NEWSLETTER
No. 28, March 2023
Malinowski & Associates. Legal Advisors. Partnership
Table of contents
Operating a pawn shop a regulated activity.
Types of pawn collateral and performance of the contract.
Information obligations of the pawn shop.
Conclusion of the contract at a distance.
New regulations on. labor dispute resolution.
Scope of the industrial dispute.
The emergence of union organization representation.
The addressee of the demands will not only be the formal employer.
New responsibilities of digital platforms.
Responsibilities of digital platform operators.
Consumer pawn loan
Genesis
Pawnshops on the Polish market have a very strong position, which is growing every year. From the data of the Union of Entrepreneurs and Employers (ZPP) [1] shows that 14% of Poles have ever used the services of a pawn shop. The total is already nearly 4.5 million. As of March 2020, 5% of citizens have used this method of raising money.
After 10 years of the Consumer Credit Law, it has been noticed that pawnbrokers avoid formally registering and operating as pawnshops, thus circumventing the obligation to apply the law in question. It is not uncommon for customers to have no opportunity to read the contract in advance and to be uninformed about the rules for calculating the cost of the loan. The main goal of the regulation is to reduce the gray market and increase consumer protection.
What is a pawn loan?
The bill defines a consumer pawn loan contract as a contract under which the entrepreneur undertakes to put money at the consumer’s disposal, and the consumer undertakes to pay the total amount to be repaid within a specified period of time and to establish a pawn security. The introduction of a new type of named contract is intended to distinguish the type of contracts with consumers for which the only security for the performance of the contract is the creation of a lien on a movable asset. The proposed construction of a consumer pawn loan agreement is based on the construction of a loan agreement, as adopted in the Civil Code, taking into account the characteristics of such an agreement secured by a pledge.
If the circumstances of the case show that the purpose of the contract is to conclude an agreement that meets the conditions of a pawn loan agreement, the drafters intend that in case of doubt such an agreement shall be considered a pawn loan agreement regardless of its form or name. The introduction of this regulation is intended as a safeguard for the application of the proposed law.
Running a pawn shop a regulated activity
The business of pawnshops will be a regulated activity, subject to registration in the register of pawnbrokers, maintained by the Financial Supervision Commission. Operating a pawn business without such a registration will be sanctioned with a fine of up to PLN 500,000.
An important element of the draft is the indication that pawnbroking activities can be carried out only in the form of a limited liability company or a joint stock company, and that the minimum share capital of the limited liability company in question will be PLN 50,000 (recall that for an ordinary limited liability company the minimum share capital is PLN 5,000). It was also clarified that the company’s share capital is to be covered only by cash contributions, and that the funds to cover this capital cannot come from a loan, credit, bond issue or unsupported sources.
Importantly, entities that do not conduct pawn business, but use the term “pawn shop” in the company, will have to change this term within 6 months of the law’s entry into force.
Types of pawn collateral and contract performance
The pawn security will consist of a restriction on the right to dispose of the collateral object. It can consist of, for example:
- Transfer of the object of security
- Obliging the consumer to transfer ownership of the object in case of failure to repay on time
- Authorizing the pawnbroker to sell the item in the event of failure to repay on time
- Establish a pledge in favor of the pawn shop.
Importantly, for obligations arising from the conclusion of a pawn loan agreement, the consumer will be liable only for the object of the collateral, unless the object was not his property or the legally required consent of a third party to establish the collateral was not obtained. The consequence of adopting such a solution is that the pawnbroker’s claim cannot be satisfied from the debtor’s other assets (for example, through enforcement of bank accounts).
If the loan is not repaid, the collateral item will automatically become the property of the pawnbroker and the pawnbroker can satisfy the outstanding amount by selling it. The pawnbroker may offer the collateral item for sale after 30 days and no later than 60 days after the due date. As a rule, the sale is made by an electronic auction lasting at least 14 days (unless the value of the loan did not exceed PLN 500.00).
The lender will be obliged to return the amount of the surplus from the sale of the pledged item, if it turns out that you managed to sell the item more expensively than the outstanding amount to be paid. The entrepreneur may reduce the excess by no more than 20%, which is intended to ensure that the entrepreneur covers the costs associated with the storage and sale of such an item.
If the consumer does not repay the loan on time, the legislator has given him a chance to avoid losing the collateral – for this purpose, within 30 days of the due date, he can pay the outstanding obligation (increased by up to 20% according to the contract). Then the collateral will expire and the pawnbroker will be obliged to return the collateral object.
The proposed changes represent a very significant change from current market practices and may be particularly important for customers who will benefit from a pawn loan by pledging high-value items.
Information obligations of the pawn shop
The draft law provides for a number of obligations to be imposed on pawnbrokers. One of them is to inform customers in detail about the material terms of the pawn loan even before signing the contract. The customer will be provided with information m. in. o:
- The amount of the pawn loan;
- The total cost of a pawn loan and its components;
- The terms and timing of the total amount to be repaid;
- The consequences of failure to repay the total amount to be repaid;
- description of the object of the pawn security;
- The method of establishing the pawn security;
- The estimated value of the subject of the pawn collateral and how it was determined;
- The mode of sale of the object of the pawn security;
- percentage reduction of the surplus;
- percentage of the unpaid amount that the consumer should pay when settling payments after the due date (maximum 20%).
The consumer must be informed of the terms of the contract being concluded. In order to safeguard consumer protection, an obligation to conclude a contract in writing under pain of nullity will be introduced. The contract must be worded in a way that is clear to the borrower.
Conclusion of a remote agreement
The legislator has provided for the possibility of concluding a contract at a distance. Then the consumer has the right to withdraw from the contract within 7 days of its conclusion.
Rules for today’s pawnshops
Entities that conduct pawnbroking activities today will be allowed to continue doing so without registration in the KNF’s pawnbroking register for no longer than 6 months from the date the law enters into force. Within such a period, the entrepreneur will be obliged to submit an application for entry.
New regulations on. resolution of labor disputes
Genesis
The Ministry of Family and Social Policy has presented a draft of a new law on collective labor disputes to replace the current Law on the Resolution of Collective Disputes. Most of the proposed solutions are modifications to current regulations.
Labor unions have the right to organize labor strikes and other forms of protest within the limits of the law. For the sake of the public good, the law may restrict the conduct of a strike or prohibit it for certain categories of workers or in certain areas. The scope of freedom of association in trade unions and employers’ organizations, as well as other trade union freedoms, may be subject only to such statutory restrictions as are permitted by international agreements binding on Poland.
Scope of the industrial dispute
The current provisions of the Law on the Resolution of Industrial Disputes enumeratively define the subject matter of an industrial dispute. Currently, an industrial dispute between employees and their employer may concern working conditions, wages or social benefits, as well as trade union rights and freedoms of employees or other groups who have the right to organize in trade unions. However, the unions’ interpretation of the scope of the subject of the dispute is very broad. Disputes are initiated in all matters that concern the collective rights and interests of employees.
The intention of the drafters is to move away from the enumeratively defined subjects of an industrial dispute. In the future law, an industrial dispute will be a dispute between persons performing gainful employment and an employer or employers over collective trade union rights or freedoms, as well as professional, economic or social collective interests or rights, related to the performance of work.
The emergence of trade union organization representation
Currently, any union organization can initiate and conduct an industrial dispute. Unfortunately, a problem arises at workplaces when most unions have reached an agreement with the employer, and only a select few reject the agreement. The employer is unable to end the dispute. In order to harmonize regulations, it is proposed to require the emergence of joint representation of trade union organizations.
The addressee of the demands will not only be the formal employer
The new law will introduce a definition of the so-called “new law. a dominant employer, i.e., an entity that exerts influence over the operation of another employer, such as by virtue of ownership, shares, or other organizational ties. As a result, the dominant employer will be treated like the formal employer, and consequently, employees will be entitled to direct their demands directly to the dominant employer, even to the exclusion of the actual interested party.
Duration of the dispute
One of the goals of the draft law on industrial disputes is to specifically define the duration of an industrial dispute. Dragging out an industrial dispute does not have a positive impact on the operations of the workplace and lowers the chance of successful negotiations. If the law goes into effect, an industrial dispute will be allowed to last a maximum of 9 months with the possibility of an additional 3 months. After this time, the dispute will expire by operation of law.
Preventive mediation
In the current state of the law, the employer shall immediately enter into negotiations to resolve the dispute by agreement, at the same time notifying the competent district labor inspector about the emergence of the dispute. Negotiations are thus conducted exclusively by the parties to the resulting conflict and end with the signing of an agreement or the drafting of a protocol of differences. Only at a later stage does a mediator appear. As a result, the parties may already be deeply conflicted and unwilling to make concessions. In order to make it possible to reach an agreement as soon as possible, it is proposed to introduce the institution of preventive mediation. Parties at earlier stages will already be able to use an impartial professional mediator. The introduction of preventive mediation can increase the number of agreements at an early stage of a dispute.
New obligations of digital platforms
The EU Council has adopted an amendment to the directive on administrative cooperation in the field of taxation. The reason for the implementation of the directive was the European Commission’s perception of obstacles to obtaining information on the income of sellers using the intermediary of digital platforms, as well as the problem of insufficiently effective cooperation between the tax administrations of member states. Many vendors evade taxation in the digital space, and for this reason individual EU countries have individually imposed reporting obligations on platform operators regarding income from activities carried out through digital platforms.
Obligations of digital platform operators
The provisions found in the bill impose a number of new obligations on digital platform operators, namely. Entities that contract with vendors to provide them with the platform or parts of it. According to the published draft, platform operators will be obliged, in particular, to:
- Provide the Head of the National Tax Administration with information on reportable vendors and
- to comply with certain due diligence procedures (these procedures relate to, among other things, determining the status of vendors, their residency and the reliability of the information obtained), including for vendors who were registered on the platform as of January 1, 2023.
Information on the following activities (“relevant activities”) is to be reported to the Head of the National Tax Administration:
- The lease of real estate or parts thereof, including appurtenant premises (e.g., garages, campgrounds, rooms, parking lots);
- Services provided in person involving task- or time-based work by an individual acting for or on behalf of an entity performed through the platform at the user’s request online or physically offline after enabling its performance through the platform,
- merchandise sales,
- lease of a means of transportation.
The obligation to report income occurs only in one member state, by one entity, provided that the reporting platform operator informs other member states. A platform operator reporting in a member state other than Poland will be exempt from reporting obligations under Polish regulations.
If the platform operator evades its obligations, the Head of the National Tax Administration will be entitled to impose a fine of up to PLN 5,000,000.
[1] “The pawn market in Poland irregularities, consumer protection, systemic risks.” – Union of Entrepreneurs and Employers, May 2021, Chart 4 p. 10.
