of their conclusion may be expected. Polish employers often forget that if such a contract meets the criteria of an employment contract, e.g. the entrepreneur concludes a contract with only one contractor, receives a “full-time” salary and works at a place and time set by the contractor – the authorities have the right to establish an employment relationship and calculate outstanding contributions.

Offer: Legal adviser – Social Insurance cases

Social insurance coverage of contracts of mandate under criticism

The National Reform Programme contains opinions on the project. Although it concerns only contracts of mandate, employers assess it unequivocally negatively and call for the reform to be postponed until January 2024. Arguments include the exceptionally unfavourable market situation caused by ongoing inflation, the armed conflict in Ukraine, and the radical tax system changes introduced by the Polish Deal. Unfortunately, there is currently no indication that the government will agree to the above arguments, and the changes are expected to come into effect in March next year.

The Lewiatan Confederation, alongside numerous proposals for improving the document, criticised the provisions on subjecting all contracts of mandate to social insurance contributions regardless of income earned, considering it an action whose unintended negative effects will outweigh the anticipated benefits. It will reduce the already insufficient labour supply in the Polish market, and furthermore, it will worsen the situation of persons earning additional income while caring for children (e.g. during parental or childcare leave). Moreover, this may lead to an increase in unregistered contracts, negatively affecting budget revenues.
The Federation of Polish Entrepreneurs mainly addressed improving regulations and increasing the role of social consultations. Noting, like other social partners, examples of poor practices in this area, the FPP stresses that the government’s use of the Social Dialogue Council (RDS) to discuss projects affecting social and economic issues should serve as a starting point to improve the quality of consultations and increase partners’ engagement in policymaking. It also highlights the importance of respecting existing provisions regarding the subsequent stages of the legislative process, including the reliable publication of information on draft legal acts and legislative stages on the already functioning Government Legislative Process website (legislacja.gov.pl). The FPP also expressed support for the proposal to introduce the obligation to publish a consolidated text of the legal act immediately after its amendment. It also recalled the demand for digitisation in labour law, especially for remote employment contracts and further digitisation of personnel records.

Employers of the Republic of Poland considered the NRP project insufficiently responsive to current economic and geopolitical realities. They also expressed the view that due to the decline in investment levels, effective pro-investment instruments need to be introduced to stimulate the economy. There was also a call for revising the project in light of the extraordinary geopolitical situation caused by the armed aggression in Ukraine and for the project to be resubmitted for consultations. At the same time, they proposed including a range of economic policy measures in the NRP that would increase the economy’s ability to adapt to new conditions caused by the war shock (e.g. expanding the liquidity credit guarantee programme for enterprises, launching temporary financing for firms previously exporting goods or services to eastern markets, initiating a programme supporting investments to reduce Poland’s economic dependence on trade relations with Russia, enabling the temporary relocation of Ukrainian companies to Poland). Like other social partners, Employers of the Republic of Poland expressed the view that standards for creating good law should be meticulously observed. For systemic laws or major amendments, they advocate conducting pre-consultations with stakeholders before directional legal solutions are developed.

The Polish Craft Association also participated in the consultations of the National Reform Programme 2022/2023, raising the issue of the inadequacy of the definition of innovation used within operational programmes (especially regional ones) in relation to the specifics of small and medium-sized enterprises. The Association also stressed the role that social partner organisations, with their rich expert potential, should play in the selection and evaluation of projects funded under cohesion policy.

Entrepreneurs ask for more time

It is worth recalling that according to a study published in March last year by the Business Centre Club, over 84% of employers were against social insurance contributions on contracts of mandate and contracts for specific work. Furthermore, it was argued at the time that contracts of mandate should be subject to contributions based on the assessment base, as before. However, due to the acceptance of the NRP by the European Commission, “the die is cast”, and the reform will definitely come into force.
Offer: GDPR Implementation Warsaw