Employment of a foreigner and an indefinite-term contract — Supreme Court judgment (III PK 11/16)

May a non-EU foreigner be employed "automatically" only on fixed-term contracts simply because they hold a temporary residence permit? And can citizenship alone justify worse treatment of an employee? The Supreme Court answered both questions in its judgment of 7 November 2016 (ref. III PK 11/16). This is an important ruling for every foreigner working legally in Poland. Below: a brief statement of facts, the breaches identified and the resolution.

1. The facts

The claimant — a Ukrainian citizen — was employed at a public lower-secondary school (previously: a group of public schools) as a teacher of English. She took up the work at the invitation of the district authorities as part of a town-twinning cooperation; previously she had taught English for 5 years at a school in Ukraine. For about 12 years she was employed under successive fixed-term contracts of employment, each time holding a residence permit (fixed-term residence) and — depending on the legal situation at the time — a work permit.

The last contract, concluded on 22 August 2011, covered a two-year period, until 31 August 2013. For the 2013/2014 school year, the available English-language hours (the reported vacancy) were assigned to another, newly hired teacher — a Polish citizen — and no further contract was concluded with the claimant.

The claimant brought three claims before the court: for compensation (PLN 6,400) for breach of the principle of equal treatment in employment (Article 18^3a of the Labour Code), for a determination of the content of the employment relationship (Article 189 of the Code of Civil Procedure) and for reinstatement. The District Court dismissed the action and the Regional Court dismissed the appeal. Both courts held that, since the claimant held only a temporary residence permit (granted for a period of no more than 2 years), an indefinite-term contract could not be concluded with her, and that different treatment on grounds of citizenship (Ukraine — a non-EU state) was permissible.

2. The breaches — where the courts went wrong

The Supreme Court found that the cassation appeal had well-founded grounds and pointed to errors in the reasoning of the lower courts on both issues.

2.1. A temporary residence permit does not determine the type of contract

The Supreme Court explained that the claimant — as a foreign-language teacher at a school within the education system — was exempt from the requirement to obtain a work permit under § 1(3) of the Regulation of the Minister of Labour and Social Policy of 20 July 2011 (and, earlier, the corresponding Regulations of 2001 and 2006). The legality of her work therefore depended on legal residence, not on a separate work permit.

Key thesis: a temporary residence permit does not preclude the conclusion of an indefinite-term contract. The Act of 20 April 2004 on employment promotion and labour market institutions — unlike the repealed Act on employment and counteracting unemployment (Article 50(9)) — no longer contains a provision requiring contracts to be concluded "for the duration of the granted permit". Moreover, in case the right of residence expires, the legislator provided the mechanism in Article 88g of that Act: the obligation to perform work expires when the foreigner ceases to meet the conditions of Article 87. An employer is therefore not forced to conclude fixed-term contracts in order to protect itself against the charge of illegal employment.

It follows that the admissibility of a fixed-term contract is determined solely by whether the conditions of Article 10(7) of the Teacher's Charter are met — i.e. a need arising from the organisation of teaching or the replacement of an absent teacher — and not by the mere fact of holding a temporary residence permit. Concluding a fixed-term contract without meeting those conditions means that, in substance, an indefinite-term contract was concluded, and the teacher may seek a determination of the content of the employment relationship under Article 189 of the Code of Civil Procedure.

2.2. Citizenship as an impermissible criterion of discrimination

The second error concerned equal treatment. The courts assumed that different treatment of the claimant on grounds of citizenship was permissible, relying on the Act of 3 December 2010 on the implementation of certain EU provisions on equal treatment. The Supreme Court indicated that this was incorrect: under Article 2(2) of that Act, its provisions (Chapters 1 and 2) do not apply to employees — so it cannot justify differentiating an employee's situation.

The Supreme Court stressed that the Labour Code provisions on equal treatment apply not only to Polish and EU citizens but also to workers from "third" countries who hold an appropriate work or residence permit. The principle of non-discrimination is universal — it follows not only from EU law but also from international law (ILO conventions) and from Article 32 of the Constitution of the Republic of Poland; exceptions in respect of foreigners are laid down by statute (Article 37(2) of the Constitution).

3. The Supreme Court's resolution

The Supreme Court set aside the contested judgment of the Regional Court and referred the case back for re-examination (under Article 398¹⁵ § 1 of the Code of Civil Procedure), leaving that court to rule on the costs of the cassation proceedings. The case was therefore not finally resolved in the claimant's favour — but the Supreme Court indicated to the court the direction of further proceedings:

• on re-examination it must be established whether there was in fact a need arising from the organisation of teaching or a replacement (Article 10(7) of the Teacher's Charter) justifying the conclusion of fixed-term contracts with the claimant;
• if such a need existed — the charge of discrimination consisting in the conclusion of fixed-term contracts becomes moot, but the charge of discrimination connected with hiring another person for that post remains to be considered;
• the mere finding of discriminatory conduct by the employer justifies a claim for compensation under Article 18^3d of the Labour Code, whose precondition is unlawfulness itself (breach of the principle of equal treatment) — without any need to prove the employer's fault.

In other words: the Supreme Court did not decide that the claimant had been discriminated against. It did, however, decide that the courts' reasoning was flawed — a temporary residence permit cannot on its own justify either fixed-term contracts or worse treatment of a foreigner.

4. What this means for foreigners — risk assessment

The practical conclusion for non-EU citizens working legally in Poland is important: the temporary nature of a residence card does not condemn a worker to endless fixed-term contracts. If an employer — without a genuine need arising from the organisation of work — concludes successive fixed-term contracts with a foreigner, it may turn out that the parties are in fact bound by an indefinite-term contract, and that differentiation based on citizenship constitutes discrimination.

One must, however, remain realistic in assessing litigation risk. First, the outcome of a given case depends on the findings of fact — here the Supreme Court ordered examination of whether an organisational need existed; if so, part of the charges falls away. Second, the ruling was made in the context of the Teacher's Charter and the situation of a foreign-language teacher — transposing its theses to other sectors requires caution and an individual analysis. Third, employee claims are limited by time limits (including the limitation of claims under the employment relationship), so delay may close off the path to pursuing one's rights.

If, as a foreigner, you have doubts about whether your successive fixed-term contracts comply with the law, or whether you are being treated worse on grounds of citizenship — it is worth analysing the matter individually before the time limits for pursuing claims expire.