The restrictions resulting from COVID-19 pandemic and progressive computerization in companies have contributed to an increase in the popularity of remote work (home office) and hybrid work.
This trend has also prompted many employers who employ foreigners to allow them to provide work from abroad – from the employee’s country of residence.
Many Polish employees – including specialists from IT, engineering and advertising branches – also decided to work for foreign companies from their place of residence in Poland in front of computer screens.
This employment model brings about many challenges – from organization to tax and insurance issues, or risk associated with setting up a tax establishment of a foreign employer in Poland. Foreign employers, when they focus on choosing a governing legislation for tax and insurance purposes and other related responsibilities, should also not forget about labor law regulations existing in Poland.
However, it must be noted that when the law of the country of residence of a foreign employer is adopted for the employment contract as the law applicable, it does not imply automatic exclusion of using the Polish law.
The law applicable to the employment contract
Article 8 paragraph 1 of the Regulation (EC) no 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), provides that an individual employment contract shall be governed by the law chosen by the parties.
Importantly, however, in accordance with the second sentence of this provision, such a choice of law may not, however, have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable. To the extent that the law applicable to the individual employment contract has not been chosen by the parties, the contract, pursuant to paragraph 2 of this Article shall be governed by law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract.
The above means that, for example, even if the employer and employee to the employment contract will chose the German law as the law applicable to this contract, then if such work is habitually carried out by the employee in Poland the employment relationship will continue based on the Polish labor law, the provisions of which are absolute and unilaterally binding, (the parties cannot change them or can only change them to the benefit of the employee), which will be more beneficial for the employee than the provisions of the German law. The above regulation guarantees the effectiveness of substantive law securing employee’s interests, as the weaker party to the employment relationship in the country where work is performed.
By the way, it’s worth noting that despite the existence of Community regulations regarding labor law, Member States’ internal systems still differ significantly from each other, when it comes to solutions adopted in labor law. For example the Polish and German labor laws provide for a number of different solutions i.e. in terms of working time regulations or rules for terminating employment contracts.
It should be emphasized, that the existence of the unilaterally mandatory standards (the principle of employee privilege) and the mandatory standard is characteristic for labor law. It means that under the Polish labor law there is a large group of legal standards, which the parties to the employment relationship will not be able to exclude by accepting a foreign law as the law applicable to the employment contract. These standards include, among others: working time regulations, including maximum working time standards and remuneration for overtime, provisions regarding protection against termination, regulations defining duration of the a vacation leave or a minimum remuneration.
It means that when an employment relationship is habitually carried out in Poland or from Poland for the acceptance of the law of another country as applicable it would be necessary to first set out the provisions of the Polish labor law, which cannot be excluded by agreement. It would then be necessary to compare the level of protection provided to the employee by these provisions with the level of protection provided for under the law chosen by the parties. Then the provisions, that provide higher standards of protection for employees should be applied.
If you are planning to employ employees in Poland and wonder what law should apply to the employment contract, or if you are employing employees in Poland and you want to make sure you provide the workers with sufficient standards of protection, please do not hesitate to contact us. We will design solutions tailored to your operational needs, and if necessary we will help you understand and correctly apply the institutions provided for in the Polish labor law. In addition, we prepare draft employment contracts from scratch and adapt your employment contract templates to the mandatory provisions of the Polish labor law. We also prepare other necessary documents related to employment. Our advice is given in Polish, German and English.