POLAND GUIDE
EMPLOY IN POLAND WITH EASE
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- Enter any international market without the requirement of opening a local entity
Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.
Expanding to countries such as Poland – which is characterized by a productive and highly-skilled workforce, complex employment and tax laws, a strong infrastructure network linking to the rest of Europe, and leading sectors in business services, automotive manufacturing, gaming, aviation, and renewable energy – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.
Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.
Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework. This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.
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Poland – The Economy
Poland is an important and dynamic market located in the heart of Central Europe. Foreign investors are drawn to Poland due its large population, well-educated and competitive workforce, strong prospects for economic growth, and location affording broad access to the European Union market of 500 million.
With approximately 38 million people, Poland is the largest single market among the “new” European Union (EU) states. Poland joined the EU in 2004, and its adoption of EU legislation has led to economic reforms that have improved the environment for business and boosted economic growth.
With an estimated 2020 GDP of $594.2 billion, Poland is the EU’s tenth largest economy (6th by PPP). According to the World Bank, Poland’s well-diversified economy is among Europe’s least affected by the COVID-19 pandemic.
The economy of Poland is an industrialized, mixed economy with a developed market that serves as the sixth largest in the European Union by nominal GDP and fifth largest by GDP (PPP). Since 1988, Poland has pursued a policy of economic liberalization. The country represents the greatest success story of all the post-communist states. Its economy was the only one in the EU to avoid a recession through the 2007–08 economic downturn.
As of 2019, the Polish economy had been growing steadily for 28 years, a record high in the EU. This record was only surpassed by Australia in the world economy. GDP per capita at purchasing power parity has grown on average by 6% per annum over the last 20 years, being the most impressive performance in Central Europe.
Poland is one of the key immigration destinations in the EU having attracted more non-EU immigrants than any other EU country for a few consecutive years.
Poland is classified as a high-income economy by the World Bank, ranking 19th worldwide in terms of GDP (PPP) and 22nd in terms of GDP (nominal). Poland has a highly diverse economy that ranks 21st in the 2017 Economic Complexity Index.
The largest component of its economy is the service sector, followed by industry and agriculture. With the economic reform of 1989, the Polish external debt increased from $42.2 billion in 1989 to $365.2 billion in 2014. Poland shipped US$224.6 billion worth of goods around the globe in 2017, while exports increased to US$221.4 billion. The country’s top export goods include machinery, electronic equipment, vehicles, furniture, and plastics.
Poland is a member state of the United Nations, the World Trade Organization, NATO, and the European Union (including the Schengen Area).
Small and Medium-Sized Companies
SMEs play a significant role to the Polish economy. The SME sector in Poland is defined as firms with between 10 and 249 employees.
In 2020, SMEs generated 67.7% of total employment, slightly above the EU average of 65.2%. SME productivity, defined as value added per person employed, was around EUR 20 700, less than half the EU average of EUR 40 000.
In 2021, it was recorded that 1, 976, 197 businesses in Poland are SMEs, which makes up 99.8% of businesses active in the country’s market. SMEs also account for 67.7% of the country’s employment, which is around 6,635,864 employees.
In terms of market value, SMEs in Poland contribute around 137.4 billion euros, which makes up around 53% of the country’s GDP.
| Country | Poland |
| Capital | Warsaw |
| No. of States/Provinces | 16 |
| Principal Cities | Warsaw, Krakow, Gdańsk, Wrocław, Zakopane, Poznań, Kazimierz Dolny, Szczecin, Lublin, Bydgoszcz |
| Language(s) | Polish |
| Local Currency | Polish złoty (PLN) |
| Major Religion | Roman Catholic |
| Date Format | dd/mm/yyyy |
| Time Zone | Central European Standard Time (GMT+1) |
| Country Dial Code | +48 |
| Population | 37,776,572 |
| Border Countries | Germany (West), the Czech Republic and Slovakia (South), Ukraine and Belarus (East), and Lithuania and the Russian province of Kaliningrad Oblast (Northeast). |
| Tax Year | 1 January – 31 December |
| VAT % | 23% |
| Minimum Wage | 2,000 PLN per month ($475) |
| Taxpayer Identification Numbers | Tax Identification Number (NIP) Identification (PESEL) number VAT Number |
| Leading Sectors | business services, automotive manufacturing, gaming, aviation, and renewable energy |
| Main imports | Cars ($11.4B), Crude Petroleum ($10B), Vehicle Parts ($9.01B), Packaged Medicaments ($5.21B), and Broadcasting Equipment |
| Main exports | Vehicle Parts ($14.6B), Cars ($6.8B), Seats ($6.14B), Other Furniture ($5.49B), and Computers ($5.05B) |
| Main trading partners | Germany, Czech Republic, UK, France, Italy, China, Russia, and the Netherlands |
| Government Type | Unitary parliamentary republic |
| Current Prime Minister | Mateusz Morawiecki (Prime Minister), Andrzej Duda (President) |
The Main Sectors of the Polish Economy
The country focuses on the following key sectors, which all have a significant impact on the country’s economy:
- Agriculture – The agricultural sector is one of the major industries in Poland – it’s geography, mild climate, and plenty of arable plains sets perfect conditions for this sector to thrive.
The country’s main exports are processed fruits and vegetables, meat, and dairy products. Additionally, Poland is the largest producer of potatoes and rye in the EU, and one of the world’s largest producers of beets and triticale.
Grains are the most important crops in the country, especially wheat, oats, barley, and rye. Poland has the world’s second-largest potato production and is the sixth-largest producer of milk and pigs in the world.
Poland’s large population also acts as an essential market for the country’s agricultural produce. Of the sugar produced in Poland, 83% is consumed domestically, as well as 90% of the poultry, 74% of the bacon, and 84% of the tinned meat. The country has been nicknamed as one of Europe’s “feeders”.
Agriculture accounts for about 4% of Poland’s GDP and is responsible for roughly 12.5% of Poland’s employment. - Manufacturing – The manufacturing sector is also a significant industry in Poland’s economy – automotive production accounts for 11% of Poland’s total industrial output and about 4% of the country’s GDP.
The country is also one of the world’s largest vehicles manufacturers and is Eastern and Central Europe’s largest manufacturer of light vehicles. Annual exports from the automotive sector are valued at over 15.7 billion Euros, which translates to about 16% of the country’s total exports.
The manufacturing industry also includes shipbuilding, mining, petrochemicals and fertilizers, electronics, and electrical machinery. - Tourism – Poland was regarded as the world’s 16th most popular tourist destination in 2016 after an estimated 17.5 million tourists visited the country that year. The tourism industry contributes an estimated 6% to Poland’s GDP, and employs approximately 196,000 people in accommodation and catering.
Poland is known for its natural sceneries and historic sites. Natural tourist attractions in the country include the Tatra Mountains and the Baltic Sea. Cities such as Warsaw, Gdansk, Torun, and Krakow have numerous sites of great historical significance. The numerous cultural events held in the country also attract thousands of tourists. - Finance and Business – Since joining the EU, Poland has played a more significant role in the European financial and business market.
It keeps growing at an unprecedented rate year to year, which is possible thanks to a large and vast supply of highly skilled English proficient workers in the EU.
There are many offices of foreign financial and business-based corporations that provide services but also provide backend support for foreign offices thanks to relatively cheaper Polish labor. Many major global Consulting firms open their facilities seeking opportunities in the Polish market. - Chemicals – The Polish economy has many well-established companies with great influence in both local and global markets, and this applies within the petrochemical and fertilizing industry.
The chemical sector in Poland employs around 300,000 people, which accounts for 11% of employment in the total industry within Poland. - Mining – Mining is the biggest industry in Poland. Poland is the second-largest coal-mining country in Europe, after Germany, and the ninth-largest coal producer in the world.
Poland’s mining and quarrying accounts for 3% of total industrial production. The country consumes nearly all the coal it mines and is no longer a major coal exporter.
Compliance Highlights
- The National Revenue Administration – KAS is responsible for the implementation of revenues from taxes, customs duties, fees, and non-tax budget receivables. KAS protects the interests of the State Revenue and the customs territory of the European Union. It also provides service and support for the taxpayers in the fulfillment of tax and customs obligations.
- The Ministry of Family and Social Policy – a government entity which works on matters relating to family security, stable work, unemployment, the elderly, social security, and equal opportunity.
Labor Contracts Law
General requirements applying to all contracts include:
- The Employment Rights Act 1996 states that employees must receive a written statement detailing terms and conditions of their employment on the first day at work
- In the absence of a written contract, the employer must provide a written statement before the first day giving full details of the parties, remuneration, start date and end date of employment, type of contract and place of work
- Poland’s Labor Code covers fixed term and open-ended contracts, including one for probationary periods
- Any changes to the terms and conditions, particularly pay, must be confirmed in writing
- Additionally, it is possible to conclude a part-time employment contract, which must not have inferior terms and conditions to full-time employees undertaking the same work
- Fixed-term contracts must not exceed three in number over a maximum of 33 months, after which it becomes an open-ended (indefinite) contract
- Contracts for trial periods, which are considered a separate agreement, must not exceed three months
- Notice periods can apply to contracts for trial periods, fixed term, or indefinite. They can vary between two weeks, one month or three months; or three days, one week or two weeks for trial periods
Payroll – Tax Contributions and Benefits
Income Tax: Liability for personal income tax is based on residency. Individuals whose personal and economic base is in Poland and who reside there for more than 183 days in a tax year are residents and are taxed on their worldwide income.
Those who are not based in Poland and do not reside there for more than 183 days are non-residents and taxed only on Polish-sourced income.
The tax year runs from January 1 until December 31 with returns and payments due by April 30 of the following year. The headline rate is 32% with a 4% ‘solidarity tax’ added to income exceeding PLN 1,000,000 (€220,200, US$252,400).
Health and Social Insurance: In Poland, social security consists of old-age pension, invalidity pension, sickness and maternity insurance, insurance against accidents at work and occupational diseases, plus health insurance. In addition, Poland has a system of family benefits, social assistance benefits and unemployment benefits.
Employers, employees and self-employed contribute to the system, with the employers withholding and remitting the employees’ contribution to the Social Insurance Institute (ZUS), in addition to their own percentage contribution of the employees’ gross salaries. As of tax changes introduced in January 2022 the contribution to health insurance by employees was no longer tax deductible.
Employers contribute:
- 16.26% of total gross salary, capped at PLN 157,770 (€34,750, US$39,835), to pensions and disability insurance
- 1.67% of total gross salary (up to nine employees); 0.67% – 3.33% (more than nine employees with rate depending on the business sector) to accident insurance
- 1.67 flat rate, generally, for foreign employers towards accident insurance
- 2.45% of total gross salary to Labor Fund
Employees contribute:
- 11.26% of total gross salary, capped at PLN 157,770 (€34,750, US$39,835), to pensions and disability insurance. As of January 2022, the 7.75% attributed to health insurance was no longer tax deductible
- 2.45% of total gross salary to sickness insurance
Sick Leave and Benefit: Benefit is paid for a maximum of 182 days (270 days if due to tuberculosis or during pregnancy). Regulations regarding benefit periods changed from January 1, 2022. If an employee falls ill with the same or different condition within 60 days of the end of the previous break, the two periods will be counted as the same entitlement period. Previously, even a one-day break between incapacities entitled to a new 182-day period. Exceptions apply to pregnant women.
Benefit is paid by the Social Insurance Institute (ZUS) after the employer pays for the first 33 days, or until the 15th day if the employee is aged over 50. Benefit is calculated on the monthly average wage and varies between 70% and 100% depending on the type of illness or injury.
Paid Vacations: Entitlement is 20 days for employees working for fewer than 10 years and 26 days after working for more than 10 years. In the first calendar year of employment, the worker is entitled to 1/12th of the annual allowance with each month that passes.
Public Holidays: In general, work on public holidays is forbidden with the exception of services that are necessary due to their public usefulness or shift-timing requirements.
Maternity Leave and Benefit: The allowance depends on the number of children born in one birth event. 20 weeks for one child; 31 weeks for twins; 33 weeks for triplets; 35 weeks for quads and 37 weeks for five or more children. The parent is allowed a maximum of six weeks’ leave before the due date. Benefit is calculated over the average salary for the preceding 12 months, at 100% for the first six weeks of leave and 60% for the remaining weeks, paid by the Social Insurance Institute (ZUS).
Paternity / Parental Leave and Benefit: Poland had to integrate the EU’s Work-Life Balance Directive into the Labor Code by August 2022, which covers employees with an employment contract. This stipulates two months paternity leave exclusively for the father, which replaced the previous allowance of 14 days. The father also has the option to take the entire four months of parental leave. Employees may apply for 32 weeks’ parental leave – 34 in the case of multiple births. Both parents can use the allowance simultaneously, in no more than four equal sections.
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