The "two companies" model (parent and subsidiary), why it does not protect you from PIP

The “two companies” model (parent and subsidiary), why it doesn’t protect you from PIP

Why “two companies” looks like protection, and why it’s an illusion

The “two companies” model doesn’t protect you from PIP, because Polish labor law looks at who actually organizes the work, not at which company formally signs the contract and transfers the money. The logic we often hear from business owners goes like this: if the contract is signed with a foreign parent company and the money comes from abroad, then a Polish labor inspector has nothing to do with it. That’s a common and expensive mistake.

The typical structure we see in audits looks like this: the parent company (Polish: spółka dominująca or spółka-matka, registered in the US, Cyprus, the UK, or another country) signs B2B contracts with contractors and pays their fees, often through a payment hub like Deel or Remote. Meanwhile, the Polish subsidiary (spółka zależna, spółka-córka) provides the office, issues equipment on the first day of work, administers leave and sick pay through an HR system, pays for health insurance, and runs day-to-day management through Jira, Slack, or similar tools. Formally, the contractor never signed anything with the Polish company.

The name of the legal entity paying the fee doesn’t determine jurisdiction: what matters is the physical place where the work is performed and who actually organizes that work day after day.

We’ve already written, in the series article “Who risks losing B2B status after the PIP 2026 reform,” that companies with dozens of contractors on the same model carry systemic risk, because the expanded Article 13 of the PIP Act lets an inspector check all of an employer’s contractors at once, not just the one who filed a complaint. A two-company structure doesn’t take a company out from under this systemic risk, it just adds a second layer of complexity: now you have to work out which of the two companies is actually responsible for what.

Who’s actually the “employer” under Polish law in a group of companies

Under Article 3 of the Labor Code, the employer is a specific organizational unit that independently employs workers, not the whole holding or group of companies it belongs to. This is called the managerial concept of the employer (koncepcja zarządcza pracodawcy): what decides isn’t ownership of assets or capital links, but who actually organizes the process of hiring and work⁷.

There’s an important nuance often oversimplified into the wrong conclusion: the Supreme Court of Poland (Sąd Najwyższy), in a resolution of 16 June 2016 (III UZP 6/16), explicitly established that the employer and the contribution remitter is a specific company within a holding structure, not the holding structure itself². This means the mere fact that a parent and a subsidiary exist within the same group doesn’t create automatic joint liability for both companies. Each company in the group is liable for its own workers separately, unless proven otherwise.

This is the nuance usually missing from general explanations of the PIP reform: the rule doesn’t work such that “a holding is always one employer.” But that’s exactly why the next mechanism, the real-employer doctrine, is more important than the group’s formal structure, not less.

When a court “pierces the veil” of a legal entity and recognizes the real employer

When a parent company creates or uses a subsidiary specifically to formally attach a contractor to a subordinate entity with no assets of its own, a court or ZUS can apply the “piercing the corporate veil” doctrine (unoszenie zasłony osobowości prawnej) and recognize as the real employer the company that actually benefits from and directs the work.

The Supreme Court of Poland formulated this doctrine back in a seven-judge resolution of 23 May 2006 (III PZP 2/06) and has consistently applied it in subsequent cases, including a ruling of 18 September 2014 (III PK 136/13)³. The court stated directly: if the legal entity formally employing the worker has no assets of its own, isn’t a ZUS contribution remitter, doesn’t independently pay wages, and effectively performs the function of a nominal “HR department” for another company in the group, then it’s that other company, the one that actually directs the work process and benefits from it, that’s recognized as the real employer⁸.

The practical takeaway for the “two companies” model is direct: a court doesn’t look at which company signed the contract and made the bank transfer, but at the sum total of actual functions. Who supplied the equipment. Who keeps track of leave. Who pays sick leave. Who actually controls day-to-day work through managers and reporting systems. No single one of these functions decides the case by itself, but together they form the picture the court uses to determine who the “real” employer is.

Example 1. A design studio in Kraków signed a contract with a dozen contractors through its parent company registered in the UK. The UK company transfers fees every month, and concludes and signs the contracts themselves. The Polish subsidiary only rents coworking spots for contractors at clients’ request, who themselves decide whether to go there, and doesn’t take part in any other aspect of the arrangement: it doesn’t issue equipment, doesn’t administer leave, doesn’t set a schedule. The contractors have several other clients and decide themselves when and how many hours to work. Is the Polish subsidiary a “real employer” here under the piercing-veil doctrine?

No. The subsidiary doesn’t perform any of the functions characteristic of an employer: it doesn’t organize the work process, doesn’t control the schedule, doesn’t administer social benefits. The formal UK structure here matches the actual division of functions rather than concealing it.

Example 2. A product IT company has a parent company in the US that signs B2B contracts with 22 contractors in Warsaw and transfers them a fixed amount every month through a payment hub. The Polish subsidiary rents an office, issues each contractor a company laptop on their first day, administers leave and sick pay through an HR system, pays for health insurance, and runs day-to-day management through internal reporting systems. The schedule is hybrid and set by the company, not by the contractor. Does the Polish subsidiary risk being recognized as the real or jointly liable employer?

Yes. The subsidiary performs exactly the set of functions that a court and a PIP inspector treat as signs of work organization and social provision characteristic of an employer: equipment, HR administration, direction. The formal two-company structure here doesn’t hide the distribution of risk, it just splits liability between two companies, each responsible for its own part of the employer’s functions.

The difference between these two examples isn’t the name of the structure, it’s exactly how many employer functions the Polish company actually performs. One coworking spot at the contractor’s discretion isn’t the same as equipment, an HR system, and a schedule all at once.

Why paying from abroad doesn’t save you, the Rome I principle

The currency of payment, the client’s country of registration, and even the law chosen in the contract don’t change whether Polish labor law applies, if the work is actually performed on Polish territory. We already broke down this mechanism in detail in the series article “PIP 2026 and the IT industry: why developers are in the highest-risk zone” with respect to payments through Deel and similar platforms, and the same principle applies to any model with a foreign parent company.

Regulation (EC) No 593/2008 “Rome I” establishes that for an employment contract, the mandatory protective rules of the country where the worker actually and habitually performs the work apply regardless of what law the parties chose in the contract⁴. That means: even if a contract with a parent company in the US or Cyprus is written under American or Cypriot law and formally titled a “services agreement,” Polish labor law still applies to the actual working conditions if the contractor physically works in Poland.

The expanded Article 13 of the PIP Act adds another layer on top: an inspector has the right to check a foreign company too, even when it has no Polish office or representation, requesting legal assistance from a foreign authority when needed⁵. And if a Polish subsidiary exists and actually organizes part of the work, the inspector doesn’t even need to seek international legal assistance: it controls a company physically present in Poland.

What an inspector actually checks in the “parent and subsidiary” model

A PIP inspector, in a two-company model, doesn’t ask “who signed the contract,” they split the employer’s functions between the two companies and check each one separately against the criteria of Article 22 § 1 of the Labor Code. This is the part of an audit business owners most often overlook, because it requires looking at the group as a single operating model rather than two separate contracts.

In practice, the typical division of functions looks like this:

When these functions are split between two companies as shown above, neither company is a “pure” service buyer in the B2B sense: one handles the financial and contractual administration, the other handles work organization and social provision. Together they reproduce the full set of employment features that, if it were a single company, would almost certainly lead to reclassification.

We’re preparing a detailed breakdown of the full set of these risk factors, using a real holding structure with two legal entities, in a separate series article on the two-company case study, where the biggest risk hides. Here, what matters is establishing the principle itself: splitting functions between companies doesn’t remove any of the features of Article 22 § 1 of the Labor Code, it just splits liability for those features between two legal entities.

The extra risk nobody mentions, a permanent establishment for CIT purposes

When a foreign parent company actually directs work through a Polish subsidiary that provides it with an office, staff, and infrastructure, a separate tax risk arises: the parent company being recognized in Poland as having a “foreign establishment” (zagraniczny zakład) for CIT tax purposes, regardless of the outcome of the labor-law analysis.

The CIT Act defines a foreign establishment as a fixed place through which a foreign entity conducts business in another country’s territory, including a representative office or an office, or as a dependent agent who actually concludes contracts on that entity’s behalf⁶. This definition applies subsidiarily, meaning only when the relevant double-taxation treaty between Poland and the parent company’s country doesn’t state otherwise, so the final assessment always requires analysis of the specific treaty. If a Polish subsidiary actually organizes contractors’ work in the parent company’s interest, tax authorities may treat this as a sign of the parent company having a permanent establishment in Poland, which means an obligation to register as a CIT taxpayer and to pay tax in Poland on the portion of profit attributable to that activity.

This isn’t an alternative to labor-law reclassification risk, it’s a separate, additional risk arising from the same factual picture: the more deeply the Polish subsidiary is involved in organizing work for the parent company, the higher both the labor and the tax risk become at the same time. Assessing this risk always requires a separate tax analysis taking the specific double-taxation treaty into account, so here we’re only flagging that this layer of risk exists, not assessing any specific situation.

Why registering a second company doesn’t scale protection

Adding a second legal entity to a structure doesn’t reduce the systemic risk of reclassification, it just splits the same risk between two companies, each of which can be liable for its part. Business owners sometimes view the two-company model as a risk-diversification tool, by analogy with financial instruments. That’s a flawed analogy: in labor law, risk doesn’t split in half between two companies, it’s assessed for each company separately, based on the full set of its own functions.

If a company with 20-30 contractors decides to split functions between two legal entities specifically to make the analysis harder for a PIP inspector, rather than for a genuine operational reason, that increases rather than decreases risk: the “piercing the corporate veil” doctrine described above is specifically aimed at structures whose purpose is evading obligations to workers³. The motive behind the structuring matters: a genuine operational division of functions between a parent and a subsidiary (for example, when the subsidiary runs a separate local business rather than just servicing the parent company’s contractors) looks different to a court than a structure built exclusively around a group of contractors with no other business purpose.

What a company owner with a two-company structure should do this week

1. Build a table of functions, like the one above, for your own structure. For each contractor, list which company performs each of the six functions: contract, payment, office, equipment, HR administration, management. If the Polish company performs three or more functions, that’s already a signal of elevated risk.
2. Check whether the Polish subsidiary runs its own business activity separate from servicing contractors. If the subsidiary’s only function is supporting the parent company’s contractors, the argument for a genuine business-based split of functions is much weaker.
3. Assess the permanent-establishment risk for CIT purposes separately with a tax advisor, if the Polish company provides an office, staff, or direction for the parent company.
4. Don’t add a second legal entity as a reaction to PIP 2026 news without changing the actual organization of work. Creating a second company without changing who actually issues equipment, administers leave, and controls the schedule doesn’t change the legal assessment of the situation.
5. Check every B2B contract against the four features of Article 22 § 1 of the Labor Code separately, as described in the series article “7 signs your B2B contract is disguised employment,” regardless of which company signed it.

Frequently asked questions

If a contractor never signed anything with the Polish company, can it still be held liable? Yes, if the Polish company actually performs employer functions (equipment, HR administration, direction), a court can recognize it as the party to the actual employment relationship regardless of who signed the formal contract³. The absence of a signature doesn’t exempt a company from liability when actual conduct matches the features of an employer.

Does two companies belonging to the same holding mean automatic joint liability for both? No. The Supreme Court of Poland explicitly established that the employer is a specific company within the group, not the whole holding, and a mere capital link between companies doesn’t create automatic joint liability². Liability arises from actually performing employer functions, not from the corporate structure as such.

Does it help if the parent company is registered in a country Poland has no legal assistance agreement with? No. The expanded Article 13 of the PIP Act allows an inspector to check directly the person performing the work in Poland, even if the foreign company is unavailable for direct oversight⁵. And if a Polish subsidiary exists in the structure, the inspector checks it directly, since it’s physically present in Poland.

Does this risk only apply to IT companies? No. The “parent abroad, subsidiary in Poland” model is typical for consulting, product companies, outsourcing, and any business where a foreign owner wants to hire a team in Poland without opening its own full-fledged office. The function analysis in the table above applies the same way regardless of industry.

Is it enough to just rename the contract from B2B to a cooperation agreement with the holding to avoid the risk? No. The contract’s title and the number of legal entities involved don’t matter for the assessment under Article 22 § 1 of the Labor Code: what matters is the actual way the work is performed⁹. Renaming without changing the actual organization of work doesn’t change the legal assessment.

How much time is there to restructure without a fine? Until 8 July 2027, a one-year window is open for voluntarily transitioning to an employment contract without a fine under Article 281 of the Labor Code for past improper documentation¹⁰. This window doesn’t cover ZUS debt for past periods, which is counted under a separate five-year limitation period, so the sooner a structural audit is done, the smaller the financial exposure.

What to do with this information

A two-company structure is exactly the case where checking one contract doesn’t give the full picture: you need to assess the division of employer functions between two legal entities at once, not each contract separately. MojaFirma offers two formats depending on your situation.

If you work on a JDG yourself, and your client has a parent-and-subsidiary structure. The basic format is an online B2B audit: fill out a questionnaire describing which company performs which functions in your arrangement, and within 48 hours you get a report with a risk category and three priority recommendations.

If you’re the owner or HR of a company with a holding structure and several B2B contractors. Assessing the division of functions between a parent and a subsidiary requires a larger format, a B2B operating model audit, which analyzes both legal entities’ contracts, the actual division of functions (office, equipment, HR, management), and, if needed, brings in a preliminary assessment of permanent-establishment tax risk.

Sources

1. Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), Art. 8
2. Resolution of the Supreme Court of Poland of 16 June 2016, ref. III UZP 6/16 (the employer is a specific company within a capital group, not the whole holding)
3. Judgment of the Supreme Court of Poland of 18 September 2014, ref. III PK 136/13 (the real-employer concept, a doctrine based on the 7-judge resolution of the Supreme Court of 23 May 2006, III PZP 2/06)
4. Regulation (EC) No 593/2008 (Rome I), Art. 8 (protective rules of the country of employment apply regardless of chosen law)
5. Act of 11 March 2026 amending the Act on the National Labour Inspectorate and certain other acts, Dz.U. 2026 poz. 473, Art. 1 (expanded Art. 13 of the PIP Act, including Art. 23a on legal assistance from foreign authorities)
6. Act of 15 February 1992 on Corporate Income Tax, Art. 4a(11) (definition of a foreign establishment)
7. Labor Code, Art. 3 (definition of an employer, managerial concept)
8. Judgment of the Supreme Court of Poland of 18 September 2014, ref. III PK 136/13
9. Labor Code, Art. 22 § 1 (four elements of an employment relationship: type of work, direction, place and time, remuneration)
10. Dz.U. 2026 poz. 473, Art. 16 (voluntary adjustment period until 8 July 2027); Social Insurance System Act, Dz.U. 2026 poz. 199, Art. 24(4) and 24(5h) (5-year limitation period for ZUS contributions)

This article does not constitute legal advice. Every situation is individual and depends on the specific division of functions between the group’s companies and the circumstances. Author: Valerii Kushnirskyi, in-house legal practitioner at MojaFirma. Last reviewed: 24 July 2026.