Polish Deal – proposed legislative changes concerning illegal employment

by Anna Kościelny

12 August 2021

The so-called Polish Deal includes many important changes. One of them is a new provision designed to eliminate illegal employment.

The legislative bill imposes sanctions on employers and boosts protection of employees. The regulations will come into force at the beginning of 2022.

According to the bill, an employer who hires workers off-the-books will have to add additional income to his business income in the amount of the minimum wage. The additional income will be added for every month of the identified illegal employment.

The employer will also have to cover all taxes and social insurance contributions from his pocket. This also applies to the taxes and contributions normally payable by the employee.

Furthermore, an enterprise which hires people illegally, even after the contract is made legitimate, will not be able to include the resultant costs in its tax-deductible costs.

The employee will have no liability on that account towards tax authorities. His or her income from off-the-books employment will be exempt from tax and social insurance contributions. The full liability will be borne by the employer. The objective is to abolish the joint and several liability of the employee and the employer and shift the risk entirely to the employer who pays under the table.