From 1 January 2021, payers of contributions and individuals commissioning work will be obliged to inform ZUS, (Zakład Ubezpieczeń Społecznych, Poland’s social insurance institution) about concluding specific-task contracts (umowy o dzieło) that are not subject to social security and health insurance contributions. Thanks to this new obligation, ZUS will be able to verify the existence of the social security obligation of persons performing specific-task contracts. However, this brief regulation may raise many practical reservations.
Who will be affected by the new obligation?
The new obligation will apply to the payers of contributions (i.e. entities paying contributions for themselves or for other persons notified for insurance – including employers for employees) and individuals commissioning work (not being payers). These entities will be obliged to inform ZUS about concluding any specific-task contract if:
- such a contract is concluded with a person with whom they have no employment relationship or
- the person with whom such a contract is concluded does not perform work under this contract for their employer.
Therefore, this obligation does not apply to contracts concluded by an employer with its own employees or with persons who perform work for their own employer under a contract with another entity, if they are going to be carrying out work under this contract for the employer with whom they have an employment relationship. For the purposes of social security, revenues from such contracts are treated in the same way as those derived from employment. However, specific-task contracts from which revenue does not constitute the basis for assessing social security contributions under the applicable regulations will have to be reported.
The conclusion from a literal wording of the provision is that it will also be necessary to report specific-task contracts concluded with contractors within their business activity. However, such a solution appears to be contrary to the legislator’s intention. Persons running a business are subject to social security anyway and are obliged to pay contributions on this account. A communication on ZUS’s website also indicates to the lack of obligation to report on contracts concluded with contractors who are sole traders.
In turn, in accordance with the current wording of the provision, ordering parties who are not payers or individuals e.g. companies not declaring any persons for insurance purposes, will not be obliged to report on concluded specific-task contracts. Such a state of affairs should be regarded as an oversight on the part of the legislator, and therefore modification of the regulations in this respect cannot be excluded.
The legitimacy of imposing this obligation on individuals is also questionable. It means that even small one-off specific-task contracts for purely private purposes will have to be reported to ZUS. In practice, however, the new regulations may prove to be dead letter in this respect. Individuals who fail to meet such obligations to ZUS are not currently at risk of any sanctions.
What is crucial is that the obligation to report specific-task contracts does not modify the actual rules for being liable to social security. There is also currently no information about the planned contribution applicable to all specific-task contracts. However, it cannot be ruled out that such regulations will appear in the future.
How and when to inform ZUS about concluded contracts?
The regulations provide a seven-day deadline for notifying a specific-task contract to ZUS, counting from the date the contract is concluded. Administrative Procedure Code provisions apply to the method for calculating this deadline. Therefore, the day on which the contract was concluded should not be taken into account when calculating the deadline. If the end of the deadline falls on a public holiday or Saturday — the deadline will expire on the next day which is not a public holiday or Saturday.
Information about concluded specific-task contracts will have to be conveyed to ZUS on form ZUS RUD. You can find the draft regulation containing a specimen form on the Government Legislation Centre website. According to this draft, the form will have to contain identification data for the ordering party and work contractor, as well as information about the concluded contracts: dates of their conclusion, dates of commencement and completion of the work, the subject of the contract and the number of concluded specific-task contracts. However, as the regulation determining the form template has not yet been issued, the scope of information to be notified to ZUS may change.
Should contracts concluded before 1 January 2021 also be reported?
When they were issued, the new regulations raised doubts as to whether the notification obligation would also apply to contracts already concluded and effective on the date this obligation comes into force. In introducing the obligation to report specific-task contracts, the Act does not contain any transitional provisions. However, based on a literal wording of the provision, it should be considered that only specific-task contracts concluded from 1 January 2021 will have to be reported. Thus, when indicating the number of specific-task contracts concluded with a given contractor, contracts concluded before that date also need not be taken into account.
Increased audits by ZUS?
The explanatory notes to the new regulations show their aim is to increase the effectiveness of assistance for people who are currently outside the social security system in the future. The new regulations are also intended to enable ZUS to verify the existence of the social security obligation of persons performing specific-task contracts. Entities which conclude a significant number of specific-task contracts must, therefore, reckon on a risk of increased audits by ZUS. It also cannot be ruled out that, depending on the conditions in which the person accepting the order performs the work, the conducted audits will result in ZUS finding that the concluded specific-task contracts are e.g. contracts of mandate for which contractors are subject to obligatory social security. This in turn will result, in particular, in the payer having to pay overdue contributions on these contracts.
What sanctions for non-compliance?
Failure by the payer of contributions or the person obliged to act on their behalf to inform ZUS about the conclusion of a specific-task contract subject to reporting or indicating false data in the form will constitute an offence punishable by a fine of up to PLN 5,000. Interestingly, the regulations do not provide for this type of liability in relation to individuals who are not payers.
Obligation to report specific-task contracts and protection of personal data of contractors of a work
The new regulations may also result in ordering parties having new obligations towards contractors of a work. From a practical point of view, ordering parties who are personal data controllers should verify whether the information provided to contractors of works in connection with the processing of their personal data will not require updating. The obligation to inform ZUS about the conclusion of a specific-task contract should be considered as a separate purpose of processing data of the contractors of a work. The obligation to inform contractors who are individuals about the new basis for processing their personal data will arise regardless of whether the work is carried out within their business activity or outside it.
The obligation in question was introduced by Article 22 of the Act of 31 March 2020 amending the Act on special solutions for forestalling, countering and combating COVID-19, other infectious diseases and the crises they cause and some other acts, under which the provisions of Article 36 sec. 17, 45 sec. 1 point 1b, 49 sec. 2 point 9 and 50 sec. 17 point 5 of the Social Security System Act of 13 October 1998 will be added.
Agnieszka Godusławska, Piotr Podsiadły