By Dr Robert Lewandowski, attorney at law (radca prawny) at Derra, Meyer & Partners in Warsaw
On 29th March 2017 the Polish Supreme Court issued a ruling according to which conducting business activity may be subject to insurance instead of insuring managerial contracts even when this activity is provided for one entity. The ruling was rather surprising favouring managers of companies engaged through managerial contracts and referred to the following case.
A company based in Poland had been operating within the market of press distribution. At the beginning of 2013, the Polish Social Insurance Institution (abbreviation “ZUS”) which is a state owned organisation in Poland governing social insurance matters, questioned rules of engaging many managers (not being directors) within this company who also conducted business activities and as a direct consequence of this, they ended up paying lower insurance charges. ZUS was of the opinion that choosing a business activity as the basis for insurance was legitimate as the reason for this was to exempt the company from its obligation to pay much higher insurance charges as it counted on income generated due to the managerial contracts. As a result, ZUS requested additional insurance fees (many millions of Polish Złoty) from the company who objected to this decision and the matter was finally brought to a district court which decided in favour of the company. ZUS launched an objection to court of appeal which overruled the decision of the court of the first instance arguing that the company should pay additional insurance fees due to the fact that it is not possible to use a managerial contract and provide business activities on a freelance basis at the same time.
The Supreme Court set the judgment of the court of appeal aside stating finally that it is acceptable – in the case of managers – to choose the basis for insurance referring to managerial contracts or freelance status. This rule does not apply to members of the management board of companies (directors) in Poland who are obliged to insure their work provided on the basis of contracts concluded with their company. The recent judgment of the Polish Supreme Court shows a different treatment between company managers and directors in terms of their insurance and is of benefit to companies engaging mangers and less favourable for ZUS which – following the Supreme Court decision – should change their previous policy on insurance of managers.
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