A growing trend in the Polish global services landscape is the shift towards contract employment (Business-to-Business (B2B) contracts), particularly among professionals with over five years of experience.
This shift is gradually changing the hiring dynamics in the industry. While entry-level talent and less experienced employees still tend to favor the traditional full-time employment model due to the job security and stability it offers. Experienced professionals are increasingly opting for contract roles, which is a new trend our analysts are seeing.
The flexibility and higher take-home pay associated with contract employment also makes it an appealing choice for those looking for greater autonomy and financial rewards.
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A deep dive into the Polish global services landscape reveals the key drivers that has fueled this trend.
Better take-home pay for professionals
Poland has a progressive tax rate ranging from 0% to 32%, depending on salary brackets. The majority of experienced professionals fall into the higher salary bracket, where they are taxed at 32%, resulting in take-home pay of around 70-75%. However, under B2B contracts, income is taxed at a flat rate of 19%, which allows for take-home pay of approximately 80-85% of gross pay, which is significantly higher than the standard full-time employment model. This financial advantage is a key driver behind the increasing preference for contract employment among experienced professionals.
Flexibility to work for multiple organizations
Under B2B contracts, professionals operate as individual service providers, allowing them to offer their services to multiple organizations simultaneously. This setup provides greater control over both their time and income streams.
Unlike traditional employment contracts, which often impose restrictions on outside work due to exclusivity, B2B agreements focus on deliverables and timelines rather than fixed working hours or employer-employee hierarchies. As a result, professionals particularly in fields like Information Technology (IT), consulting, and design, can diversify their income sources, reducing reliance on a single employer and selecting projects that better align with their expertise and interests.
Lower notice period and faster turnaround time
Generally, B2B contracts range from 6 to 18 months, with a notice period of about 1 to 2 weeks. These contracts are often renewable based on project requirements. The shorter notice periods offer professionals greater flexibility, allowing them to transition between projects more quickly compared to full-time employment, where notice periods are typically longer.
Unlike traditional employment contracts governed by labor law, B2B agreements are governed by civil law, providing more flexibility in setting termination and notice period terms. As a result, organizations can negotiate shorter notice periods, sometimes as brief as a few days. This leads to quicker onboarding and offboarding, reduced long-term overhead, and the ability to scale teams up or down without the delays and legal complexities typically associated with full-time employment.
Mandatory benefits: Employer vs. individual responsibility
Polish law mandates that employers contribute to18% to 21% of gross pay toward mandatory benefits, such as retirement fund schemes, disability funds, accident funds, and more, depending on salary levels.
In addition, employers often offer extra benefits like private life insurance, food vouchers, sports packages, and group life insurance. These contributions significantly increase the overall cost borne by employers. However, under B2B contracts, professionals typically negotiate higher pay to compensate for the lack of these benefits. In this model, the responsibility for social security contributions shifts to the individual, rather than the employer.
While the overall cost to employers remains similar in both full-time employment and B2B contracts, the latter reduces the administrative burden on organizations, as they are not responsible for managing these mandatory benefits and contributions.
Final take: Strategic implications of rising shift toward B2B talent model
The growing trend of experienced professionals, particularly in the IT sector, opting for B2B contracts over traditional full-time employment is reshaping how companies should structure their workforce.
Ignoring this shift risks organizations missing out on a valuable pool of skilled talent. For employees, the benefits include higher take-home pay, greater flexibility (such as working with multiple organizations and working from anywhere), and output-based rewards instead of traditional time-based compensation.
From an employer’s perspective, while the B2B model offers advantages like faster scaling and cost savings, it comes with moderate-to-low levels of control and compliance. This makes it crucial for organizations to balance the benefits with the associated risks to optimize their workforce strategy.
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If you have any questions or want to discuss the evolutions of B2B contracts in more depth, please contact Vipin Alexander ([email protected]) and Suraj Singh ([email protected]).
