Polish Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Poland might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Poland, including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.
Benefits and entitlements for employees in Poland are based on the Polish Constitution and the Labor Code, which updates provisions with occasional amendments. European Union (EU) directives, case law and collective and trade union agreements also play a role The State Labor Inspectorate (SLI) supervises compliance with regulations and instigates prosecutions where rules are ignored.
Foreign companies hiring employees in Poland must operate within this fluid arrangement of legislation that provides safeguards and guarantees for the workforce. Minimum guarantees include:
- Minimum wages
- Paid vacations
- Working hours
- Termination, severance, and notice periods
- Sick leave
- Maternity allowances and benefits
The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.
What Compensation Laws exist in Poland?
The bulk of legislation concerning the employees’ rights and employers’ obligations are drawn together under the Labor Code and the Polish Constitution, while the Employment Rights Act largely deals with contracts. A minority of employees in Poland are covered by Collective Bargaining Agreements (CBAs), which operate mainly at company and workplace level. Where in place, CBAs can improve statutory minimums but not undercut them.
The Labor Code: This is the key piece of employment law governing the entitlements of employees and the duties of employers in all areas of employment law. Employers cannot attempt to enter contractual agreements with employees which are less advantageous than terms laid out in the Code. The Code is periodically updated in relation to various employment regulations, which in other countries are often formed in separate acts or statutes
The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.
Drawing up contracts is tricky enough, but in Poland it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Employees must be given a written contract no later than the first day of employment. Do not take the risk of paying penalties for ignoring these responsibilities … or being late!
Compensation, entitlements, and benefits include the following, all of which can be improved by collective agreements, but not diminished.
- National Minimum Wage: The minimum was set at PLN 19.70 (€4.35, US$4.97) per hour and PLN 3,010 (€664, US$760) each month in January 2022
- Working Hours and Breaks: Working hours should not exceed eight in 24 hours, or more than 40 in a five-day week averaged over a period determined by the employer up to four months. Employees are entitled to a paid 15-minute break for working six hours, with the option of an unpaid lunch break of 60 minutes – although this means making up the hour at the end of the day. Flexible working hours are allowed under the Labor Code
- Overtime: The permitted maximum is 150 hours in a calendar year unless otherwise covered in the employment contract, collective agreement, or workplace regulations. Total weekly working hours, including overtime, should not average more than 48 in the reference period determined by the employer. Overtime is paid at 100% above the normal hourly rate for Sundays or bank holidays; 50% extra for overtime on other days; 100% extra for every hour worked above the norm contractually agreed for the reference period
- Termination and Severance: Contracts may be terminated by mutual agreement. Employers terminating contracts with immediate effect must provide a ‘termination letter’ justifying the reasons. Employees protected from termination include those within four years of retirement; those on maternity, paternity, parental, childcare, or sick leave; those on vacation and trade union or works council members. Employers may need to notify trade unions of intended terminations. Severance may apply if the employer terminates a contract either with notice or by agreement between the parties; if the employer is responsible for the termination and if they have more than 20 employees. Employees are entitled to severance pay of: One month if they have worked for the employer for less than two years; two months for between two and eight years; three months if they have worked for the employer for over eight years. Severance pay cannot exceed 15 times the national minimum wage
- Notice Periods: Statutory minimum notice periods for indefinite contracts are: At least one week if employed between one month and two years; one week for each year if employed between two and 12 years; 12 weeks’ notice if employed for more than 12 years. Improved terms can be agreed contractually or by collective agreements. Probationers are entitled to three days, one week or two weeks’ notice depending on the length of the trial period
Social Security in Poland
Poland’s social welfare system is administered by the Social Insurance Institute (Zaklad Ubezpieczeń Spolecznych, ZUS), and comes under the Ministry of Family and Social Policy. ZUS is responsible for collecting contributions and distributing benefits.
There are four categories covering old age pension, disability pension, sickness insurance including maternity benefit and work accident insurance.
Employees contribute a total of 13.71% to pension, disability, and sickness insurance from gross salary. Employers contribute a total of 20.38% of the employees’ gross salary towards pensions, disability and accident insurance, the employee guaranteed benefits fund and the Labor Fund.
Statutory Employer Costs in Poland
- Social Insurance: All employers must be registered with the Social Insurance Institute (ZUS) to remit the contributions. Employers in Poland must contribute the equivalent of 20.38% of their employees’ gross salary towards pensions, disability, and accident insurance in addition to the employees’ supplementary benefits fund and the Labor Fund
- National Minimum Wages: All employers must comply with minimum wages that are set either by statutory regulations, contracts, or improved by Collective Bargaining Agreements (CBAs). Poland has a federal mandatory minimum for wages, which from January 2022 is PLN 19.70 (€4.35, US$4.97) per hour and PLN 3,010 (€664, US$760) each month
- Corporate Income Tax (CIT): Employers face the statutory cost of corporate taxes on their taxable profits. The standard rate is 19%, with returns filed and final payments made within three months of the end of the tax year. A rate of 9% applies since January 2020 to companies with revenue up to PLN 5,451,970 (€1,200,000, US$1,374,877). The lower rate can apply in some circumstances to start-ups launched since 2019