The July 2026 PIP reform - what has changed?
The National Labour Inspectorate (PIP) has gained new, far-reaching powers, which came into force on 8 July 2026. The key change is that inspectors can now order the conversion of sham civil-law contracts and B2B contracts into employment contracts. This is a fundamental change in the approach to enforcing labour law - until now, inspectors could only ask a court to establish an employment relationship, which took months or even years.
The first three months under the new rules have brought concrete results. According to the Ministry of Family, Labour and Social Policy (MRPiPS), employees filed 1,362 complaints in this period about civil-law contracts being used improperly. This shows that awareness of PIP's new powers is growing quickly among workers who previously felt powerless against the forms of engagement imposed on them.
The Minister of the MRPiPS, Agnieszka Dziemianowicz-Bąk, stressed that the reform is working effectively - hundreds of people who previously worked on so-called "junk contracts" now have standard employment contracts with the full package of employee rights. This means paid overtime, paid leave and protection against dismissal.
607 conversion orders - how do the new mechanisms work?
The statistics from the first quarter of the reform are telling. PIP inspectors issued 607 orders to convert a civil-law contract into an employment contract, of which 535 have already been carried out. That is a success rate of over 88%, which is an unprecedented result in the context of Polish labour law.
Particularly significant, as the MRPiPS pointed out, is that in most cases PIP does not need to conduct administrative proceedings or refer cases to court. Employers simply comply with the inspectors' orders and restore a lawful situation in their businesses. The order mechanism alone has therefore proved to be a sufficiently effective means of pressure.
But what happens when an employer refuses to comply with an order? Only ten such cases have been recorded so far. In each of them, the regional labour inspector will decide whether to initiate administrative proceedings or to file a claim with the labour court. For the remaining orders, the deadline for compliance has not yet passed.
What rights do employees gain after their contract is converted?
Converting a civil-law contract into an employment contract brings an employee a number of concrete benefits:
- Paid annual leave - 20 or 26 days depending on length of service
- Overtime pay - a supplement of 50% or 100% to the salary
- Protection against dismissal - an obligation to give reasons for termination, and notice periods
- Full Social Insurance Institution (ZUS) contributions - pension, disability, sickness and accident insurance
- Sick pay and sickness benefit - in the event of incapacity for work
- Parental protection - maternity, parental and paternity leave
- A guaranteed minimum wage and working time regulation
It is worth remembering, however, that converting a contract also brings higher costs for the employer, including full ZUS contributions, which in practice means having to recalculate the payroll budget.
What does the reform mean for employers and people on B2B contracts?
For employers who have so far used sham civil-law contracts to reduce employment costs, the new reality calls for an urgent review of the working models they use. The key question becomes: does a given contract for services or B2B contract have the characteristics of an employment relationship? If so, a PIP inspector can order its conversion, and the employer has no practical option to refuse without exposing themselves to administrative or court proceedings.
The characteristics of an employment relationship that inspectors take into account are primarily: work performed under direction, at a place and time set by the principal, in person and for remuneration. If a person formally running a sole proprietorship (JDG) effectively works like an employee, the risk of conversion is high.
The reform is not the only change in labour law, however. Alongside the new PIP powers, the ministry is also introducing stronger protection against discrimination and bullying, a length-of-service act that counts periods of self-employment and work under civil-law contracts towards length of service, and a pilot scheme for shorter working hours with pay maintained, being run in several dozen companies and institutions.
How can you legally optimise the form of your business?
The new rules do not mean that every form of engagement other than employment is at risk. What matters is that the business model is genuine rather than a sham. People running a genuine business, serving multiple clients and organising their own work independently should, as a rule, not be exposed to the risk of conversion.
Nevertheless, many people who have so far worked on B2B contracts face a dilemma - move to an employment contract with higher employer costs, or look for legal solutions that optimise tax and contribution burdens. One popular solution is to run the business as a limited liability company (sp. z o.o.) with a foreign shareholder, which, in an appropriately planned structure, can allow an effective CIT rate of 9% and preferential ZUS contributions, while remaining fully compliant with the law and protecting personal assets.
Need support? Take advantage of a free consultation
The PIP reform is a major change for both employees and business owners. If you run a business and engage collaborators on B2B contracts or civil-law contracts, it is worth checking now whether your working model is safe. Likewise, if as a business owner you are looking for legal ways to optimise the form of your business in the new legal environment, an individual analysis of your situation is essential.
The Global Accounting team has supported business owners for over 10 years in choosing optimal business structures - from full accounting and HR and payroll services, through company formation, to comprehensive advice on compliance with labour and tax law. We tailor every solution individually, taking into account the specifics of the business and the current legal environment.
Book a free consultation and find out which solutions best suit your situation. Call: +48 505 684 412 or write to us at globalaccounting.com.pl. The first 15 minutes of the consultation are free.
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