SK&S’ attorneys, headed by Sławomir Łuczak and assisted by Stanisław Gordziałkowski and Agata Miętek, obtained a favorable court judgment for a leading producer of brass bathroom fittings before the Regional Court (case ref. III U 899/15) in a precedent-setting case concerning the classification of the social security designations of over 100 agreements on cooperation with sub-contractors.
As a result of an inspection, ZUS (the Social Security Office) questioned agreements on cooperation with sub-contractors who were natural persons and who were self-employed. ZUS stated that the legal relationship binding the Company with the sub-contractors reflected the terms and conditions of an employment contract, in particular in view of the fact that the work was performed only in the Company’s facility, on Company machines, from Monday to Friday, under Company supervision, and in a way organized and planned by the Company. In the course of an inspection lasting more than 6 months, ZUS questioned over a hundred witnesses, filed a notification with the District Prosecutor’s Office on the suspicion on the commission of an offense against employee rights, and initiated a simultaneous inspection by the State Labor Inspection.
In connection with irregularities committed by ZUS when carrying out evidentiary tasks, including in particular that of questioning a large number of witnesses in a group in a manner which it was impossible for the Company to take part in these tasks, the Company filed – under the procedure contained in the Act on the freedom of business activity – a number of objections to the manner in which the inspection was carried out. In a number of decisions, ZUS refused to initiate proceedings in the matter of examining the objections. These decisions were upheld by the ZUS President. The Company filed complaints with the Voivodship Administrative Court in Warsaw (“VAC”), which in two judgments of 18 June 2015 (case ref. V SA/Wa 937/15 and V SA/Wa 936/15) declared the invalidity of the decision of the ZUS President and of the decisions of ZUS as having been issued without legal grounds.
The above judgments of the VAC cast doubt over the correctness of the evidence proceeding of ZUS, which had been carried out in spite of the fact that the objection had not been examined, which resulted in the automatic conclusion of the ZUS inspection. In spite of this, ZUS issued – on the basis of this evidence – over 100 decisions specifying arrears in ZUS contributions of the Company as payer, resulting from classifying sub-contractors as Company employees.
The Company filed an appeal against each decision of ZUS with the Regional Court, pointing out, among others, that the sub-contractors independently carry out assignments for the Company which merely inspects the effect and does not keep a record of the work time of the sub-contractors. Moreover, the Company emphasized that the concluded agreements on cooperation are based on the principle of freedom in concluding agreements. In the course of the proceedings, the Court once again questioned over 100 sub-contractors, whose depositions were not consistent (some confirmed the Company’s position, some did not). Moreover, the Court carried out scores of other evidence-related tasks. A key element in the case was also an expert opinion which confirmed that technically it is possible to execute elements of brass bathroom fittings in the Company facility in a sub-contract system carried out by mutually independent business entities, where each carries out an assignment independently of the others.
Ultimately, after approximately a year and a half of court proceedings, the Court issued a judgment in which it changed ZUS’ decision and stated that agreements on cooperation were concluded by the Company within the scope of the civil law freedom to conclude agreements and though they contain certain elements of an employment contract, they are not, however, employment contracts.