From self-employment to employment during pregnancy – there is a Supreme Court ruling

Switching from business contract to employment contract during pregnancy – Supreme Court’s stance

Changing the form of employment from a B2B contract to an employment contract, especially to obtain insurance protection and maternity benefits, often raises controversies – especially when the Social Insurance Institution (ZUS) gets involved.
Employees who decide on such a solution can count on greater stability, but ZUS increasingly scrutinizes such changes to exclude cases where the employment contract is concluded solely to obtain high benefits, not out of a genuine need for employment. ZUS may question the validity of the contract if it considers that the salary was set at an excessively high level or to abuse the social insurance system by concluding a sham contract.

A case reviewed by the Warsaw Court of Appeal (case ref. III AUa 68/22) and subsequently by the Supreme Court (case ref. II USK 128/23) provides an interesting example regarding the limits where an employee’s salary can be considered by ZUS as an attempt to circumvent the law.

What is the boundary between legality and abuse?

The case examined by the Warsaw Court of Appeal and then the Supreme Court provides interesting answers to this question. A highly qualified lawyer with extensive professional experience changed her employment form from a B2B contract to an employment contract after becoming pregnant, which ZUS considered an attempt to abuse the social insurance system. The amount of remuneration and the intentions behind it were challenged.
The Warsaw Court of Appeal, overturning the earlier District Court ruling, clearly stated that the salary of 20,000 PLN gross, which the lawyer received after switching to an employment contract, was fully justified by her high qualifications and the employer’s needs. The court emphasized that the offered salary corresponded to market realities and the insured person’s skills, and its amount was lower than her previous income under the B2B contract.

However, ZUS held a different opinion, arguing that raising the salary shortly before pregnancy could be a form of circumventing regulations. The cassation complaint filed by ZUS with the Supreme Court concerned the interpretation of provisions related to the principles of social coexistence. The question posed by ZUS to the court was whether increasing the social insurance contribution base shortly before an event justifying long-term benefit payments constitutes merely a prudent life measure fully acceptable or may violate the principles of social coexistence. Is it enough to recognize that the salary granted to the insured person is fair, or should the circumstances of its granting not violate the collective interests of all insured persons?

However, the court had no doubts that the parties to the contract acted in good faith. The salary set at 20,000 PLN gross was adequate to market conditions and resulted from long-term cooperation between the insured and the employer. The court also noted that the lawyer actually performed work under the employment contract, full-time, at the employer’s premises, and using their equipment. All this indicated that her employment was not fictitious, and the salary was not intended solely to obtain social insurance benefits. The Supreme Court emphasized that not every pursuit of insurance protection, especially by pregnant women, is unlawful. However, if the salary was set at a grossly high level to obtain higher benefits, such a contract may be deemed contrary to the principles of social coexistence.

What does this mean for employers and employees?

This ruling is not only a clear signal for ZUS but also for all employees and employers that the line between legality and abuse of the social insurance system can be thin and not always obvious. ZUS may suspect various intentions in employment changes, especially when high salaries and benefits are involved. Nevertheless, if actions are justified and supported by appropriate arguments, courts may side with the employed, dismissing abuse allegations.
Every case must be assessed individually, considering all circumstances rather than general suspicions. If you have any questions or doubts, we encourage you to contact our Law Firm. You can count on comprehensive service and full commitment at every stage of your case.