In the heart of Central Europe lies Poland, a country with a rich history, high standards of living, and a strong economy. Known for its safety, economic freedom, and free university education, Poland has become an attractive location for businesses seeking to expand into its skilled labor pool.
However, when it comes to hiring and managing employees in Poland, understanding the intricacies of the local labor laws is essential. In this guide, we’ll delve into Poland’s labor market, Polish employment laws, tax regulations, and more to ensure your business operations stay in compliance with both Polish and European Union (EU) standards.
Employment Terms in Poland
Employment Contracts
Polish labor laws are governed primarily by the Labor Code of 1974 and the Non-working Days Act of 1951. Every form of employment should highlight the employment start date, agreed compensation, working hours, deliverables, and anything else relevant to the offered position. There are four types of contracts in Poland:
- Trial Contracts: This contract type serves as a probationary phase, limited to three months, allowing employers to assess an employee's suitability. Renewal of a trial period contract for the same role is not permitted; it can only be renewed for a different job position, and this must be formally requested in writing.
- Fixed-Term Contracts: Employers can offer fixed-term contracts for a maximum of three months, and they can only be renewed thrice. On the next renewal, the employer is required to offer an indefinite employment contract for any further tenure.
- Indefinite-Term Contracts: This contract type blends aspects of both fixed-term and trial-period agreements. It begins with a probationary period and has no set expiration date. The indefinite contract remains active until either party opts for termination or if there's a breach of contract terms, making renewals unnecessary.
- Specific Task Contracts: These types of contracts are short-term and expire upon completion, usually used for seasonal jobs or short contracted work.
Minimum Wage and Working Hours
As of July 1, 2023, Poland's minimum wage is PLN 3,600 per month, with a standard workweek of 40 hours at 8 hours per day. However, these working hours and overtime rules depend on the employee’s profession and can vary considerably.
Overtime work is usually capped at 150 hours per year, with corresponding pay rates ranging from 150% to 200% of the regular rate.
Workplace Equality and Anti-Discrimination Laws
Poland has robust anti-discrimination laws within its labor regulations, covering various grounds to ensure equal treatment and protection of employees from discrimination in the workplace. The Polish Labor Code prohibits discrimination based on gender, age, disability, race, religion, nationality, political beliefs, trade union membership, and sexual orientation.
Taxes and Local Employment Costs in Poland
Employer Taxes
- Social Security: Employers contribute between 19.4% and 22.1% of an employee's gross salary to social security (for a total of approximately 35% when combined with the employee's contribution). This includes accident insurance and contributions to the Labour Fund, Employee Guaranteed Benefits Fund, and the Solidarity Fund. Contributions for pension and disability insurance are capped at PLN 208,050.
- Employee Capital Plans (PPK): Employers contribute a basic 1.5% of gross salary to PPK.
- Health Insurance: Only employees contribute to health insurance via social security, as employees are generally covered by the state-funded health plans.
Employee Taxes
- Income Tax: Polish residents pay taxes of about 12% up to PLN 120,000 and 32% above this threshold. Workers under 26 are exempt from tax on income up to PLN 85,528.
- Social Security: Employees contribute around 13% of their salary to social security, which includes Pension and Disability insurance and sickness insurance.
- Healthcare Contribution: Employees contribute 9% to health insurance, and 7.75% is usually deductible from tax.
- Solidarity Tax: Residents earning over PLN 1 million pay an additional 4% tax.
Employee Rights and Benefits
Employees in Poland are entitled to ample annual leave, sick leave, and are also offered substantial maternity and paternity leave benefits, emphasizing the nation’s commitment to work-life balance.
Annual Leave
Poland has 13 public holidays, and employees are entitled to annual paid time off based on how long they have worked at a company (between 20-26 days of paid time off per year). Employees can also qualify for leave for disability, childcare, military duty, and others.
Sick Leave
Employees are entitled to paid sick leave in Poland, though the length of the leave depends on age and how long the employee has worked at the company. Employers must pay 80% of the employee’s salary for the first 33 days of leave (14 days if the employee is 50+ years old), and the rest is covered by social security. If the sickness continues past this point, the employee can receive social security benefits.
Maternity Leave
Pregnant employees are entitled to 20 weeks of paid maternity leave (or 31 weeks for twins). The leave is paid by social security at 100% of the salary, and employees are required to take at least 14 weeks of leave after the birth of the child. Employees can also receive adoption leave.
Paternity Leave
Fathers can receive 2 weeks of paid paternity leave, taken with 2 years after the birth. If the mother wants to return to work early (after the 14 weeks of mandatory maternity leave), the father can use the remaining balance of the maternity leave. Employees can also receive adoption leave.
Parental Leave
Parents in Poland can also take up to 41 weeks of paid parental leave after the maternity leave has been fully completed. This leave is paid at 70% of the salary and can be used entirely by one parent of simultaneously by both parents.
Remote Working Policies in Poland
The Polish government is currently crafting regulations for remote working, potentially making certain employer duties mandatory, such as workspace provision standards. Remote work arrangements must be mutually agreed upon by employers and employees.
Employer Responsibilities
- Incorporate remote work rules into employee agreements.
- Supply necessary equipment (like laptops and phones) and handle installation, maintenance, and insurance.
- Provide technical support and training for the equipment used.
- Conduct tailored health and safety training for home settings.
- Inform employees about relevant health and safety regulations and confirm their understanding in writing.
- Ensure home workstations meet health and safety standards, potentially including co-financing corrective glasses.
- Ensure equal treatment of remote employees in all aspects of employment, including training and advancement opportunities.
Terminating Employment in Poland
Termination Process
In Poland, there are four ways to end an employment relationship between an employer and employee:
1. Mutual Agreement: Employment can end with both parties' consent, with no restrictions on initiation, timing, or contract type.
2. Via Notice Period:
- Employees can resign at any time, providing the required notice.
- Employers must have specific, genuine reasons to end an indefinite contract with just cause and cannot compensate in lieu of notice. In this case, employers will bear the burden of proof to justify the termination.
- The notice period depends on the length of employment and is between 2 weeks and 3 months.
3. Immediate Termination:
- By Employer: For severe employee misconduct, crime confirmation, or loss of necessary licenses. Employers have one month to act upon discovering the fault.
- Due to Employee's Inability to Work: Including prolonged illness (longer than the duration of employment) or unjustified absence.
- By Employee: For employer's severe breach of obligations or health reasons after a medical certificate.
4. Contract Expiry: For probationary or fixed-term contracts, the relationship will end at the end of the contract period unless it is renewed.
Severance Pay
If an employee is let go due to redundancy/group dismissal, or for reasons that are not attributable to the employee or their performance, they are entitled to severance pay based on their length of service with the company:
- 0-2 years: One month's salary
- 2-8 years: Two months' salary
- 8+ years: Three months' salary
Hire Compliantly in Poland
Figuring out the ins and outs of hiring in another country can be complex, but finding a partner with the right expertise and solutions can help your business remain compliant. Consider partnering with Remofirst for Employer of Record (EOR) services that streamline global payroll in 170+ countries.
Learn more about hiring and managing employees in Poland in our comprehensive Poland Country Guide.
