Reporting specific-task contracts to the Social Insurance Institution (ZUS) from January 2021.

Who will be responsible for reporting?

According to the new provision, the contribution payer or the natural person ordering the work will be required to inform ZUS about the conclusion of each contract in this regard if it was concluded with a person with whom they are not in an employment relationship or if, under such a contract, no work is performed for the employer.

Firstly, the obligation to report a concluded contract for specific work will rest with contribution payers within the meaning of the Social Insurance System Act. However, the contribution payer will not always be a specialised or ‘institutional’ entity. The list of contribution payers is quite extensive and includes primarily organisational units and natural persons associated with other entities by a legal relationship constituting a title to social insurance. Contribution payers include, among others, principals in relation to contractors (provided that social security contributions are due under the contract of mandate), persons conducting non-agricultural business activity in relation to persons cooperating in the conduct of that activity, or an entity in which a supervisory board operates - in relation to members of supervisory boards.

However, so-called ‘internal contracts’ - concluded with one's own employee or performed for one's own employer - are excluded from the reporting obligation. Apart from these ‘literal’ exceptions, the new reporting obligation will not affect legal persons who, even if they operate within a capital company, do not have the status of contribution payers. An example of such a situation would be limited liability companies of a holding nature. If such a company entrusts someone with the performance of a work, then – according to the literal wording of the regulations – it will not have to report the concluded contract.

In addition to contribution payers, the reporting obligation has also been imposed on natural persons. Therefore, if from 2021 we privately commission, for example, an interior design project or a painting, concluding a contract for specific work with the contractor, the obligation to report the contract to the Social Insurance Institution (ZUS) will also apply.

Who will be subject to reporting?

The catalogue of entities performing contracts for specific work reported to ZUS includes not only natural persons who do not conduct business activity, but also entrepreneurs performing work as part of their business activity (B2B). Furthermore, due to the lack of subjective restrictions on the parties to this legal relationship, it can reasonably be assumed that contracts concluded with legal persons will also be subject to reporting.

Such a broad catalogue of entities subject to reporting is not reflected in the draft Regulation. The consulted template of the ‘RUD’ form used to report specific-task contracts provides space for indicating the personal data of natural persons (e.g. PESEL), and not entrepreneurs (NIP, KRS). Presumably, therefore, the inclusion of entities other than natural persons in the provisions was not intended by the legislator. This conclusion is supported by the fact that persons conducting business activity are, as a rule, subject to social security regardless of the contract performed.

Will specific task contracts concluded before 1 January 2021 be subject to the reporting obligation?

No. The wording of the provisions leads to the conclusion that the reporting obligation will apply from 1 January 2021 and will concern contracts concluded from that date. Contracts concluded earlier and performed after the date of entry into force of the new provisions should not be subject to reporting.

When will the reporting have to be done?

The contracting authority will have exactly 7 days from the date of conclusion of the contract for specific work to inform the Social Insurance Institution (ZUS) about it.

How will the reporting be done?

On the ZUS-RUD form, a template of which is available on the website of the Government Legislation Centre together with the draft Regulation and is currently being reviewed by the public.

What information will need to be reported?

In addition to the details identifying the entity ordering the work and its contractor, the draft ZUS-RUD form requires the subject of the contract, the number of specific task contracts concluded, the dates of their conclusion, and the start and end dates of the work to be indicated.

It is worth noting that the last two pieces of information may not be known to the entity making the notification. The date of commencement and formal completion of work on the project does not have to coincide with the duration of the contract for specific work or the date of its delivery to the ordering party. Perhaps this ambiguity will be addressed in possible amendments to the draft form or subsequent practical guidelines from the Social Insurance Institution (ZUS).

Why was the obligation to report specific-task contracts introduced?

The explanatory memorandum to the Shield 1.0 draft indicates that the purpose of introducing the obligation to report specific-task contracts is to enable ZUS to verify the existence of social security obligations for persons performing contracts referred to as specific-task contracts. It was also noted that the proposed amendment would enable the sharing of information on specific-task contracts with the minister responsible for public finance.

The above was repeated in the justification for the draft Regulation, which additionally points out that the registration of specific task contracts may in the future increase the effectiveness of assistance to persons who currently remain outside the social security system. However, the details of this additional objective have not been described.

It is worth noting that reporting a contract for specific work to the Social Insurance Institution (ZUS) does not entail an obligation to pay social security contributions on income from such a contract. This is because contracts for specific work remain outside the scope of social security coverage. However, considering what appears to be the main objective indicated by the legislator, it can be assumed that thanks to the registration of specific task contracts, ZUS will be able to more easily control and ‘reclassify’ such contracts into other types of contracts that give rise to insurance obligations. Additionally, if the parties to a contract for specific work operate on a ‘renewable’ basis and formally conclude separate contracts for specific work at regular intervals, ZUS will have the right to question each of them (up to 5 years back) during an inspection.

How to prepare for the new reporting obligation?

First of all, it is worth reviewing the model contract for specific work used in the organisation to ensure that it does not contain provisions typical of other types of contracts, e.g. contracts of mandate. Regardless of this, it is also worth reviewing the practice of concluding specific task contracts to ensure that the services contracted under such contracts qualify for this form of cooperation and, if necessary, making appropriate adjustments. This will reduce the risk of specific task contracts being reclassified in the event of a future ZUS inspection.

 

[1] Act of 13 October 1998 on the social insurance system (Journal of Laws 1998 No. 137, item 887, as amended)

[2] Act of 31 March 2020 amending the Act on special solutions related to the prevention, counteracting and combating of COVID-19, other infectious diseases and crisis situations caused by them, and certain other acts (Journal of Laws of 2020, item 568) (‘Shield 1.0’)

[3] Draft Regulation of the Minister of Family and Social Policy on the determination of forms for social security and health insurance notifications, personal monthly reports and personal monthly correction reports, contribution payer notifications, settlement declarations and correction settlement declarations, notifications of data on work in special conditions or of a special nature, information reports, statements of intent to submit information reports, information on concluded specific-task contracts and other documents (‘Regulation’)