Doing business in Poland: How to build a team and finance their work (part 2)
In the first article of the series, which concerned starting up a business in Poland, we discussed the first step of introducing a foreign company on the Polish market – it was pointed out what issues should be taken into account when registering the company and what decisions at this stage may affect the future positive decision or the amount of public funding for the project. In this article we will focus on one of the key aspects of the company's further activity which is the selection of human resources.
Resource criterion
Regardless of the nature of the planned activity of the company – conducting R&D activities or carrying out an investment – the decision to grant public funding for a given project is dictated by whether or not it meets a number of formal and technical criteria. One of the key criteria is the criterion of human resources. This criterion, as a rule, is present in all calls for proposals. Experts evaluating applications take into account both the resources that have already been secured by the applicant, as well as these planned to be acquired. In order to make the successful implementation of the project, it is necessary to precisely define the roles and competencies of the persons that will be essential to carry out the project and to indicate specific persons that will be responsible for particular parts of the project. It is not necessary to indicate all people planned to be involved in the project, but the so-called key personnel, i.e. people crucial for the project's success, should be defined.
R&D projects vs. investment projects
Due to the nature of the activities to be performed in the project, as well as the cost structure (operational costs, OPEX), the competence and experience of the future personnel is a very important factor influencing the decision on funding R&D projects. Taking the most popular R&D instrument as an example - the Fast Track call for proposals of the National Centre for Research and Development – HR broken into (1) R&D staff and (2) management staff should be indicated as early as at the stage of submitting the application.
The R&D staff includes a person holding the position of the R&D project manager and is accompanied by 3-4 persons who are the main specialists conducting R&D works in the project. These persons should have experience similar to the roles planned in the project, i.e. experience in supervising R&D work should be indicated for the R&D manager, and for specialists – experience related to the performance of the R&D work itself, with a scope similar to that planned in the project. There is no requirement to show experience in projects co-financed from the EU funds, but it may be well appreciated by the application evaluators.
Persons indicated in the project management staff must ensure the performance of such roles as, among others, management of the entire project (project manager), control of financial aspects (budgeting, forecasting of costs and income, project settlement) and operational coordination (contact with the intermediary institution, in case of the Fast Track NCBiR). One person, as long as he / she has adequate and documented qualifications, may be responsible for more than one role. It is good practice to have a person with knowledge and certificates in project management methodologies to act as a project manager.
In the case of investment projects where the eligible costs are the capital expenditures (CAPEX), there are no such precise requirements concerning the staff, i.e. number of persons or specific roles to be performed. However, the very fact of establishing cooperation with adequate people is important for the probability of the project implementation and consequently for increasing the chances of obtaining a positive decision on receiving the grant. Recruited people should correspond to the nature of the project. For example, in a project involving construction of a production plant it is necessary to ensure competencies in e.g. construction supervision from the owner's side, technology of future production, parameters of machines and devices, quality of final products, advertising and marketing, as well as obtaining all necessary permits both at the stage of construction of the facility and commercialization of products.
Types of cooperation
It is worth pointing out that the rules of calls for proposals for funding do not introduce restrictions concerning the employment of employees who do not have Polish citizenship, as long as the future employees agree to be employed by a Polish company. In this case one should keep in mind the numerous obligations of the employer associated with it, which include (apart from standard formalities such as e.g. payment of income tax or social insurance contributions) among others, obtaining a residence and work permit for the employee, without which the provision of work is illegal. However, currently the procedures for applying for permits are simplified and the offices are easier to reach, as a consequence the entrepreneurs are more willing to employ a foreign citizen.
In R&D projects, the most beneficial form of cooperation is the provision of services on the basis of an employment contract (employment relationship) or civil law contracts (contract of mandate, contract for a specified task). In investment projects, labor costs are not subsidized, and thus there are no requirements or restrictions as to the form of employment.
The employer contract is the most expensive type of the cooperation for the employer – the actual cost of hiring an employee is higher by about 20% than the gross amount presented in the contract. In addition, it entails a number of obligations on the part of both the employee and the employer. Employers must rigidly comply with the provisions of the Labour Code, take care of the employee's right to uninterrupted rest and pay for overtime work.
In the case of civil law contracts, as a rule, it is the contractor who specifies the days, hours and place where he will provide services. The contracting parties can flexibly shape the legal relationship between them, and cooperation is not as costly as in the case of an employment contract. There are also no legal obstacles to terminate a contract of mandate with a person on sick leave. It should be noted, however, that as far as civil law contracts are concerned, the provisions of the Labor Code do not apply and legal relations between the parties are regulated by the provisions of the Civil Code. As a result, contractors are deprived of the "protective umbrella" that the labor law provides in the context of employment relationship.
So far, it was believed that a contract for a specified task is the least troublesome way of cooperation, which is not subject to the obligation of making social insurance contributions. However, according to the recent legislative changes regarding the register of contracts for specific task, as of January 1st this year, persons commissioning work are obliged to notify the Social Insurance Institution of such a contract within 7 days of its conclusion. This is a novelty with respect to the previously binding rules, and it significantly changes the perception of this type of cooperation in the eyes of potentially interested entities.
Contract agreement / self-employment agreement, increasingly popular under the English acronym B2B, is definitely less profitable than the above types of cooperation if the cost is to be covered by EU funding. The costs of cooperation incurred within the B2B formula are qualified as subcontracting costs, and therefore do not constitute the basis for charging a 25% lump sum for indirect costs of the project. Moreover, in order to ensure fair competition and equal treatment of subcontractors, each work order in the B2B formula which exceeds the net amount of PLN 50 000 (in the scale of the entire project) requires an official procurement procedure in accordance with the principle of competitiveness – publishing a request for proposal in the competitiveness database, which is a publicly available online database of advertisements available here.
Conditional cooperation agreement
The requirements of R&D calls for project proposals do not impose an obligation to sign any binding agreement between the applicant and the project staff before submitting the application. However, it is necessary to sign a so-called conditional cooperation agreement, which is not a legal form of employment. This document is a declaration of readiness to cooperate and to later sign a binding contract. The fact that the agreement is only a declaration and not a legal form may also represent a risk for both parties: the document neither guarantees employment – a risk for the future staff member, nor constitutes a binding commitment to work – a risk for the applicant. Avoiding the above risk is possible when the project applying for funding is part of a broader, long-term strategy of the company. The company may start its regular operating activity and hire employees even before submitting the grant application and then, in case of positive assessment of the application, assign them to complete the project that received the grant.
Time-consuming process
The planning and selection of human resources with relevant competencies, which should be carried by the local coordinator, often requires cooperation with academic institutions or headhunting agencies. Additional formalities between the intermediaries cause extension of the process in time – the completion of the team may take a few months, and sometimes longer, especially in the case of niche specializations requiring competences with low supply on the labor market. Needless to say, this should be taken into account in the project preparation schedule.
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