News

Collusion and Abuses in the Labor Market – New Regulations and Oversight

In recent months, Poland’s labor market has become a focal point for the Office of Competition and Consumer Protection (UOKiK). The President of UOKiK has initiated a preliminary investigation to examine potential violations of competition law in employment practices. The primary focus is on the practices of large retail networks and transport companies providing services for these networks.

This article will explain:

• What actions in the labor market can be considered anti-competitive collusion.
• What wage-fixing and “no-poaching” agreements entail.
• The legal consequences of violating competition rules in the labor market.
• The significance of UOKiK’s actions for protecting employees and ensuring labor market transparency.

What Actions in the Labor Market Can Be Considered Anti-Competitive Collusion?

Under Polish competition law, any agreements that restrict competition are prohibited — including those in the labor market. Particularly harmful practices in the context of employment include:

• Wage-Fixing Agreements: Employers jointly set wage levels or impose salary caps, preventing employees from negotiating better terms.
• “No-Poaching” Agreements: Companies agree not to recruit each other’s employees or accept their applications, restricting professional mobility.
• Non-Compete Clauses: If these clauses result from agreements between employers rather than the need to protect a specific company’s interests, they may violate competition laws by limiting employees’ career development opportunities.

What Are Wage-Fixing and “No-Poaching” Agreements?

Wage-fixing agreements and “no-poaching” arrangements are forms of anti-competitive practices that manifest uniquely in the labor market:

• Wage-Fixing: Employers collude to establish wage levels, leading to stagnant pay and the suppression of wage increases.
• “No-Poaching” Agreements: These are informal or formal arrangements that prevent employees from changing jobs. They may take the form of:
  • Active bans: Prohibiting recruitment of competitors’ employees.
  • Passive avoidance: Refusing to hire individuals currently or previously employed by competing firms.

What Are the Legal Consequences of Violating Competition Rules in the Labor Market?

Businesses and individuals responsible for actions that breach competition laws face severe penalties, including:

• For Companies: Fines of up to 10% of the company’s annual revenue.
• For Managers: Financial penalties of up to 2 million PLN for directly participating in prohibited agreements.

Such violations can be particularly costly for large enterprises and decision-makers involved in these practices.

What Is the Significance of UOKiK’s Actions for Protecting Employees and Ensuring Labor Market Transparency?

The initiatives undertaken by the President of UOKiK play a pivotal role in ensuring fairness in the labor market. As a result:

• Employees gain greater freedom to negotiate salaries and the ability to change employers without restrictions.
• The labor market becomes more transparent and competitive, fostering overall economic growth.
• HR departments and businesses are better positioned to align their practices with legal requirements, avoiding potential sanctions.

Summary

UOKiK’s efforts to combat collusion and abuses in the labor market are a significant step toward ensuring greater transparency and fairness in employer-employee relationships. These measures enhance employees’ negotiating power and contribute to a more competitive labor market. Businesses and HR departments should carefully review their practices to ensure compliance with current regulations and avoid harsh penalties.

Author: Zuzanna Chudzia, Lawyer