Sending an employee to work in another country can take the form of a business trip or a secondment. Both of above mentioned ways to post employee give rise to various consequences under labor law, tax law and insurance law. Due to the lack of a definition of business trip, there are doubts as when a business trip becomes a secondment.

The second of the publications in series “12 Rules of the Cross-Border Secondment of Employees” focuses on separation of two different concepts – secondment 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.

According to the resolution of seven judges of the Supreme Court (II PZP 11/08), a business trip is of a temporary and short-term nature and constitutes something unique in the overall duties of a given employee, boiling down to the performance of a task specified by the employer.

The legislator did not introduce a provision that would directly determine the maximum duration of a business trip. Nevertheless, it can be indirectly concluded from other provisions of the Labor Code that a business trip may last up to three months in total per year. Exceeding this deadline requires completing additional formalities related to the employment relationship between the parties.

Remuneration paid to an employee for the duration of a business trip is, as a rule, taxed and subject to contributions in the country from which the employee was sent.

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The concept of delegation

Secondment is defined as the phenomenon of sending employees for a longer period to work in a place other than that specified in the original employment contract. Therefore, the employer is obliged to formally change the terms of the employment contract, e.g. in the form of an additional annex to the contract. This is the key difference between a business trip and a delegation, because while a business trip does not require the employee’s consent, the terms of the delegation must be accepted by the employee.

Delegation also involves the employee having to change his place of residence or accept a temporary place of stay. Employee relocation may be domestic or international. In the case of cross-border secondment, the duration of relocation may affect the place of taxation of income.

In the EU, EEA and Switzerland, social security systems are coordinated. Additionally, there is a list of countries with which Poland has signed bilateral social security agreements. It should be noted that income is subject to contributions in the country of delegation, unless the employee has a current A1 certificate (more on this in subsequent articles in the series).

A business trip or a delegation – doubts

In practice, doubts often arise as to when an employee’s work in a place other than the employer’s headquarters should be considered a business trip and when it should be considered a delegation. This is due to the lack of a clear definition of the time frame of a business trip.

The assumed three-month period of a business trip is based on the regulation regarding the need to formally change the contract. Pursuant to Art. 42 § 4 of the Act – Labor Code:

Termination of the current working or remuneration conditions is not required if the employee is entrusted, in cases justified by the employer's needs, with work other than that specified in the employment contract for a period not exceeding 3 months in a calendar year, if this does not result in a reduction in remuneration and corresponds to the employee's qualifications.

When distinguishing between business trip and delegation, attention should be paid to the duration of the analyzed event. The accepted cut-off period is 3 months.

However, each case should be considered individually, because in addition to duration, other factors also influence the correct definition of the type of relocation. The distinction between these two concepts is extremely important due to the separate formal, tax and insurance consequences of each event.

Co-author: Karolina Nieścior, Tax advisory services

The series of “12 Rules of the Cross-Border Secondment of Employees” consists of the following articles:

  1. Cross-border secondment of employees
  2. Secondment and delegation
  3. Employee seconded to work in Poland
  4. Employee abroad – taxes in Poland
  5. Secondment – social and health insurance
  6. Secondment – documentation
  7. Secondment – double taxation agreements
  8. Secondment – income taxation in different countries
  9. Secondment – annual tax return
  10. Cross-border secondment of workers Directive
  11. Secondment – tax advisor assistance
  12. Secondment – additional questions

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