As has been recently reported by the media, the Ministry of the Family and Social Policy have joined forces with the Social Security Institution (ZUS) to work on legislation which would expand the obligatory social insurance system.
Under the current law, if a person is working under a contract for services where the basis of assessment for social insurance contributions is equal at least to the minimum wage, the person will not be subject to obligatory social insurance regime with respect to any subsequent contract for services they make. This allows firms to reduce employment costs and increase income for the service providers. According to data from ZUS, there are about half a million people working under more than one contract for services.
The projected changes include ensuring that the obligatory social insurance system will catch each contract for services, whether it is the first or a subsequent one for the given person. ZUS claims the solution will better safeguard those covered by the system (mainly by increasing their future pensions), simplify the contribution payment mechanics and restore a more level playing field among businesses. However, many firms will face increased business costs and administrative compliance burdens.
The suggested changes have not been turned into any formal legislative proposal yet. We will keep you posted on the related developments.
Another type of civil law contracts frequently used in business practice are contracts for specific work, which generally do not fall within the social insurance regime. However, whether a particular contract is to be treated as a contract for specific work rather than a contract for services is often a bone of contention between firms and ZUS. Note that the Anti-Crisis Shield 1.0 legislation provides for a register of contracts for specific work to be kept as of 1 January 2021 while firms will have to report to ZUS on their contracts for specific work within 7 days from the date they enter into any such contract.
If these issues pertain to your business and you are interested in our assistance, please contact your WTS&SAJA consultant.
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