As international companies grow their footprint and tap into new markets, understanding local hiring laws and employment structures becomes vital to building sustainable operations. In this 17- part series, we guide foreign businesses through the legal and strategic aspects of employment in key global jurisdictions.
This installment brings us to Poland – a growing economic power in Central Europe with a strong labor force, robust infrastructure, and increasing appeal for international investment. Poland offers multiple pathways for foreign companies to hire, including direct employment, independent contracting, and outsourcing through staffing agencies. While the regulatory environment is businessfriendly, employers must navigate strict labor protections and potential risks related to worker misclassification. Choosing the right hiring model is essential for ensuring compliance, controlling costs, and building a reliable local presence.
Authored by Agnieszka Wagemann-Smolanska
Are There Alternatives to Direct Employment?
Yes, foreign businesses have several alternatives to directly employing workers in Poland. These include:
- Outsourcing and Staffing Agencies: Companies can use third-party employment agencies to hire workers on their behalf, reducing administrative burdens and ensuring compliance with local regulations.
- Independent Contractors: Hiring freelancers or contractors provides flexibility and can reduce employer obligations, but must be structured carefully to avoid legal risks.
- Business-to-Business (B2B) Contracts: Engaging professionals through their own registered businesses (typically as sole proprietors) is another viable option, commonly used in Poland, particularly in the IT sector.
Is It Necessary to Set Up a Local Entity to Hire an Employee?
No, establishing a local entity is not always necessary. Foreign companies have options such as:
- Hiring Through a Staffing Agency: Temporary employment agencies can act as the legal employer, allowing foreign firms to hire without incorporation.
- Direct Employment Without a Polish Entity: In some cases, companies can employ workers from abroad through cross-border employment, but this requires adherence to Polish tax and labor laws.
- Establishing a Local Entity: If long-term operations and local employment are key to the business strategy, setting up a Polish branch or subsidiary may be the most suitable option.
Direct Employment vs. Independent Contractor: What About Costs?
Cost considerations play a major role in choosing between direct employment and independent contracting. Here’s a comparison:
Direct Employment Costs:
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- Employer contributions to social security (approx. 20-25% of gross salary)
- Health insurance and pension contributions
- Paid leave, sick pay, and other employee benefits
- Compliance with Polish labor laws, including termination costs
Independent Contractor Costs:
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- No employer social security contributions (contractor handles their own taxes and insurance)
- Lower administrative burden
- Flexibility in contract duration and termination
- Risk of misclassification if the relationship resembles an employer-employee structure (potential legal and financial liabilities – In Poland, institutions such as the Social Insurance Institution (ZUS) or the National Labor Inspectorate (Państwowa Inspekcja Pracy) may determine that a given relationship between the parties is, in fact, an employment contract, even if it has been labeled as a civil law agreement. This would result in the obligation to pay all costs associated with employing a worker. Such situation also entails the employer’s criminal liability for employing a worker under conditions typical of an employment contract but without formally concluding one.
Conclusion
Choosing the right hiring model in Poland depends on a company’s long-term strategy, cost considerations, and risk tolerance. Aliant poland assists foreign businesses in evaluating options, ensuring compliance, and selecting the most efficient structure tailored to their needs.
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