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Practice Area Articles

Poland

February 05, 2024

By Paul Hastings Professional

Back to International Employment Law

Poland

KEY DEVELOPMENTS FOR 2024

Adequate minimum wages

By 15 November 2024, Poland must implement into national law EU Directive No. 2022/2041 on adequate minimum wages. The Directive mandates the applicable minimum remuneration to provide employees with a decent life, taking into account the cost of living and the general level of wages. In addition, the Directive imposes an obligation to create a plan to increase employee participation in collective agreements on remuneration schemes. However, it is currently not entirely certain whether the directive will be implemented into Polish law. The directive has been challenged by Denmark before the Court of Justice of the European Union (“CJEU”), which will now rule on the validity of the directive. The main objection is that the directive essentially means that the EU is directly interfering in determining the level of remuneration in Member States, and this may infringe upon the right of association (which is not within the competence of the EU legislator).

Equal pay for men and women

Poland must implement EU Directive No. 2023/970 (the “Directive”) on strengthening the application of the principle of equal pay for men and women for equal work or work of equal value through pay transparency and enforcement mechanisms. Poland should implement national legislation on the introduction of transparent, precise, and fair mechanisms for setting remuneration and pay rules. The Directive also provides for the introduction of monitoring and corrective mechanisms in situations of pay inequality. The initiative was introduced to tackle the gender pay gap, but its systemic approach will also address a range of other pay inequalities. In practice, this means that employers must provide applicants with information on the starting remuneration (or salary range) for the job or the collective agreement applicable to the job (where applicable) either in the job vacancy notice, prior to the job interview, or otherwise prior to the conclusion of an employment contract. The Directive also sets out the right of employees to receive information from the employer on individual pay levels and average pay levels (broken down by gender, for categories of employees performing the same job) and annual information addressed to employees on the above right and the way it is exercised.

Overtime

On 19 October 2023, the CJEU issued a judgment on the payment of overtime work to part-time employees, which may affect the way overtime is paid in Poland. According to the Polish Labour Code, the parties should specify the number of hours of overtime work, the exceeding of which entitles the employee to payment of overtime. If there is no such provision in the employment contract, according to case law of the Polish Supreme Court, a part-time employee is entitled to overtime according to the rules applicable to a full-time employee (e.g., part‑time employee, who should work four hours per day receives overtime after working eight hours). Such an interpretation constitutes unequal treatment. In practice, this means that the employer will be required to pay overtime work if the part-time employee exceeds their limit of hours on a given day (e.g., a part-time employee, who is supposed to work four hours a day will receive overtime if he/she works more than four hours, not eight). The new CJEU ruling means that employers should consider changing the way they approach overtime. The Polish courts may change the jurisprudential direction of the above provision, in accordance with the CJEU’s position, in 2024.

With thanks to Wioleta Polak and Karolina Kornelak of Wiercinski, Kwiecinski, Baehr sp.k. (WKB) for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2023

Polish Labour Code

The Polish Parliament are currently working on the amendments to the Polish Labour Code regarding remote work and sobriety testing of employees and individuals engaged under civil-law contracts. Consequently, it appears that in the first quarter of 2023, the companies should introduce internal procedures related to these topics.

The Polish government is currently working on the new provisions of law. Provisions regarding remote work will be applicable after 2 months from the date of announcement and provisions regarding sobriety tests will be applicable after 14 days from the date of announcement. According to information provided by the member of the government, the new law will become effective in the first quarter of 2023. The employer may be required to implement a number of practical changes with respect to these areas of law in 2023.

Minimum remuneration for work and minimum hourly wage

The Polish Government has adopted a regulation establishing a new amount of the minimum remuneration for work and a new amount of the minimum hourly wage in 2023, which will come into effect on 1 January 2023.

The extraordinary double change in the amount of the minimum remuneration is related to the average annual consumer price index projected for the following year. According to the adopted rule, if this index is at least 105%, two dates are set for changing the amount of the minimum remuneration and the amount of the minimum wage per hour. In the adopted assumptions of the state budget for 2023, the amount of the average annual rate of increase in consumer prices was projected at 107.8%. The main provisions of the regulation are to raise the minimum wage and the minimum wage per hour.

Employers should make sure they guarantee their employees a minimum remuneration for their work, and entities receiving services performed by individuals engaged under civil law contracts (e.g., B2B contracts, contracts of mandate) should guarantee contractors a minimum wage per hour.

Collective labor disputes

The Government is currently working on a bill on collective labor disputes, which is intended to replace in its entirety the act on the resolution of collective disputes that has been in force in Poland since 1991.

The draft of the new law was created to adapt the legislation to the current market situation and to guarantee new, transparent procedures for resolving collective disputes. The draft is currently at an early legislative stage, so its assumptions may be subject to modification.

In particular, the draft provides the following:

resignation from the enumerative definition of the subject matter of a collective dispute in order to allow the conduct of a dispute in all collective matters (collective trade union rights or freedoms, as well as for professional, economic or social collective interests or rights, related to the performance of work);
introduction of a requirement to select representation of trade union organizations in order to facilitate agreement in the event of a multiplicity of trade unions;
introduction of judicial review of the legality of the strike referendum to introduce the possibility of examining the legality of the conducted vote on the announcement of a strike under the provisions of the Polish Civil Procedure Code on non-litigation proceedings;
introduction of a limitation on the duration of the collective dispute – the dispute will be allowed to last no longer than 9 months from the date of the employer’s disregard of the demands (with the possibility of extending the duration of the dispute by three months by decision of the parties to the dispute).

We recommend employers to monitor the evolution of these regulations on an ongoing basis (especially employers in which the trade unions are operating).

With thanks to Monika Walasek and Karolina Kornelak of Wiercinski, Kwiecinski, Baehr sp.k. (WKB) for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2022

Implementation of new whistleblower laws

Poland must implement EU Directive 2019/1937 of the European Parliament and the Council of 23 October 2019 on the protection of whistleblowers (the "Directive") into its domestic legal order. The purpose of the Directive is to provide an adequate level of protection for whistleblowers notifying violations of EU and national law (e.g., with respect to public procurement, financial services, products and markets, personal data and privacy protections, and the security of networks and information and communications systems).

Protection will apply regardless of the whistleblower's form of employment, it will cover not only employees, but also individuals engaged under civil law contracts, volunteers, trainees and interns, individuals working for the employer but under the supervision of entities with which the employer maintains business relations (e.g., contractors, suppliers), other individuals involved in the management, supervision or administration of the employer (e.g., shareholders, partners, executive and non-executive directors), and persons whose employment relationship has either ended or not yet begun. The Directive requires Member States to introduce penalties for retaliation against whistleblowers or their unfavorable treatment on account of reporting irregularities.

According to information published by the Government, the new law will impose a duty to establish internal whistleblower channels on entities:

in the private sector, provided that they have at least 50 employees; and
operating in the financial sector (e.g., banks, investment funds, insurance and reinsurance undertakings) regardless of the number of employees.

The establishment of internal whistleblower channels will not be mandatory for entities not falling into either of the above categories. Note that the Government has proposed to include sanctions for the retaliatory dismissal or unfavorable treatment of whistleblowers, in particular proposing that retaliatory dismissals be deemed ineffective by law.

Employers should continue to monitor the developments in this area of law and establish appropriate internal whistleblower channels at the appropriate time.

Changes to Polish tax and social security laws

Polish Parliament has introduced significant changes to Polish tax and social security laws which have a significant impact on employers. From 1 January 2022, employers in Poland are required to comply with new rules for calculating health insurance contributions and personal income tax advance payments, as well as rules for calculating tax applicable to employees who make personal use of their business cars.

Employers need to change the manner in which they calculate the value of health insurance contributions. Under the new law, the amount of such contributions depends solely on the employee's income (without the possibility to make certain optimisations e.g. deducting the amount of the contribution from the income tax). Additionally, under the new law, Polish companies are required to pay health insurance contributions for those members of their management board who receive remuneration under applicable corporate resolutions, with such contributions being equal to 9% of their remuneration.

The new law also includes rules for calculating the value of personal income tax advances due on employees' salaries. The value of the tax-free income allowance and the threshold for the application of a 32% tax rate has increased to PLN 30,000 per year and PLN 120,000 per year respectively.

Other important amendments include the introduction of rules for calculating the tax applicable for the personal use of business cars. Under previously binding law, the value of this tax depended on the car's engine capacity. The new rules changed the indicator used to calculate the value of this tax to the car's overall horsepower.

These changes have a detrimental effect on individuals who earn a lower amount of net remuneration. Employers in Poland should take into account the necessity of familiarizing themselves with the new rules for calculating health insurance contributions and personal income tax advances. They should also be aware that the new provisions may encourage employees to demand higher salaries during their annual assessments or performance reviews.

Increased attention on workplace equality

Increased attention will be paid to workplace equality in 2022. Once adopted by the EU, Poland will be required to implement the Directive of the European Parliament and of the Council to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms. Additionally, workplace gender equality will be promoted through equalizing access to rights regarding parenting, by way of:

a draft bill providing for "family leave" (urlop rodzinny). Employees may be granted this form of leave for up to 12 months in order to care for their close family members. Such leave would be available to employees employed for at least 6 months (including previous periods of employment).
the implementation of Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU. This Directive should help to achieve better gender equality in the labour market by making it easier for employees who are parents or carers to reconcile their work and family lives.

Employers should monitor the evolution of these regulations on an ongoing basis. They may also be required to implement a number of practical changes with respect to this area of law in 2022.

KEY DEVELOPMENTS FOR 2021

Obligation to report contracts for specific work to the Social Insurance Institution (ZUS)

Starting from 1 January 2021, the entrepreneurs (payers of social security contributions) will be obliged to inform the Social Security Institution (ZUS) about concluding a contract for specific work within seven days on the official form. On the basis of the reported data, ZUS will make an assessment whether a given contract actually fulfils the conditions of a contract for specific work.

The obligation to report will cover only those contracts for specific work which are not subject to social security contributions. As a result the contracts for specific work concluded with the payer's employees will not have to be reported. In view of the implementation of the new regulations, increased controls of ZUS can be expected. Therefore, companies should be prepared for the new obligations and review the contracts already in force from the perspective of their eligibility. If, during the inspection, ZUS qualifies a given contract for a specific work as a service contract, a contract of mandate or an employment contract, the company will be obliged to pay the outstanding social security contributions.

A failure to report the contract for a specific work will be subject to a fine of up to PLN 5,000.

Remote work regulated by the Labour Code

Remote work in Poland has been temporarily regulated under the COVID‑19 epidemic regulations. In order to regulate the remote work in the Labour Code, the Ministry of Family, Labour and Social Policy ("Ministry") presented a draft amendment on this issue which was to be processed by the Social Dialogue Council. It provides, among other things, for the obligation to introduce regulations on remote work, to provide the employee performing remote work with materials and tools necessary for its performance and obligation to pay a cash equivalent to the employee working remotely with the use of his/her own tools.

According to the information provided by the Ministry, the new regulations came into force in the first quarter of 2021, however the draft may be a subject to further amendments.

Inspections of the use of funds granted under the "Anti‑Crisis Shields"

During the pandemic, in order to support entrepreneurs, the Polish Government issued acts of law called collectively as "Anti‑Crisis Shield." The Shield provided for different instruments granting the right to financial support for entrepreneurs who suffered from COVID‑19, subject to specific conditions. The support included the financial aid from the Polish Development Fund ("PFR") and co‑financing of employee's remunerations from the Guaranteed Employee Benefits Fund ("FGŚP").

Currently, inspections of companies which received different forms of support have been started. During the inspections, the criteria for obtaining financial support were to be verified, including the data indicated in the declarations that were submitted when applying for financial help.

The failure to comply with the granting conditions may result, among others, in an obligation to return the funds by beneficiaries in full or in part.

KEY DEVELOPMENTS FOR 2020

Anti-Crisis Shields

The Polish Parliament adopted a number of acts (the "Anti-Crisis Shields"), which have introduced new measures aimed at supporting entrepreneurs affected by the economic crisis, including providing them with co-financing from the State.

In particular:

the Anti-Crisis Shields allow employers to obtain additional financing from the State to maintain financial liquidity;
employers are allowed to modify employees' employment conditions more freely (including to reduce their remuneration or working time);
if certain conditions are met, the severance pay and other benefits due on termination of an employment or a civil law contract cannot exceed 10 times the minimum remuneration;
the parties to a non-compete agreement will be able to terminate it by giving seven days' notice (applicable not only to employment contracts, but also to agency agreements, mandate agreements, services agreements and contracts for specific work);
employers may unilaterally grant employees up to 30 days of unused holiday leave from previous calendar years; and
employers may suspend the duty of establishing or operating the company social benefits fund, making basic write-offs or paying holiday leave benefits.

The Anti-Crisis Shields amended or supplemented many Acts and Regulations, which will undoubtedly gravely affect many areas of companies' business activities over the next few months.

Increase to Minimum Wage

The Regulation of the Council of Ministers on the minimum monthly wage and minimum hourly rate in 2020 provides that employees in Poland should not be paid less than PLN 2,600 per month and PLN 17 per hour (in 2019, it was PLN 2.250 and PLN 14.70, respectively). This increase also affects other financial benefits received by employees that are calculated on the basis of the minimum wage, such as night work allowance, minimum remuneration for downtime, and statutory severance pay.

In addition, as of 1 January 2020, the seniority allowance is no longer taken into account when checking if the minimum national pay threshold has been met. Pursuant to the new legislation, the seniority allowance should be paid on top of the minimum wage, which may additionally increase an employer's financial burden. The objective of this amendment is to differentiate the financial situation of more experienced employees from those with less tenure.

Employee capital plans obligatory for medium-sized employers

Under the Act on Employee Capital Plans ("Act"), employers with at least 50 employees as at 30 June 2019 had been under an obligation, as of 1 January 2020, to introduce a new pension saving vehicle in the workplace. The first group of employers that were subject to this obligation included the biggest employers in the market. It is important to note that, even if the number of individual employees drops below 50 after 30 June 2019, the employing entity is still obliged to introduce an employee capital ("ECP") under the Act. The system not only covers employees, but also covers other eligible persons including civil contractors (for the ease of reference, we use the term 'employees' to address all individuals).

The ECP implementation process consists of several steps which must be followed. The first one is to choose an authorised financial institution to manage and operate the plan. Next, the employer is obliged to conclude two separate agreements:

an ECP management agreement (by 27 October 2020 – the date was postponed due to the COVID-19 pandemic) between the financial institution and the employer; and
an ECP operation agreement (by 10 November 2020 – the date was postponed due to the COVID-19 pandemic) between the financial institution and the employer on behalf of all employees.

Under the ECP, both the employing entity and the employee are legally obliged to pay monthly contributions to the ECP. The basic contribution by the participant amounts to 2% of their remuneration (for employees with lower income rates, it may be reduced to 0.5%), while the employer's mandatory contribution amounts to 1.5% of the participant's remuneration. Additional voluntary contributions of up to 2.5% of the employee's remuneration are optional for the employing entity, and up to 2% for the employee.

As of 1 July 2020, the Act also applies to entities employing at least 20 employees (as at 31 December 2019).

KEY DEVELOPMENTS FOR 2019

New way to save for retirement under Employee Capital Pension Schemes ("ECPS")

In January 2019, employing entities became obliged to:

sign an agreement with a chosen authorised financial institution, which will set up and manage the ECPS; and
conclude agreements to run the ECPS for each employed individual.

The obligation to set up ECPS will progressively affect the employing entities over the next few years, starting in July 2019 with those employing at least 250 Employed Individuals as at 31 December 2018, and gradually extending to smaller entities to cover all employing entities by 2021.

Both the Employing Entities and the Employed Individuals will be obliged to make contributions to the ECPS account, but an Employed Individual may resign from participating by submitting a declaration in this respect.

Certain employing entities will be released from the obligation to run the ECPS, provided that:

they already operate Employee Pension Schemes (EPS) constituting an alternative and voluntary way to save for retirement, based on the currently applicable law;
they pay contributions to EPS per each individual in the minimum amount of 3.5% of remuneration; and
at least 25% employees of a given entity join EPS.

Retention of employment-related records/electronisation of the records

As of 1 January 2019, the retention period for employee records has been shortened from 50 to 10 years. This rule applies without limitation to persons employed as of 1 January 2019. Under certain conditions, it will be possible to apply the shortened retention period to those employed between 1 January 1999 and 31 December 2018.

In addition, the employer can choose whether to hold paper or electronic copies of employee records. In relation to all employees hired from 1 January 2019, employers are required to add a Part D to the employee files which contain all documents relating to the employees’ accountability such as disciplinary letters.

Right of civil law contractors to establish and join trade unions

As of January 2019, contractors performing work under civil-law contracts (e.g. contracts of mandate, contracts for performing a specific task) will have the right to establish and join trade unions provided the right will be granted to civil-law contractors who (i) perform services in consideration for remuneration and do not employ other individuals for such work and (ii) have such rights and interests connected with the performance of services which can be represented and defended by a trade union. Consequently, civil-law contractors will enjoy rights and privileges that were previously only guaranteed to employees e.g. protection against termination of contracts in particular cases.

KEY DEVELOPMENTS FOR 2018

Implementation of the GDPR

The GDPR will come into force in May 2018, pursuant to which employers will have to amend existing procedures for obtaining, collecting, processing and safeguarding personal data. Any employer who does not comply with the new guidelines will face financial penalties amounting to EUR 20 million or 4% of the overall global turnover for the previous financial year.

Ban on Sunday Trading

On 1 March 2018 a bill will come into force that will phase out Sunday trading by 2020. . Until the end of 2018, shops will be open on two Sundays of the month (first and last). In 2019 stores will be open only on the last Sunday, and in 2020 the ban will cover all Sundays (with some exceptions, e.g. before Christmas).

Draft Act on Transparency in Public Life - Protection of Whistleblowers at Work

Under a draft law aimed at protecting whistleblowers (expected to come into force in 2018) whistleblower status can be granted by a prosecutor to persons who report corruption related to an employer or client. This new category of employee, with whistleblower status, will be afforded protection from termination or less favourable changes to the terms of their employment without the prosecutor’s consent.

Higher Social Insurance Contributions

From 2019, the cap on social security contributions for salaries exceeding PLN 127,890 ($35,000) will be removed. This will result in higher taxes for both employers and employees.

KEY DEVELOPMENTS FOR 2017

Introduction of a minimum hourly pay rate

From January 2017, certain individuals engaged under service contracts will be entitled to a minimum rate of hourly pay, meaning time spent working will have to be recorded. Importantly, the new regulations will not apply to individuals who can choose the place and time of work, as well in cases where remuneration is based on the result of the performed work.

KEY DEVELOPMENTS FOR 2016

Changes to duration of parental leave

Parental leave has now been extended to up to 32/34 weeks (depending on the number of births). It is also now possible to take parental or child-raising leave until the end of the calendar year in which the child turns six.

New provisions in the Labour Code impacting employment contracts

Employment contracts under Polish law for the duration of a specified task are not lawful. Individuals may, however, continue to perform work under employment contracts for a trial period, or an indefinite or definite period of time.
Restrictions on use of fixed-term employment contracts. Employers are allowed to conclude a maximum of three fixed-term contracts with the same employee providing the total duration of these contracts does not exceed 33 months. After this period, a fixed-term employment contract will have the same effect as a permanent contract.
There is a new right for employers to put employees on gardening leave.
The notice periods for fixed-term contracts and permanent contracts will need to be the same and will be calculated based upon length of service with the particular employer.
New rules concerning use of trial period contracts.
New obligation to provide an employment contract before starting a new job. Employers who do not comply with the new regulations may incur a fine of between PLN 1,000-30,000.

Restrictions on posting employees to Poland

One of the most important changes of 2016 was the implementation of the EU Posted Workers Directive into Polish law. Under this legislation, foreign employers must ensure that the working conditions of employees posted to work in Poland meet the requirements of Polish law. Employers posting employees to Poland have to notify the National Labour Inspectorate (NLI) of certain matters necessary for conducting inspections at the workplace.

Review of protections for pregnant and breastfeeding women to bring it into line with EU law

From August 2016, new provisions of the Polish Labour Code provide certain protections for women who are pregnant or breastfeeding from harmful and difficult working circumstances. The amends stem from EU recommendations which provide that prohibiting women from performing certain types of work is a form of discrimination and, in fact, limits work possibilities. The Polish Council of Ministers will issue a new list of work prohibited for pregnant and breastfeeding women.

With thanks to Wioleta Polak, Monika Walasek, Karolina Kornelak and Dr. Mateusz Gajda of Wierciński Kwieciński Baehr for their invaluable collaboration on this update.