On the basis of the discussions which initiated the idea of carrying out the so-called “entrepreneur test”, the question arises when the entrepreneur issuing one an invoice for the same entity becomes an employee in the light of regulations. In this article, we will look at the terms of the B2B service agreement in terms of the recognition of the relationship between the party as a contract of employment in the light of current case law, doctrine and regulations.
Government work on the draft statutory recognition of cooperation agreements in favour of one only the person for the employment relationship has not yet entered the official path, but there are voices that this will happen in the near future. At the moment, in the light of the laws and jurisprudence, such agreements are acceptable if they meet the criteria we discuss below.
Employment contract vs B2B contract
Article 22 the labour code (defining employment relationship) makes it possible for the labour court, in specific circumstances, to consider the civil law contract in question to be actually equivalent to the relationship arising from the employment contract. It all depends on the facts and type of services provided under the cooperation agreement.
Government work on the draft statutory recognition of cooperation agreements in favour of one only the person for the employment relationship has not yet entered the official path, but there are voices that this will happen in the near future
The main elements of the statutory employment relationship are: management relationship, subordination, specific type of work, personal performance, designated place and time of work, wages payable at regular intervals.
In order for the cooperation agreement to be effective, the place of supply of services should not be limited to the premises of the payer, it should be possible for the contractor to employ employees and subcontractors. This represents an exact denial of the employment relationship.
It would also be important in practice, not only in the contract, although the possible burden of proof lies with the client who is present with the labour action or inspection.
The greatest risk is in practice the ban on the provision of services to persons third, the place of supply of the service limited exclusively to the place of establishment (branch/company) of the payer, payment for the period during which the customer does not provide the services and the establishment of working hours.
Office practice and current case law
The tax office and the Social Security Office usually approach determining the actual employment relationship much more rigorously than the general courts, but the latter have a decisive voice.
It does not matter whether the contract was concluded in writing, whether it is in accordance with the will of the parties and whether the company has notified any employees to the U.S. or ZUS.
It should always be possible for officials to control and challenge the contract, who consider cooperation in this form to circumvent the mandatory employment relationship.
The current jurisprudence line is important in determining the actual employment relationship.
On the basis of an analysis of the previous case law of the Supreme Court, a general conclusion can be drawn that, if the contract shows characteristics common to at least two The different types (types) of contracts (employment contracts and civil law contracts) should be used by a typological method, the essence of which is to make arrangements for what characteristics prevail.
That is the essence of the still pending Supreme Court ruling from March 2008, cited today in most judgments.
The court does not examine the contract itself, but the facts, its implementation. Even if the contract is not written or is not officially concluded, the court may rule on the existence of an employment relationship.
Moreover, in June 2008 The Supreme Court has changed its long-standing position and has held that the court can determine the existence of an employment relationship even if the parties in good faith conclude a civil contract, but its content or manner of implementation corresponds to the characteristics of the employment relationship.
Previously, the reason for establishing an employment relationship was the ‘employee’ action. Currently, the procedure is increasingly initiated by ZUS or U.S., against the will of the parties to the agreement. Any rules and annexes which may be decisive in the process shall also be treated as part of the contract.
For example, the Supreme Court in the judgment of February 1999 (still up-to-date) concluded that the performance of work on all days of the week (except Saturdays and Sundays) and during the appointed hours is a job under the constant management of the employer.
It is important that the contract indicates a specific range of services provided by the customer, cannot be too general, nor should it be de facto limited to being available at the place and time in question, to put yourself to work daily, without pre-defined activities to be carried out, and to follow instructions on an ongoing basis, usually demonstrates that the work is carried out under the guidance of the employer(October 1999, still valid).
Entrepreneur within the meaning of CEiDG
When examining the existence of an employment relationship, a cooperation agreement with a person acting as an entrepreneur registered in CEiDG shall be no different from another contract constituting the basis for a legal relationship between the parties.
This is the consistent position of the courts, which was established a few years ago.
In the year 2014 The Supreme Court considered that if an employer makes the employment of a candidate dependent on the establishment of a personal business activity by him, then the intention of the parties, the content, nature and manner of implementation of the contract may appeal against its recognition as a contract of employment.
Until recently, the courts had treated B2B agreements with understanding, although already in the November judgment 2010 The SN expressed the view that setting up an economic activity does not mean that there was no employment relationship.
Until a certain point in time, the jurisprudence held that the conduct of business by a coworker protects the entrepreneur from being determined by the court that it is, however, employee employment. The ruling of the Supreme Court of 24 June 2015 and another in 2016.
The Court of First Instance considered that, also in the case of cooperation agreements, the decisive importance of the will of the parties can be attributed to the fact that the contract concluded shows common features for the employment contract and the civil law contract with equal intensity.
Breakthrough on "one invoices’
A relatively fresh judgment with 20 February 2018. The case concerned the issue of the subjection of social insurance by a natural person conducting an economic activity (i.e. an entrepreneur) when it provided services to only one the entity, in the hours and at work established by that entity and for its account and risk.
The Supreme Court ruled on the recognition of the exclusive provision of services by a self-employed person to another entrepreneur as an employment relationship.
In this situation, the customer provided services exclusively to the benefit of one customer, but this was an extreme case, concerned a seller employed in a stationary store, so regardless of the type of contract concluded, it was a typical employment relationship anyway.
In addition, the scope of the services provided coincided with activities performed by other persons employed in the same establishment on the basis of employment contracts.
The Social Insurance Institution, and then the courts established that the mere registration of the business and subsequent conclusion of the cooperation agreement did not result in the services provided under that contract being considered to be provided by the entrepreneur.
The court pointed out, among other things, that a self-employed person may lose the status of an entrepreneur in a situation where responsibility towards persons third The contracting authority shall be responsible for the outcome of the activity and their execution, they shall be carried out under the direction and at the place and time prescribed by the contracting authority and, in addition, the self-employed person shall not bear the economic risk associated with the economic activity carried out." Consequently, in the disputed case, the court considered that the registration of economic activities had taken place solely in order to circumvent the law and obtain rights to certain social security benefits.
The Supreme Court indicated the conditions laid down in Article 5a(1) Income tax laws on individuals whose cumulative fulfilment excludes the recognition that we are dealing with non-agricultural economic activities, i.e.:
- • non-responsibility towards persons third for results and performance;
- • carrying out activities under management and at the place and time designated by the contracting authority;
- • no economic risk associated with the economic activity.
Although this judgment is based on a specific factual situation and may be dictated by fiscal considerations (stopping claims for excessive social benefits), the interpretation by the SN of self-employment characteristics, in particular economic and organised characteristics, may potentially increase the risk of undermining the conduct of business even in cases where the characteristics that bring cooperation to the employment relationship are less apparent.
Judgment determining the existence of employment relationship means the obligation to pay late social security contributions for the last five years. It does not in any way prejudge the employment relationship resulting from any further property claims, e.g. compensation for overtime (judgment of the Supreme Court of April) 2016.
Claims for overtime, night work allowances, compensation for the time of an uninjured downtime worker, compensation for the time of illness or the equivalent for unused leave shall expire on the expiry of three years after the sentence.
A judgment determining the existence of an employment relationship may expose the payer to liability for the offence, for which he is liable for a fine from 1,000 PLN to 30,000 PLN..
Whether or not the government changes the regulation of service contracts or courts changes the case law, one remains certain – as long as there is a fundamental difference in the amount of contributions paid, it will be very popular to continue to operate in the form of so-called self-employment.
The test of an entrepreneur who would be tasked with checking who self-employed actually work for a contract of employment, not under a real cooperation agreement, will not change that.
It seems that instead of another tool, which is already regarded as repressive, a change of law is needed, for example, as regards compulsory insurance in ZUS.
Author: Rafał Czepik, legal advisor, graduate of the Faculty of Law at the University of Warsaw, specialist in economic and civil law