“llusory Contract”
Is it possible to have an employment contract with the owner of an LLC?

Contents 

1. Salary of a Sp. z o.o. Owner: A Practical Example
2. Employment Contract (Umowa o Pracę) for a Sp. z o.o. Shareholder: Legal Aspects
3. The Stance of ZUS and Court Case Rulings
4. Umowa o pracę with a Majority Owner: Theoretical Exceptions and Conditions
5. Employer’s Costs When Hiring an Employee under an Employment Contract (Umowa o Pracę)
6. Executing a Contract with a Management Board Member: Documents
7. Consequences of Concluding a Fictitious Employment Contract with an Owner

“Business is a game, the greatest game in the world if you know how to play it”… You have to agree, Thomas Watson hit the nail on the head. After all, running a business in Poland is indeed playing for high stakes! For example, you decide to take on additional work in your own company by signing a standard employment contract (umowa o pracę). At first glance – it seems logical, convenient, and safe. But it’s not that simple. The fact is, not every owner can become an employee of their own company. So, how can you legally combine the role of a shareholder and an employee? And how do you correctly formalize an employment contract? You will find answers to these and many other questions in this article.

Salary of a Sp. z o.o. Owner: A Practical Example

Recently, Mikhail, the owner of a controlling stake (65% of shares) in a logistics company (Sp. z o.o.), approached us. He is not just a passive investor: Mikhail plans to take on the direct management of the company, client acquisition and relations, as well as the strategic development of the business.

“I am ready to invest all my efforts into the firm and plan to dedicate a significant portion of my time to operational work. Therefore, I want to formalize an employment contract (umowa o pracę) for the position of Executive Director. But I’ve heard that since I hold the majority of shares, ZUS might challenge such a contract. Is this true? How should I structure my work with my own company from the outset to receive remuneration for my labor?”

Mikhail’s question touches upon one of the most complex topics for business owners in Poland. As a rule, for majority shareholders of a Sp. z o.o., and even more so for sole owners, formalizing an employment contract (umowa o pracę) with their own company is risky. Most likely, ZUS officials will challenge such a contract.

Therefore, in situations like Mikhail’s, we recommend our clients choose a proven alternative: become an official Member of the Management Board (Członek Zarządu) and receive payments based on a shareholders’ resolution. A B2B contract for specific services between your sole proprietorship (JDG) and the company is also suitable in such a situation. However, this is only possible if certain conditions are met. We will definitely cover these topics in our future materials. For now, let’s return to the main topic of the article.

Employment Contract (Umowa o Pracę) for a Sp. z o.o. Shareholder: Legal Aspects

An employee working under an employment contract (umowa o pracę) is protected by the Labour Code. Among the advantages of such a contract are:

• Right to a minimum wage.
• Paid leave.
• Safe working conditions (BHP – Occupational Health and Safety).
• Paid sick leave.

The idea of employing the owner under an employment contract (umowa o pracę) seems advantageous. For the manager themself – it means a stable salary every month and full social protection. For the company, there is also an obvious plus: the management board member’s salary officially reduces taxable profit. That is, the company pays less corporate income tax (CIT), as these payments are considered expenses.

But this is precisely where the difficulties begin, which we mentioned earlier and will now discuss in detail.

The Stance of ZUS and Court Case Rulings

The fact is that the key element in an employment relationship is subordination. This means that the employee must personally perform work under the direction of the employer and at a place designated by them.