Student status under a contract for specific work can make a significant difference in employment costs. At the same time, this very area has come under increasing scrutiny by the Social Insurance Institution. Inspections primarily focus on cases in which a foreign national formally holds the status of a pupil or student, but in practice, their education may be fictitious, and the document was used primarily to claim an exemption from social security contributions.
This poses a significant risk for employers and other contribution payers. A challenge to the basis for an exemption may mean not only having to correct current filings, but also having to pay back contributions along with interest for prior periods.
Why does student status matter in a contract for services?
As a general rule, a person performing work under a contract for specific services is subject to social insurance. An exception applies to high school and college students under the age of 26.
In their case, a contract for services does not constitute a basis for mandatory social security and health insurance.
From the entrepreneur's perspective, this means lower costs for the collaboration. The contractor, in turn, may receive a higher net amount.
The problem arises when a student's status exists only on paper, or when the documents presented to the payer do not reflect the actual situation.
ZUS Scrutinizes Fictitious Student Status of Foreign Students
According to a report in “Dziennik Gazeta Prawna,” the Social Insurance Institution (ZUS) is stepping up inspections of businesses that hire foreign nationals under contract-for-service agreements and take advantage of the contribution exemption related to student status.
The inspections are intended to uncover cases in which foreign nationals are formally enrolled in post-secondary schools but do not actually participate in the educational process.
The scheme may involve, among other things, organizing or financing:
- translations of the required documents,
- school registration fee,
- the formalities involved in obtaining auditor status,
- certificates confirming enrollment.
Of course, the mere presence of such elements does not in itself indicate an irregularity. What is crucial is whether the educational status is genuine and whether it actually provides grounds for granting an exemption from contributions.
A certificate may no longer be sufficient
This is one of the most important takeaways for business owners.
When hiring a foreign national, simply obtaining a document confirming the person’s status as a pupil or student should not automatically conclude the verification process.
If the status turns out to be fictitious, outdated, or obtained solely to create a formal basis for avoiding the payment of contributions, the payer may face consequences.
That is why the following question is becoming increasingly important:
"Did the employee provide a certificate?"
but also:
“Do we have grounds to conclude that the status resulting from it is current and genuine?”
A ZUS audit of foreign nationals could result in significant costs
If ZUS challenges the exemption granted, it may determine that the person in question should be subject to insurance coverage under the contract being performed.
As a result, an obligation may arise to:
- correcting the billing documentation,
- payment of overdue contributions,
- payment of the interest due.
Furthermore, claims for contributions generally become time-barred after 5 years from the date on which they became due. The final scope of liability, however, depends on the circumstances of the specific case and the course of the statute of limitations.
With a larger number of contractors, the scale of potential arrears can therefore quickly become a significant financial burden for the company.
A single case could trigger a broader investigation
Of particular importance is the risk that an audit may be expanded following the detection of irregularities involving individual persons.
If, during an audit, doubts arise regarding how the contribution exemption is being used, ZUS may examine the documentation of other employees working under a similar arrangement.
However, one should not automatically assume that an irregularity involving one foreign national determines the situation for all others. Each case should be evaluated based on its individual circumstances.
From a business owner’s perspective, however, this means that a single problem can reveal risks affecting the entire process used within the organization.
How can I verify the status of a foreign student?
For companies that benefit from a contribution exemption, it is advisable to conduct an audit of their records even before a potential inspection takes place.
The verification should primarily cover:
1. Status Update
It must be determined whether the foreign national actually holds current student status that entitles him or her to the exemption.
2. Authenticity of Documents
The certificate should be issued by an authorized institution. If there are reasonable grounds for doubt, it is advisable to verify its authenticity and validity.
3. Continuity of Status
The document provided at the start of the business relationship should not be considered confirmation of status for an indefinite period. The contractor’s situation may change.
4. How to Obtain Status
Companies in which the process of obtaining educational status was organized by intermediaries or other entities involved in the hiring process should exercise particular caution.
5. Documentation for each contractor
The basis for the exemption should be demonstrable on a case-by-case basis for each individual.
The employer's good faith may not be enough
This is particularly important for companies that employ a large number of foreign nationals.
An employer may accept a document submitted by an employee in the belief that it is correct. However, if it later turns out that there was no actual basis for the exemption from contributions, the mere fact of acting in good faith does not necessarily eliminate the obligation to pay the contributions due.
Therefore, the document verification process should be an integral part of the compliance system, rather than a one-time activity performed when a contract is signed.
Hiring foreign nationals requires greater compliance today
The increasing activity of regulatory agencies reflects a broader shift in the market.
Hiring a foreign national legally is no longer limited to simply verifying their residence permit and the basis for their employment. Employers must also ensure that payroll records are accurate, that exemptions are applied on valid grounds, and that the documents used in HR processes are up to date.
In the case of large teams, even a minor error that persists for months can result in significant financial risk.
That is why procedures, regular review of documentation, and collaboration with partners who understand not only the recruitment process but also the realities of legally and safely employing foreign nationals are crucial .
What should an employer do?
Companies that hire foreign nationals under contract-for-service agreements should, first and foremost, verify whether the social security contribution exemptions they apply have a genuine and current basis.
It's not worth waiting for the inspection.
Internal audits help detect irregularities early, organize documentation, and reduce the risk that a single incident could lead to a much broader problem.
At the NJOB Group, we have long viewed the hiring of foreign workers as a comprehensive process—from recruiting the right employees, through formal and legal procedures, to ensuring the safe organization of the working relationship. In an environment of increasingly frequent inspections, this comprehensive approach is becoming one of the most important elements of an employer’s safety.