What is the cost of transferring a B2B contractor to an employment contract in Poland?

Reclassifying a B2B contract into Employment Contract in Poland – Costs, Risks and Legal Implications

As early as July 2026, we expect amendments to the Act on the National Labor Inspectorate in Poland to enter into force. These amendments will allow the Polish labor inspectorate to more efficiently monitor the use of civil law agreements (such as B2B contracts) and convert them into employment contracts based on an administrative decision.

Changes in Polish Law – New Powers of the Labor Inspectorate (PIP)

Due to the expanded powers of the National Labor Inspectorate (PIP), we expect an increased number of inspections of employers who use B2B contracts as their primary form of employment. In many sectors, such as the IT industry, these contracts are widely used, and in practice, contractors are treated similarly to employees.

The new powers of the labor inspectorate are intended to increase scrutiny of these practices and initiate the conversion of B2B contracts into employment contracts – where the collaboration lacks the independent, business-like nature required for a B2B contract.

Following an inspection, if the inspector determines that the cooperation in question exhibits the characteristics of an employment contract (e.g., subordination, the requirement to work at a designated location with fixed hours, lack of flexibility, limited responsibility, company equipment, paid days off, the inspector may issue an administrative decision converting the B2B contract into an employment contract. This will create an employment relationship between the parties, resulting in additional obligations and costs for the employer under Polish employment law.

Costs of transitioning from B2B (business to business) to employment

Many employers wonder whether to get ahead of a possible labor inspection by transferring employees from B2B contracts to traditional employment contracts. Others wonder how their costs will change if an administrative decision is issued converting a B2B contract to an employment contract. Below, we explain how to easily perform such a calculation.

In the case of B2B contracts, the amount earned by the contractor is a net amount – the contractor independently pays contributions and taxes from the amount transferred to their account after payment of the invoice. This amount also constitutes the total cost of employment, as the company does not pay any additional contributions or incur other costs related to the engagement of the contractor.

In the case of employment contracts, the amount specified in the contract is a gross amount – from this amount, the employer deducts social security contributions and tax advances payable by the employee.

However, this is not the employer’s total cost – in the case of an employment contract, the employer must add the mandatory ZUS contributions payable by the employer to the gross amount entered in the contract. Only then can the total cost of employing a given employee be calculated. This cost is much higher than the net amount, or even the gross amount, specified in the contract.

Therefore, when converting the cost of transferring a contractor from B2B to an employment contract, it is necessary to determine whether the amount the contractor earned in B2B as a net amount should be considered net, gross, or the total cost of employing the employee.

Therefore, three scenarios are possible here, and for the purpose of this example calculations we have assumed an example salary of PLN 10,000 net in the B2B contract:

1. Net amount on B2B contract = net amount for the employee*

B2B – PLN 10,000 net (this is also the total cost of hiring)

In this scenario, the total cost to the employer under the employment contract is over PLN 7,000 higher than under the B2B contract – the employer bears the negative consequences of the change in contract type, while the employee’s financial situation remains unchanged.

2. Net amount from B2B = total cost of employment under an employment contract*

In this scenario, the total cost of the employer under an employment contract is equal to the cost of hiring the contractor, but the employee receives approximately PLN 4,000 net less. In this scenario, the employee bears the full negative consequences of the change.

and, an intermediate (usually rarely used) scenario:

3. Net amount from B2B = gross amount in the employment contract*

Net amount – Gross amount –Total cost to employer –This represents a balance between the worsening situation for the employee and the employer – using this calculation, both parties bear the negative consequences of the change.

*All three calculations were performed assuming the employee is over 26 years of age, does not benefit from preferential contributions or tax exemptions such as ulga na start, works in the place of his residence, and does not have a PPK account. Depending on these parameters, the calculations may vary, but the principle remains similar and may require consultation with a tax advisor or other specialists.

Additional costs associated with transitioning a contractor to an employment contract

It is important to remember that transitioning a contractor from a B2B contract to an employment contract involves not only increased employment costs but also additional labor law obligations, which can also constitute a financial burden for the employer. These include

• paid vacation days
• paid sick leave,
• other types of paid time off,
• lump sums for remote work,
• death severance,
• severance pay in the event of collective layoffs,
• holiday pay,
• and many other financial burdens on the employer arising from the Labor Code.

Therefore, considering the increased employment costs and additional obligations on the employer’s side, we must come to a conclusion that an employment contract is a significantly more expensive form of employment, and employers who do not wish to use this form should be adequately prepared for labor inspections to avoid the forced conversion of a B2B contract to an employment contract.

How to avoid a conversion from B2B contract to employment contract in Poland?

Employers who do not wish to transfer B2B contractors to employment contracts, either voluntarily or involuntarily (as a result of a PIP decision), should begin auditing their practices regarding B2B employees now. 

We recommend reviewing B2B contracts to identify any provisions that resemble those in employment contracts, as well as reviewing internal practices to eliminate any similarities between contractors and employees working under employment contracts. In the event of control, the assessment will focus not only on the content of the contract between the parties but also on how the collaboration works in practice.

Therefore, if in practice your contractors are no different from those working under employment contracts, you should begin the process of implementing changes now to avoid being caught off guard by a PIP control.

Legal Audit of B2B Contracts – How a Law Firm Can Help

We encourage you to our contact specialists from our labor law department at: [email protected], who, based on their many years of experience, help conduct comprehensive audits of B2B collaborations.

We may help you:

• analyze your B2B contract and implement appropriate changes to reduce the risk of recognizing the employment relationship between the parties,
•  review internal practices regarding contractors,
• determine the necessary internal changes to implement,
• establish best practices for the future,
• communicate the changes to contractors and employees.

B2B vs Employment in Poland – Key Tax and Legal Differences (Summary)

Transitioning from B2B to an employment agreement in Poland involves significant changes in both taxation and legal obligations. Contractors running their own business operate on their own behalf, manage their own taxes such as income tax, and often benefit from higher net income and greater financial independence. They can deduct business expenses, including real expenses, business costs, and other tax deductible costs, especially if they are a VAT payer able to deduct VAT.

However, if cooperation is reclassified as hidden employment under the applicable legal framework, income shifts to a model based on gross salary, where social contributions to the Social Insurance Institution reduce the final take home pay. While employment provides stronger legal protection, it also results in significantly higher costs for employers.

In practice, the key factor is whether the cooperation genuinely reflects an independent business relationship. The more autonomy the contractor has in how the work is performed, the lower the risk of reclassification. On the other hand, arrangements that closely mirror typical employment conditions may raise concerns from a regulatory perspective. Ultimately, choosing the right model should be based on a careful assessment of both legal risks and financial implications for each party.