The second of the publications in series “12 Rules of the Cross-Border Secondment of Employees” focuses on separation of two different concepts – secondment to Poland and from Poland and business trip of the employee. In this series we will present the most important issues related to the process of seconding employees to Poland and from Poland. Each publication will present an individual issue in details. The entire series of articles will be a compendium of general knowledge on the cross-border secondment.
The meaning of a business trip – Polish regulations
The Polish legislator mentions about business trip in the article 775 § 1 of the Act – Labour Code pursuant to which:
An employee who performs work assigned by the employer away from the location of the employer’s registered office, or away from his permanent workplace, is entitled to reimbursement of any expenses related to business travel.
At the same time the quoted article defines what conditions the employee’s journey must meet to be called a business trip in the meaning of law. Those are:
- employer’s order,
- realization of a work task,
- work outside the permanent place of work and employer’s registered office.
It is worth also to point out, that employee’s business trip has an incidental, occasional and temporary character. It is not a long-term trip or permanent transfer.
The Polish legislator didn’t introduce any regulation that would directly define the maximum duration of a business trip. Nevertheless, from regulations of the Act – Labour Code it can be indirectly deduced that a business trip can last maximally up to three months during the year. In case of exceeding above mention limit, employer must complete additional formalities related to the employment relationship between the parties.
Remuneration due and paid to the employee for the duration of the business trip is – in principle – taxed and subject to social security contributions in the country from which the employee has been posted.
The concept of secondment
Secondment is defined as the event of sending employees for a long period to work in a place other than a one specified in the employment contract concluded between the parties of the employment relationship. Thus, the obligation of the Polish employer is to change the terms of the employment contract, e.g. in the additional annex to the contract. This is a main difference between a business trip and secondment, because a business trip does not require the employee’s consent, while the conditions of the secondment must be accepted by the employee.
Additionally, secondment requires the employee to change the place of living or at least to take on a temporary place of living.
Employee relocation may have national or international coverage. In the case of cross-border seconding of workers, the duration of the relocation have influence on the place of income taxation.
When it comes to social and health insurance, it should be indicated that the income is contributed in the country to which employee has been seconded, unless the employee has a valid A1 certificate (more on that in the following publications of the series).
Questions and doubts
Unfortunately, practice shows that there are still doubts – when an employee’s work in a place other than the employer’s registered office should be considered as a business trip, and when it should be treated just like a secondment. This is undoubtedly due to the fact that the time frame of the business trip has not been specified directly by a Polish law regulations.
The accepted three-month period of a business trip is based on the regulation concerning the need to formally change the contract. According to Art. 42 § 4 of the Act – Labor Code:
Notice of termination of the current terms and conditions of work and pay is not required in cases when an employee is assigned work other than that specified in the contract of employment for a period not longer than 3 months in a calendar year, if justified by the employer’s needs, unless this reduces the employee’s remuneration and is inappropriate to the employee’s qualifications.
To summarize, when making a distinction between delegation and secondment, particular attention should be paid to the duration of the analyzed event. The accepted maximum period is 3 months. Nevertheless, each case should be analyzed individually. The distinction between these two concepts is extremely important due to the separate formal, tax and social insurance consequences.
The series of “12 Rules of the Cross-Border Secondment of Employees” consists of the following articles:
- Cross-border secondment of employees
- Secondment and delegation
- Employee seconded to work in Poland
- Employee abroad – taxes in Poland
- Secondment – social and health insurance
- Secondment – documentation
- Secondment – double taxation agreements
- Secondment – income taxation in different countries
- Secondment – annual tax return
- Cross-border secondment of workers Directive
- Secondment – tax advisor assistance
- Secondment – additional questions