Still many doubts on the details of the Sunday trade ban

2018.04.27

We have already seen several trade-free Sundays. There are still, however, many questions concerning the legal exemptions from the ban on trade, or the definition of some of the basic terms used in the Act. In many cases, the explanations provided so far by the Ministry and the State Labor Inspectorate (PIP) have hardly helped. They are often based on a teleological interpretation of the Act which is not reflected literally in the text. The need for unequivocal understanding of the regulations is particularly pressing in the context of the possible criminal or misdemeanor liability for violating it.

Predominant business activity

To give an example of a clarification provided by the Ministry and the PIP which is doubtful given the text of the regulations, we can consider the rules for identifying 'predominant business activity’. According to these organs, if it is determined during an audit that a given type of business activity, which is entered into the court registry, is actually not performed at the given establishment, the entity in question cannot use the exemption.

However, the Act itself makes a clear reference to the business activity entered in the application to the national registry of entrepreneurs. Of course, such a solution leaves room for abuse; the data entered in the registry should correspond to reality. Importantly, the PIP does not have the competencies to question registry entries and to determine factual predominant business activity. Thus, these representations greatly exceed the literal text of the law and would require amendments to the Act.

The notion of trading establishment – what about warehouses and distribution centers?

There are similar problems with the definition of a ‘trading establishment’. According to the definition provided in the Act, it refers to any facility where trading happens and where activity connected to trade is performed. The use of the conjunction ‘and’ (oraz) is equivalent to the legislator requiring that both premises included in the definition be met jointly. However, the Ministry of Labor and the PIP insist on a definition that is less favorable to entrepreneurs.

According to them, it is sufficient that trade or trade-related activities are performed in a given establishment for it to be considered a trading establishment.  While this may not be relevant in the case of smaller stores (where typically both actual trading as well as trade-related activities such as product stocking, happen), in the case of many larger entrepreneurs this leads to a real definitional issue.

Large entrepreneurs frequently operate separate stores, where retail activities happen, and separate warehouses and distribution centers, where it does not. Given the literal text of the Act, the ban should not be applicable to establishments where actual retail activities do not happen. The Ministry and the PIP seem to have noticed that their interpretation of the term ‘trading establishment’ is too far-reaching, and it has been moderated somehow recently. This is confirmed, for example, by the recent pronouncements of the deputy minister of family, labor and social policy concerning distribution and warehousing centers. Having said that, due to the potential consequences of a violation of prohibitions imposed by the Act, including severe criminal sanctions, the question of warehousing and distribution centers deserves a definite explanation.

More than just a fine for trade on Sundays

The Act limiting retail trade on Sundays introduces parallel sanctions for misdemeanor and for felony. Asking an employee to perform trade work or other trade-related activities (e.g. product stocking) is a misdemeanor. It carries a penalty between 1,000 zloty and 100,000 zloty. The State Labor Inspectorate can fine the perpetrator up to 2,000 zloty or send the case to court. 

Regardless of this, many individuals can be subject to criminal penalties for the same deed. The new Act introduces a new provision into the Penal Code, Article 218a. It has nearly the same wording as the provision that describes the misdemeanor, but it carries a much more severe penalty. The fine for this felony can reach as much as 1,080,000 zloty. In addition, the court may impose the penalty of limitation of personal liberty (e.g. community service) between 1 month and 2 years. The information about the felony conviction is entered into the National Penal Register, and if the convicted individual is a board member or commercial proxy, the company is banned for 5 years from public tenders. Criminal liability under Art. 218a of the Penal Code may apply to many individuals. In addition to those who actually entrusts work to an employee in violation of the law, it includes those who order this (e.g. a board member who makes a decision about work on a Sunday) or who incite this (e.g. a board member who commissions from a security or logistics company the performance of duties related to product stocking in a retail establishments).