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Łukasz Łaguna  10 października 2019

Work of the future – what its new code might look like

Łukasz Łaguna  10 października 2019
przeczytanie zajmie 16 min

New forms of employment do not need to turn out a curse or a necessary evil for employees. The right adjustment of labor law will eliminate potential economic and social losses. The atypical nature of change does not necessarily mean a change for the worse. However, it is the responsibility of state governments to ensure that transformations do not lead to excessive atomization of society and exclusion of the most vulnerable individuals. British solutions may provide the groundwork for creating the Labor Code in a changing reality. Similar concepts have already been proposed by the Labor Law Codification Commission. Unfortunately, the several years of efforts by specialists have been swept under the rug.

A clear thesis should be stated. The labor market rushes forward, but the law regulating it fails to follow suit. To paraphrase the words of Heraclitus of Ephesus, the only constant thing on the labor market is change.

According to the Global Human Capital Trends 2019 research, 74% of respondents in our country expect a greater application of AI and new technologies in the economy over the next three years. According to a study by the Organization for Economic Cooperation and Development, presented in the Future of Work 2019 report, 20% of jobs in Poland are at risk of automation. This means that technological development may affect the employment of over 3 million Poles.

It is worth pointing out that according to the report False Alarmism: Technological Disruption and the U.S. Labor Market, 1850–2015 by the reputable technological think tank – Information Technology and Innovation Foundation (ITIF) – no technological revolution has caused a radical drop in employment. For the purposes of the study, the experts made an impressive analysis of censuses dating back to 1850 and confirmed that technological innovations created more jobs, not destroyed them.

The mechanism in the current transformation of the labor market is probably a similar one. None of the European countries recorded a significant increase in unemployment; on the contrary, the percentage of unemployed is dropping. The market reacts to changes by autonomously creating the so-called atypical forms of employment, which are associated with the departure from the standard 40-hour working week.

The challenges facing our generation are combined with the uncertainty associated with the implementation of new technologies and the gradual intensification of cooperation on the machine-human interface. Our predecessors have already dealt with similar issues. The history of industrial transformation and the economic approach to the potential technological revolution were described very well by Karol Wałachowski on our website.

On the other hand, our system is not adapted to the to the current changes . Poland ranks 30th among 41 EU and OECD countries assessed in the Employment Flexibility Index 2018, which measures the flexibility of code-compliant employment contracts.

Changes at the employee’s expense

Changes related to new technologies are not only an economic issue but above all a legal and sociological one. Unfortunately, Polish employers must be asked the following questions: are we, as a country, legally prepared to implement new technologies on the labor market? Do we have any idea how to cushion the negative effects and point out the positive sides of this situation?

The value of work is not only materialistic. To protect the public interest, we cannot perceive it as a kind of „commodity” that an employee „sells” to an employer, and the employees themselves as an anonymous „workforce”. Work is the foundation for shaping family life, which is a person’s natural right and vocation. As the creator of goods, an employee plays a central role in the entire sphere of social and economic policy. It should be recalled that work is a prerequisite for starting a family, as this basic social cell requires proper subsistence, which a person acquires precisely thanks to work (John Paul II’s Laborem exercens).

These theses lead to the principle of work’s priority over capital. This rule primarily applied to nineteenth-century industrial relations, but in my opinion, it is a universal principle. Proper and decent working conditions are a tracer of sorts, helpful in assessing the ethics and development of a given community.

(A)typical nature of work

What is the spreading “atypical nature” of labor relations all about? For the purposes of the article, let us assume that typicality will mean work arising from an employment contract, concluded for an indefinite period, performed under the employer’s management at a specific place and time, with a fixed and predetermined salary. The “typicality” of such a legal relationship is indicated by the Labor Code itself in Article 22 § 1.

The border between “typicality” and lack thereof is now becoming very blurry. Is a highly qualified manager in an international corporation performing their duties under someone’s direct supervision? Probably not, but they would usually get a contract of employment without any problems.

Is using an app to indicate to the food suppliers from Pyszne.pl the address they are to deliver the goods to, the same as performing work under the employer’s supervision, at the time and place designated by them? Even if we say so, drivers in apps that deliver us food have little chance of getting an employment contract, if they would be willing to accept it.

The Future of Work 2019 report cited above shows that the market naturally reacts to changes by increasing the amount of the so-called “atypical forms of employment”. In Polish conditions, this term refers mainly to:

– temporary work performed under the Act on the Employment of Temporary Workers;

– teleworking and remote work;

– work performed as part of task-related or mobile working time;

– work performed based on a fixed-term employment contract.

A contract of mandate is not a job

An entirely separate category involves the provision of services based on civil law contracts. Those working based on e.g. service contracts, mandate contracts, or specific work contracts often do the same things as “typical” or “atypical” employees.

Legally speaking, however, this is a completely different category, since civil law relations are governed by profit-oriented market rules. In essence, this means viewing capital as an element of human dignity, instead of work. In the case of employment relationships, other social values are crucial, such as protection of labor (health and safety regulations) or employment relationships (prohibition of employers’ terminating contracts in certain cases, e.g. with pregnant women). These elements are not protected by civil law contracts.

What is the difference? A person providing services based on a civil law contract is not entitled to paid leave, unlike an employee whom the Act grants an exact number of days (20 or 26, depending years of service).

Another difference is the lack of employment relationship protection for those employed under civil law contracts. Work can be terminated overnight, and the person providing services on such basis is essentially not entitled to any protective measures that would prevent the effects of immediate redundancy. On the other hand, protection applies during the notice period (its duration depends on employment, but it is not less than two weeks). This situation gives time to find a new source of income. It also involves life stability. It is difficult, however, to talk about economic security in a situation of continuous possibility of losing one’s job.

Moreover, what counts in civil contracts is the result. There is no remuneration without specific results. This means that if providing a service was not possible during a certain period, no salary will be paid. For example, a “civil employer” may refuse payment if the outcome of a work contract does not meet their expectations.

The Labor Code treats this situation completely differently. In this case, a salary becomes an essential element of the employment relationship, and the lack of payment usually ends in the employer losing a court trial. Importantly, if the employee actually did not perform any work, even though they were ready to do so, but it was impossible for reasons attributable to the employer, they are entitled to remuneration. The differences are also visible in the area of occupational health and safety. It is worth pointing out that those providing services based on civil law contracts are not obliged to perform periodic and mandatory examinations in terms of occupational medicine.

Therefore, there are profound differences between an employment relationship and a civil law relationship: the remuneration is entirely results-based, no notice period or the right for paid leave is provided. Unfortunately, civil relationships are increasingly replacing employment contracts. Meanwhile, the goal of every country should be to reduce the so-called shadow economy to a minimum.

Global problem

Withdrawing from standard contracts concluded for an indefinite period, with a fixed salary and fixed working hours is becoming more and more commonplace in Europe. This is confirmed by OECD reports – Future of Work 2019 and Eurofound’sLabour market change.

In OECD countries, the issue of atypical work is not a marginal one. Already every seventh person performs work under self-employment, and every ninth – based on a fixed-term employment contract. The reasons for the growing number of „atypical” forms of employment include: increasing digitization and automation, globalization. These factors affect the nature of the work performed and the expectations of employers and employees.

Using the experience of other countries is fully justified. The authors of the Future of Work report emphasize that new forms of employment do not need to be treated as a necessary evil. When maintaining proper standards, employees can be protected just as effectively as in the case of a traditional employment relationship. According to experts, the following standards are crucial:

– a ban on differentiating employees according to form of employment (this is a new potential form of discrimination in the workplace);

– extending all social guarantees to employees, irrespective of their form of employment;

– adjusting social security regulations to include “atypical workers”;

– replacing social measures whose use would be unduly hampered for ‚atypical workers’ with more universal ones.

Brits as a role model

The British legislation proposes a very interesting solution. There are two categories of working people there, i.e. employee and worker. Undoubtedly, no Polish translation could reflect the sense of these instances, but for the purposes of this paper, let us assume that the first term means a „contracted employee” and the second simply means an „employee”.

In its current sense, an employee, i.e. a contractual employee, is – in simple terms – in a similar legal situation to a person performing work based on an employment contract in Poland. This means that the employer controls their activities, their place and time, and the employee must work in person. In this case, the employer is also the payer of all necessary taxes.

Whereas the term worker is a broader category than employee. It includes people working both on the basis of an employment contract and those who personally provide services to the employer under other contracts. This group includes e.g. most agency workers, seasonal workers, and some freelancers. The worker status can also be granted to self-employed persons who usually provide specific services based on a civil law contract, running a business on their own and paying tax and social security contributions themselves. This depends on the actual work performed, as it cannot be excluded that in some situations both parties will prefer providing services exclusively under civil law.

Both workers and employees have certain fundamental rights, such as a minimum wage. The latter, however, have additional employment rights. These include e.g. the right to maternity leave, maternity or paternity benefits, statutory severance pay for employment reduction, protection against unjustified dismissal, as well as all other minimum statutory rights. Importantly, these people fall under employment law. The British breakdown shows one possible way to solve the problem of employment contracts being displaced by civil law contracts. Simply put: if you work, you have certain rights as an employee.

Polish caricature of new forms of employment

The problem was first made manifest when trying to define Uber drivers. Apart from the recently adopted law, the so-called “Lex Uber”, it is currently difficult to determine how the Labor Code defines a person providing services through the app . An Uber driver is neither self-employed nor an employee. It is rather an intermediate form between these instances. New technologies create previously non-existent forms of work and entities that we cannot classify in a way we know.

Our attempts to make employee forms of employment more flexible turned out to be only a caricature of an employment relationship. An example of this is the Act on the Employment of Temporary Workers, which creates the so-called temporary employment agencies. They do not fulfill the role of a link between those looking for permanent work and potential employers. In reality, it boils down to hiring people performing specific tasks to subsequent employers, without any prospects of permanent employment. Instead of an atypical form of employment, we’re dealing with the objectification of employees, consisting in the lack of financial security or insurance continuity. Admittedly, there is nothing wrong with that, provided that both parties want to make an arrangement where one of them is willing to perform temporary work. However, this situation is abused in Poland.

Source: Report “Eurofound: Labour market change“, 2018.

Poland has the largest percentage of people in Europe using the services of employment agencies. Worse still, there is a clear growth tendency in interest in this institution. Eurofound research presented in the report quoted above shows that the percentage of people employed in this way increased from 4.6% in 1999 to 28.2% in 2007. As shown in the graphic above, the percentage was even higher in 2016.

The institution of an employment agency essentially contradicts the purpose of the work performed. A person works to ensure stability and financial security in the long run. The temporary nature and uncertainty of employment obtained through an employment agency contradicts all fundamental axiological assumptions of the labor market and therefore have negative social consequences that, in fact, cannot be included in any empirical study.

The issue of the so-called false self-employment is also problematic. Using civil contracts and entering into employment relationships with the self-employed allows avoiding a number of protective provisions under the Labor Code.

Self-employed workers and people “employed” under civil law contracts do not enjoy a number of privileges because they are not protected under the Labor Code. They have no collective employee rights or social protection. Furthermore, they are not guaranteed access to raising their professional qualifications on par with employees. Such a distinction is unacceptable, because the work performed by a person employed under a contract of employment is often the same as that performed by the self-employed.

Nevertheless, the Polish government is trying to fight these issues. On January 1, 2019, the amendment to the Act on Trade Unions entered into force, which was a kind of revolution in labor law. The document extends the right to union association, i.e. the creation and joining of trade union organizations, to non-employees, i.e. self-employed and those working under civil law contracts. The legislator thus extends the right to union association to those who are not considered employees.

The state is trying to save the social situation of persons deprived of employment contracts. Since the market has forced employers to abandon such contracts, the state will guarantee workers similar protection standards as employees. In my opinion, the government’s action can be compared to sticking a bandaid on a festering wound. The issue of association is only a part of a larger problem. What about the lack of a number of other rights, such as the possibility of raising one’s own qualifications, or protecting the permanence of an employment relationship?

***

Work plays a significant social role, with remuneration being only one of its elements. The proper organization and implementation of work in the appropriate legal framework has a significant impact on the development of every society and its foundations.

In view of the ongoing changes and the growing percentage of “atypical” work, two solutions are possible. First of all, dura lex sed lex, i.e. the absolute enforcement of applicable law. To this end, the National Labor Inspectorate should be subsidized, so that it can perform its duties effectively. Such a solution seems extremely unfavorable, or even oppressive. Forcing employers to conclude employment contracts may have a number of negative consequences and increase the so-called shadow economy. If the regulations are bad, they need to be changed, not brutally enforced. Changing the provisions of the Labor Code and loosening current social standards seems like a better solution. Here British legislation may provide some inspiration.

Establishing two categories of workforce, based on the model of worker and employee status is also worth considering. Creating such a regulation would allow employers to adapt employment relationships to the expected economic situation. If work were to be carried out in risky economic conditions, then the employer could conclude employment contracts based on the British worker model, with fewer social guarantees and less protection of the employment relationship. This would be a clear progress, because in the current situation people who are „employed” under civil contracts or self-employed are deprived of most of the employee rights (except for the right to union association).

Last year, the draft of the new Labor Code was being discussed, where two categories of employees were proposed: “part-time” and “full-time”. Roughly speaking, this mechanism was to achieve the objectives referred to in this text. Professor Arkadiusz Sobczyk, who was part of the Labor Law Codification Commission, pointed out that, in line with work on the amendment to the Code, an explicit order for paid employment in the form of worker employment or self-employment would apply. The proposed changes would certainly contribute to reducing the shadow economy in the form of civil contracts abuse (contract of mandate, provision of services, work performance contract).

Unfortunately, this milestone in Polish labor law has not been subjected to extensive public debate during the proceedings in parliament. Several years of work by outstanding specialists has been swept under the rug for now. The only commentary of the ruling party was a tweet by PiS press spokesperson Beata Mazurek: “Law and Justice is not working on any changes to the Labor Code. We will not back the proposal of the Codification Commission.” We can only hope, that we will eventually see a change in the laws that remember the days of deep communism.

Polish version is available here.

Publication (excluding figures and illustrations) is available under Creative Commons Attribution 4.0 InternationalAny use of the work is allowed, provided that the licensing information, about rights holders and about the contest "Public Diplomacy 2019" (below) is mentioned.

The publication co-financed by the Ministry of Foreign Affairs of the Republic of Poland as part of the public project "Public Diplomacy 2019" („Dyplomacja Publiczna 2019”). This publication reflects the views of the author and is not an official stance of the Ministry of Foreign Affairs of the Republic of Poland.