In Poland,nearly 3 million people run their own businesses, and over 2.4 million work on civil law contracts. From January 2026, these numbers may change drastically, along with entire markets that rely on outsourcing and B2B cooperation.
The State Labor Inspectorate (PIP) will gain a new power that could completely reshape how companies work with freelancers, contractors, and outsourcing partners: the ability to administratively establish an employment relationship with immediate enforceability.
A single inspector’s decision will be enough to convert a B2B contract into an employment contract overnight. No court proceedings. No regard for the parties’ intentions. And often, severe financial consequences.
What Will Change in 2026? New PIP Powers to Reclassify B2B and Contracts Into Employment
Until the end of 2025, disputes over establishing employment relationships went primarily to courts.
The State Labor Inspectorate could issue an order to change the contract, but if the employer didn’t comply, it had to go to court, which determined whether an employment relationship actually existed.
From January 1, 2026, an inspector will be able to independently issue an administrative decision that:
- Establishes the existence of an employment relationship between the parties
- Takes effect immediately (with immediate enforceability)
This is a fundamental change. There’s no waiting for court, no examination of the parties’ intentions, and no analysis of contract negotiation history. Only the actual way work is performed will matter, and it’s the inspector who decides whether the work was subordinate enough to be deemed employment.
To fully understand the differences between a B2B and an employment contract, head on to our article: B2B vs. Employment Contract in Poland: Which One Makes Sense for You?
Appeals Won’t Stop Execution
Affected businesses will be able to appeal, but the decision will still be binding—right from the day it’s delivered. From that day onward, the employer must treat the person whose inspector’s decision concerns as an employee.
Reclassification will mean:
- Back payment of social security contributions
- Back payment of tax advances
- Loss of VAT deduction rights
- Possible tax sanctions (e.g., 30% under the VAT Act)
- Interest on each of these items
The employer has only 7 days to appeal the decision. The Chief Labor Inspector, however, has 30 days to review it. And the decision? That can vary.
If the employer still disagrees with the decision after receiving the appeal results, they can file a complaint with the district court. The proceedings, in theory, should be completed within 30 days.
Irreversible Costs and Retroactive Corrections
Even if the court later overturns the decision, the entire period from delivery to the final ruling is legally considered an employment relationship. All costs from that time are permanent, and there is no mechanism to refund contributions or taxes already paid.
What’s more, these costs can reach up to three years back, because it’s the PIP inspectors who decide when the employment relationship actually began.
This is precisely what creates the highest financial risk: in practice, a single decision affecting just a few B2B specialists can cost a company anywhere from tens of thousands to several million złotych.
Extended Scope of Inspections
Starting in January, Inspectorate officials will be able to audit entities that worked with contractors up to a year before the inspection date. In practice, this means you cannot “avoid” a potential audit by ending contracts shortly before a visit—the look-back window remains open.
Inspections will also move online. Remote checks will be carried out through video calls, digital document reviews, and other online verification methods.
In addition, inspectors will gain full access to the Polish Social Insurance Institution’s—ZUS—data, including contribution histories, links between entities, insurance titles, and information on who an individual has been providing services to.
Higher Financial Penalties
Alongside the expanded powers for inspectors, the reform also doubles the financial penalties. PIP itself expects its fine revenues to increase twofold once the new rules take effect. In practice, penalties will rise by 100–150%.
Additional sanctions may also apply: a ban on conducting business in severe cases, entry into the register of unreliable social security payers, and public listing as an employer that violates labor regulations.
This Applies to B2B, Contract Work, Work for Hire, and Some Outsourcing Models
The reform doesn’t target just one type of contract. The risk extends to a wide range of cooperation models, including:
- B2B arrangements that resemble employment
- Contract work performed under subordination
- Body leasing (understood as personnel outsourcing)
- Long-term engagements with a single contractor
- Cooperation with foreigners
How Inspectors Decide: Key Criteria for Determining Employment Relationships
The inspector’s most important question is: does this person actually work like an employee?
Inspectors will evaluate:
- Where and how work is performed
- Who decides about tasks and time
- Who bears business risk
- Whether the work is performed independently
- Whether results or time are billed
These factors determine whether the cooperation is genuine B2B or in practice resembles employment.
We will describe these criteria in more detail in our next article.
Who Will Be Hit the Hardest? Models at Highest Risk
1. Companies Using Service Outsourcing
In 2024, PIP found that 38.3% of inspected outsourcing arrangements (87 cases) were in fact illegal temporary work.
Given these numbers, it is highly likely that this area will be one of the main targets of intensified inspections.
2. Organizations Working with B2B (Especially IT Industry)
In IT, the B2B model has become the norm, and the reform hits this segment particularly hard. The key issues are:
- Work often cannot be performed with full independence (Scrum teams, daily stand-ups, code reviews)
- Cooperation commonly lasts 2–6 years, making it difficult to present it as truly “project-based”
At monthly rates of 12–20k PLN, a three-year reclassification can generate hundreds of thousands of złotys per person. For software houses with 50–100 B2B contractors, the potential financial exposure can reach tens of millions of złotych.
3. Companies Employing Foreigners
69% of cases of illegal employment of foreigners involve a lack of required permits: the most common errors concern documentation inconsistency and discrepancies between contracts and reality.
PIP’s new powers mean that these errors can trigger immediate reclassification, and if a required work permit is missing, the situation becomes a serious offence.
4. Organizations with Large Numbers of Contracts and Long-term Cooperation
Companies relying on long-standing contractor relationships will face heightened risks because long-term cooperation may be interpreted as an attempt to bypass employment obligations. After several years with the same client, demonstrating real independence is difficult, and documentation confirming autonomy is often incomplete or nonexistent.
5. Body Leasing & Staff Augmentation Models
The typical setup—the worker is formally employed by a partner but operates day-to-day under the client’s direction—can now be treated as an employment relationship if an inspector decides so, regardless of what the contracts say.
Financial Exposure: What Reclassification Really Costs Companies
Every decision establishing an employment relationship will create enormpus costs.To understand the scale, it’s worth looking at three risk levels: retrospective, current, and operational costs.
Retrospective Costs
ZUS contributions, PIT, VAT corrections, interest, employment obligations, payroll, benefits.
Example
Scenario: Reclassification of 5 IT Programmers with an average salary of 35,000 PLN net/month with a 3-year retroactive effect.
Cost breakdown:
- Estimated income tax advance for 3 years: 701,170 PLN
- Employer social security contribution for 3 years: 837,366 PLN
- Employee contribution to settle with social security (including health contribution): 1,067,606 PLN
- Estimated income tax interest amount for advances: 269,880 PLN
- Estimated employer social security interest cost: 234,379 PLN
- Estimated cost of preparing document corrections: 13,500 PLN
- Loss of VAT deduction right for 3 years: 1,449,000 PLN
- Estimated VAT interest amount and 30% sanction: 683,720 PLN
Total costs for the employer: 5,256,621 PLN
Operational Costs
- Contract renegotiations
- Project delays
- Loss of specialists unwilling to switch to employment
Reputational Costs
- Perception of being “non-compliant”
- Problems with contractors
- Impact on employer branding
Will the PIP Reform Actually Happen? Legal Controversies and Probability
The reform is far advanced but not fully settled.
It is a milestone in the National Recovery Plan, and EU funds depend on implementing it, creating strong political pressure and little space for major changes.
At the same time, the reform faces serious constitutional concerns raised by legal experts, the Government Legislation Center, employer organizations, and the SME Ombudsman. A Constitutional Tribunal complaint is very likely, but its outcome is unpredictable.
One thing, however, is certain: the era of risk-free B2B cooperation is over. The real question now isn’t whether the reform happens, but in what form.
Our Practical Recommendations
- Conduct a contract and documentation audit
- Assess reclassification risk
- Strengthen processes around independence and deliverables
- Train managers on compliance
- Monitor updates from the SME Ombudsman and legal bodies
More details on preparation will appear in the next article in this series.
Summary: What the PIP 2026 Reform Means for Employers
The State Labor Inspectorate 2026 reform is the biggest change in the Polish labor market in over a decade, and the first one that directly shifts legal and financial risk onto businesses, including those operating fully legally under previously accepted interpretations. For companies, it means not only legal risks but also significant financial and operational threats.
This isn’t a change you can “wait out.” It’s a moment when businesses must organize documentation, review cooperation models, train managers, and implement real processes to minimize reclassification risk.
At TalentPlace, we’re continuously monitoring the situation’s development. In coming weeks we’ll be publishing more practical materials—analyses, checklists, guides, and case studies—to help companies prepare for new regulations and proactively secure the areas of greatest risk.
FAQ: The Most Common Questions About the PIP 2026 Reform
Q: Does the reform only apply to IT and high earnings?
No, the reform applies to all civil law contracts (B2B, contract work, work for hire) in all industries, regardless of salary level.
Q: Are 200 inspections in 2026 a lot?
It depends on perspective. From the Inspectorate’s point of view, these are targeted inspections, selected based on risk analysis, which may cover the largest companies with the largest number of “suspicious” contracts.
From the market’s perspective: in 2024, ~39,000 contracts were inspected, ~1,400 were challenged. 200 inspections with administrative decisions are a significant percentage of challenged cases.
Q: If I end B2B cooperation before the end of 2025, am I safe?
No. PIP can inspect “former employers” up to a year back. This means that even if cooperation ended, you may receive a decision in 2026/2027 covering years 2023-2025, and you’ll have to pay additional contributions and taxes for that period.
Q: What if the B2B person doesn’t want to become an employee?
The parties’ will doesn’t matter. The inspector’s decision is authoritative, meaning the person automatically becomes an employee.
Theoretically, the person can terminate the employment contract themselves (notice period), but the State Labor Inspectorate may consider this a circumvention of the decision, not to mention retrospective effects still apply.
Q: Can I insure against this risk?
Standard liability/business insurance doesn’t cover social security contributions, taxes, or administrative sanctions. Specialized “employment practices liability” insurance is possible. Check your policy and detailed terms. Premiums will likely be high after the reform takes effect.
Q: What about VAT? Will I lose deduction rights?
This is the reform’s biggest unknown. The draft doesn’t precisely explain the tax consequences of conversion. Be sure to consult with a tax advisor on this.
Potential risks:
- Loss of VAT deduction right for retrospective periods (employment = no VAT)
- Need to correct JPK_VAT for years back
- Late payment interest
- 30% sanction (additional tax liability)
Q: Is the reform decided, or can it still be stopped?
This is a very common question. In our view, the reform is very likely.
Probability Assessment according to TalentPlace:
- Entry into force 01.01.2026: 80-90%
- Later Constitutional Tribunal review: 60-70%
- Overturning by Constitutional Tribunal: 30-40%
