The PIP reform comes into force - what changes from 8 July 2026?
From 8 July 2026, new rules apply that fundamentally change the powers of the National Labour Inspectorate (PIP). This is a reform that was debated for many months - now it is becoming reality, and PIP inspectors have gained tools they did not previously have. The key change is that a labour inspector can, by way of an administrative decision, reclassify a civil-law contract or a B2B contract as an employment contract.
Until now, challenging sham contracts required referring the matter to a labour court, which meant proceedings lasting many months and limited effectiveness of inspections. The new rules drastically shorten this path and give inspectors real enforcement power. For business owners and people working under B2B contracts, this means an urgent need to review existing forms of cooperation.
The reform is a flagship project of the Ministry of Labour and of the Left (Lewica), ultimately included in the National Recovery Plan agreed with the European Commission. President Karol Nawrocki signed the amendment while at the same time referring it for subsequent review by the Constitutional Tribunal - which means the rules are in force, but their constitutionality may still be challenged.
Three steps of the contract reclassification procedure - how does it work in practice?
The new procedure for reclassifying contracts has been designed as a three-stage process, intended to give the parties a chance to comply voluntarily with the law before any compulsory intervention takes place. Understanding each of these steps is crucial for business owners who want to avoid the negative consequences of an inspection.
- Request to remedy irregularities - a PIP inspector who finds that a civil-law contract or B2B contract is a sham sets a deadline for concluding an employment contract or for shaping the terms of cooperation so that they comply with the Labour Code.
- Administrative decision on reclassification - if the employer does not comply with the request, the inspector submits an application to the Regional Labour Inspector, who issues a decision reclassifying the irregular contract as an employment contract.
- Appeal to the labour court - both the employer and the employee may appeal the decision to the labour court. Lodging an appeal suspends enforcement of the decision until a final judgment is issued.
It is worth stressing that the controversial option of retroactive reclassification of contracts, one of the most disputed elements of the original draft, was ultimately dropped. This is a significant reduction in risk for business owners, although it does not eliminate it entirely.
Who will inspectors check first?
The scale of potential inspections is enormous. According to Ministry of Labour data, around 1.5 million people in Poland work solely under civil-law contracts. The Ministry of Finance, in turn, estimates that around 160,000 B2B contracts are fictitious businesses masking an actual employment relationship. These cases are the main target of the reform.
Inspections will not be conducted on a mass scale - they are meant to be targeted and based on data analysis. For this purpose, the Social Insurance Institution (ZUS) and the National Revenue Administration (KAS) will pass information to PIP inspectors that allows them to select entities for inspection. This is a fundamental change in how the inspectorate operates - until now, PIP acted largely reactively, on the basis of employee complaints.
Priority areas of inspection
Signals from the government point to several main directions for inspectors' activities:
- Companies with a history of irregularities - businesses that have previously been inspected and used sham civil-law contracts will come under scrutiny first.
- The healthcare sector - the Minister of Labour explicitly stated that PIP should inspect public hospitals and medical facilities, where many doctors work under B2B contracts even though the nature of their work meets the criteria of an employment relationship.
- Small and medium-sized towns with a dominant employer - local monopolists who impose "junk contracts", knowing that employees have no alternative employment, are also a priority.
- Businesses employing entire workforces under civil-law contracts - industrial and agricultural enterprises where the whole staff is formally not employed under employment contracts, despite performing typical subordinate work.
Consequences for employers - what to prepare for?
Reclassifying a civil-law contract as an employment contract brings serious financial and organisational consequences for employers. Above all, it means an obligation to pay full ZUS contributions, provide annual leave, observe working time limits and apply the rules on protection against dismissal.
The reform also provides for higher penalties for offences against employee rights. The existing sanctions, widely regarded as too low to be an effective deterrent, will be increased. Combined with PIP's ability to carry out remote inspections, this means the inspectorate will be able to act faster and cover a larger number of entities.
For business owners, it is crucial to understand which features of an employment relationship will determine whether a contract is considered a sham. Inspectors will examine in particular: organisational subordination, a fixed place and time of work, personal performance of services, work performed under direction, and remuneration paid at regular intervals. If a B2B arrangement shows these features, the risk of reclassification is very high.
How can you protect your company against the risk of contract reclassification?
In light of PIP's new powers, business owners should take immediate action to minimise legal risk. Passively waiting for an inspection is the worst strategy - it is far better to carry out an internal audit of contracts before the inspector's visit.
First, every civil-law contract and B2B contract should be analysed against the criteria of an employment relationship set out in Article 22 § 1 of the Labour Code. An arrangement in which the contractor or B2B counterparty works at a set place and time, under the direct supervision of the client, and has no real freedom in organising their work is highly likely to be challenged.
It is also worth ensuring appropriate documentation confirming the business nature of the cooperation - the counterparty's separate organisational structure, the ability to provide services to multiple clients, their own work tools and bearing of business risk. These elements may prove decisive both at the PIP inspection stage and in any subsequent appeal proceedings before the labour court.
Do not wait for a PIP inspection - act proactively. If your company uses B2B or civil-law contracts and you want to be sure they comply with the new rules, contact our firm. We will carry out a comprehensive audit of your contracts, assess the risk of their reclassification and help you implement solutions that protect your business. An initial consultation will allow us to determine the scale of the risk and plan the next steps.
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