Sham outsourcing of employees - Labour and employment law

Businesses optimising their operations often cease employing some of their staff in favour of outsourcing services. Sometimes, for this purpose, they transfer their employees based on Art. 23¹ of the Labour Code to an outsourcer, most often without transferring any other assets. The main economic motive for such measures is savings on social security and health insurance contributions. However, in the opinion of courts ruling on cases in similar factual circumstances, often at the request of tax or social insurance authorities, this may be only a sham transfer of the workplace, and as a consequence Art. 23¹ of the Labour Code does not apply. What does this mean for the original employer?

Dr Szymon Kubiak, Kamil Jabłoński