Update on New Company Liability for Immigration Law Violations

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At a glance

A new draft law in Poland would significantly increase company liability for breaches to immigration and other rules, introducing new penalties and obligations.

A closer look

• Direct liability for violations. The draft law would allow companies to be prosecuted directly and exclusively for breaches of immigration and other rules. Currently, companies can only be held liable if an executive or other company representative is personally convicted, or if the company has insufficiently supervised an executive or other company representative who violated immigration or other rules. The draft law does not list specific crimes for which the employer can be held liable. Instead, employers can be held liable for all criminal offences related to their business activity.
   

• New penalties. The law introduces the following new penalties, among others:
  • Dissolution of the company, dissolution of a branch of the company, or a ban on certain business activities;
  • Fines between PLN 30,000-30,000,000, up from PLN 30,000;
  • Ban on participation in bids on public contracts;
  • Withdrawal of subsidies or other benefits; and
  • Ban on advertising in Poland.
     
• Obligation to implement rules of conduct. Under the draft law, companies could be held liable for not implementing a compliance system. To avoid liability, companies would be obliged to implement an ethical code and rules of conduct, organize relevant staff training, and designate staff responsible for maintaining compliance. Companies with 50 or more employees, or annual net sales of EUR 10 million or more, would be required to appoint a compliance officer or set up a compliance division.
   
• Other changes. The draft law would also hold companies liable for violations committed by third-party contractors, provided that the company benefited from the violation and/or incompliance would have been easily detected. Additionally, the law would require companies to implement whistleblowing procedures and protect whistleblowers.
   

Impact

Companies are advised to review their current compliance system and to prepare for the new rules, as the new liability and penalties could significantly impact their compliance strategies.

Background

This proposal was introduced by the Ministry of Justice in June, and was recently adopted by the Council of Ministers.

Due to economic growth and a shortage of local workers, Poland has seen an influx of foreign workers and a corresponding rise of work and residence permit applications. Authorities are grappling with the high workload and have recently increased the number of worksite inspections to ensure foreign workers and their employers stay compliant.

The current law would significantly boost Poland’s overall compliance system, aligning its compliance policies more with its western neighbors.

Looking ahead

The law is still subject to public and parliamentary debate, and changes may still be made by parliament. Once passed by parliament, companies will have three months to implement the rules delineated in the law.

This alert is for informational purposes only. If you have any questions, please contact the global immigration professional with whom you work at Fragomen or send an email to [email protected].