Warning Signs in Cooperation with a Staffing Agency
The way an agency employs workers and settles accounts with them matters to the company that uses their work. Unclear pay rules can lead to resignations, and gaps in documentation can make it harder to start work on time. Irregularities on the agency’s side can also result in inspections, the need to remove workers from work, liability in respect of the user employer’s obligations and reputational losses. That is why, when choosing a staffing provider, it is worth checking what assumptions lie behind the low price of the service on offer.
The Gremi Personal Analytical Center, based on an analysis of market practices, has identified six recurring schemes that appear in cooperation with agencies employing foreign nationals, including citizens of Ukraine. These schemes usually allow an agency to offer a clearly lower price or a more attractive rate for candidates, but they shift the risk onto the workers and the company that uses their work. They concern both settlements with workers and the organization of cooperation with the company. The conditions offered to workers should be part of the assessment of an agency’s service quality: for a manufacturing company or a logistics center, a gap between those conditions and the actual terms of employment means workers leaving and the need to onboard new people again and again.
1. Cutting costs through a fictitious student status
A pupil or student under the age of 26 working under a contract of mandate (umowa zlecenia) is exempt from ZUS (Polish Social Insurance Institution) contributions. Their work is therefore clearly cheaper, and this is precisely how some agencies justify the low price of their services. There are cases on the market of student status being confirmed with fictitious certificates: documents from non-existent universities, forged certificates or certificates of a formal entry on a student list without actual study.
The contribution exemption applies only to genuine student status. It expires on the day studies are completed or interrupted or the person turns 26, and does not apply when the mandate is performed for the person’s own employer, with whom they are simultaneously employed under an employment contract. If the status turns out to be fictitious, ZUS may assess back contributions for the entire period of work.
If an agency’s offer relies mainly on students, the company should establish how the agency verifies the authenticity of the certificates: whether it confirms the status directly with the university, whether it checks that the university actually exists and is recognized, and how often it updates the documents, for example every semester. A certificate in an employee’s file alone does not guarantee that the exemption is applied lawfully.
2. Delayed registration of the worker for insurance
Information that a worker will be registered with ZUS only after a probationary period or after the first month of work should raise alarm. Insurance coverage arises from the first day of work, and registration is made within 7 days. A probationary period under an employment contract changes nothing in this respect.
For a contract of mandate there are statutory exceptions, for example the exemption of students up to the age of 26 (more in point 1) or a situation in which the worker has another basis for insurance (coincidence of insurance titles) and some contributions may not be assessed. These exceptions depend on the situation of the individual and should be confirmed by documents, rather than applied by default to all workers.
That is why it is worth providing in the contract with the agency for control tools, for example periodic presentation of certificates of no arrears with ZUS and the tax office, a declaration by the agency that it meets its insurance obligations, or the right to spot-check documents. A verbal assurance alone that “all formalities have been completed” does not give the company any real ability to verify.
3. Part of the pay outside the official settlement
A warning sign is a situation in which part of the agreed pay does not appear in the payroll documentation. Payment in cash alone does not in itself indicate an irregularity: under an employment contract it is permissible at the employee’s request, and under a contract of mandate it depends on the parties’ arrangements. An irregularity is, however, the payment of amounts that are not recorded in the payroll documentation or in the settlement of taxes and contributions.
The company should ask the agency to present the structure of the rate: what part of it goes to the worker’s pay, contributions and other employment costs, and what part constitutes the agency’s margin. If the price of the service approaches the minimum cost of legal employment or is below it, it is worth establishing how the agency achieves this and whether it includes the full costs resulting from the adopted cooperation model.
4. Treating workers as Ukrainian tax residents so as not to withhold Polish PIT (personal income tax)
Some agencies promise candidates a higher net amount by groundlessly treating them as tax residents of Ukraine and not withholding Polish PIT. Non-resident status does not, however, exempt a person from taxation in Poland in and of itself. Income from work performed in Poland for a Polish employer is, as a rule, taxable in Poland.
Moreover, tax residence cannot be freely chosen. It results from actual circumstances: a person who stays in Poland for more than 183 days in a tax year or has moved their center of vital interests here becomes a Polish tax resident regardless of any foreign certificate they hold.
Doubts should be raised by a situation in which an agency treats workers from Ukraine en masse as non-residents without analyzing their circumstances. If tax was groundlessly not withheld, the agency, as the withholding agent, will have to pay it with interest, and workers may receive summonses from the tax authorities. The agency’s client should therefore establish whether the agency withholds Polish tax, what proportion of workers is settled as non-residents and on what basis.
5. Discrepancies between the job offer and the pay rules
The rate advertised in a job posting may include an attendance or performance bonus. The risk arises when the candidate learns the conditions for obtaining it only after starting work.
For the company, such a discrepancy may mean the departure of people in whose onboarding time has already been invested. It is worth agreeing with the agency the content of recruitment communication, so that the candidate knows, before arriving, what part of the pay is guaranteed and what the rest of the pay depends on.
6. An assurance that the agency takes over all of the company’s obligations
In temporary work, some obligations by law remain with the user employer, and an agency’s general declaration that it assumes “full responsibility” does not change this. The company in particular ensures safe and hygienic working conditions and conducts workstation instruction, and also keeps records of temporary workers’ working time on the same terms as for its own employees and passes this data to the agency for the calculation of pay. In addition, it keeps records of all persons performing temporary work for it, including under civil-law contracts. A temporary worker may not be treated less favorably than the company’s own employee in the same position, and may work for a single user employer for no longer than 18 months within a period of 36 months.
Before cooperation begins, the parties should establish in writing who carries out particular tasks and how, including who provides work clothing and personal protective equipment. The company needs clear information on what steps it must take before admitting workers to work.
How to assess an agency’s offer
Verification of a partner is worth starting with the basic data: a current entry in the National Register of Employment Agencies (KRAZ) with authorizations appropriate to the planned service, data in the KRS (National Court Register) or CEIDG (Central Registration and Information on Business), and a bank account on the VAT taxpayers’ “white list”. It is also worth asking for current certificates of no arrears with ZUS and the tax office.
Next, the agency should be asked to present the structure of its rate, and it should be compared with the minimum cost of legal employment. Offers from different agencies must be compared on the same assumptions: the form of contract, the method of taxation and the work schedule. If an offer relies on students or on workers settled as non-residents, it should be established what proportion of employees they make up and how the agency verifies their status.
To assess whether the conditions promised to candidates correspond to actual employment, it is worth asking for templates of the job posting, the contract with the worker and information on deductions for accommodation and travel. It is also worth asking for references from other clients.
Finally, the contract with the agency should set out the division of duties, the way registrations of workers for insurance are confirmed, the right to spot-check documents, and the rules for handling workers’ complaints and clarifying discrepancies in payments. The transparency of these rules allows the company to plan its staffing and budget and to assess whether cooperation with the agency provides a basis for stable work.