Poland Payroll and Benefits Guide

What global businesses need to know about payroll in Poland

Did you know that Poland, at the time of writing, has the sixth-largest GDP of any country in the Eurozone? Did you also know that it’s one of the biggest countries in Europe for industry, which still makes up 40% of its economy?

If you’ve ever wanted to get your business up and running in Poland, then there’s no time to lose. Costs such as employee wages are still relatively low, but are rising all the time to bring the country closer to the levels of its Western European counterparts. But if you decide to embark on a Polish expansion, you’ll find a workforce that is well-educated and has a reputation for a strong work ethic. Two decades on from its accession to the European Union, its trade links with other countries around the world are arguably as strong as they’ve ever been.

One of the first things to do when evaluating doing business in Poland is to understand your responsibilities from a payroll and employment perspective. This guide sets out all the key basics.

Getting Started

Business registration in Poland is relatively straightforward. Most companies will set up as one of two business entities: a limited-liability company (known as an Sp. z. o. o.) or a joint-stock company (an S.A.). 

The former is preferable for many organizations as the minimum share capital is only 5000 złoty (approximately £1000; $1250; €1150), and because only one official director and one official shareholder are required. Larger businesses, on the other hand, may choose to run an S.A. that is listed on the stock exchange; the minimum share capital for an S.A. is 100,000 złoty (approx. £20,000; $25,000; €23,000).

Companies should register at the National Court Register (KRS) once a bank account has been opened and the Articles of Incorporation have been notarized. Once this is completed, a KRS number will be issued, and then an application can be made for a tax registration (NIP) number.

Many of these processes can be done online, however, at present, some websites like the Portal of Court Registers are only available in Polish. Some of the paper documents involved in the ‘traditional’ process must also be completed in Polish. This means you may need the help of a native Polish speaker.

It’s also important to register for Płatnik, an online government portal for reporting and payments for tax and national insurance. New employees should be registered on Płatnik within seven days of starting. Departing employees should be de-registered within seven days of leaving.

Employment Considerations

Employees can be taken on for a probation period of a maximum of three months, before they are taken on a fixed-term, ‘definite’ contract (maximum 33 months in length) or a rolling ‘indefinite’ contract. Non-EU residents are employed on the same terms as EU citizens, provided they have a valid work permit.

Working hours may not exceed eight hours in a 24-hour period, or more than 40 hours in a week. Anything over and above this is overtime, paid at 150% of the normal rate, or 200% if on a Sunday, a public holiday, or any day that is not a normal working day for the employee in question. An extra 20% premium is also payable for work between 9 pm and 6 am. The maximum overtime allowed is eight hours per week or 150 hours per year. It’s also possible for overtime to be paid as time off in lieu if employees agree.

Poland also has an alternative form of employment called ‘civil law agreements’ (‘umowa-zlecenie’ in Polish), which is similar to freelancing in that people are employed to perform specific tasks. These agreements are free of many of the Polish labor laws applicable to normal employees. 

Notice periods in Poland are two weeks for employees with less than six months’ service, rising to one month after six months’ service, and three months after three years’ service.

Compensation, Bonuses and Severance

Employees in Poland are typically paid on a monthly basis, and employers should be aware that the minimum wage rate is rising regularly and rapidly. Indeed, the rate will rise twice in 2024: on 1 January to 4242 złoty (approx. £845; $1070; €980) and on 1 July to 4300 złoty (approx. £855; $1090; €990). This means the rate will have risen by around 50% in just four years.

Paying bonuses to employees in Poland is common, especially as there are no strict rules around the amounts and forms of them, other than that they are taxed in the same way as normal earnings as part of total employee income.

The use of benefit-in-kind is a gray area within Polish law, especially on fuel for company cars, around which there have been a number of court cases in recent years. Caution should be applied and extensive research should be undertaken before offering BiK to employees. 

Severance pay works on a sliding scale, starting at one month’s pay for those with less than two years of service. This rises to two months’ pay after two years, and three months’ pay after eight years. This only applies to businesses with a headcount over 20.

Tax and Withholding Considerations

All employers who have a physical presence in Poland must operate withholding of tax and social insurance from salary. Despite this, employees must still fill out an annual tax return for administrative reasons.

Personal Income Tax (PIT) is administered by the Urzad Skarbowy (Tax Office) and is set at three progressive bands. The first 30,000 złoty a year (approx. £6000; $7600; €6900) is exempt. Earnings above this up to 120,000 złoty (approx. £23,800; $30,400; €27,700) is taxed at 12%; income above this is taxed at 32%. 

The standard corporate tax rate is 19%, and the main VAT rate is 23%.

Given that as of 2020, the national average salary was around 64,000 złoty (approx. £12,900; $16,100; €14,300), it means the majority of Poland’s workforce benefits from a relatively low income tax rate. 

Employers and employees also have to make a variety of different social security contributions, including:

  • Retirement and pension: 9.76% employer and employee
  • Disability fund: 6.5% employer, 1.5% employee (only on the first 208,050 złoty of annual salary)
  • Accident fund: 0.67%-3.33% employer
  • Labor fund: 2.45% employer
  • Guaranteed employee benefits: 0.1% employer
  • Sickness fund: 2.45% employee
  • Health insurance: 9% employee

Holiday and Leave Considerations

Poland has 13 days of public holidays each year, and days off in lieu must be given if any fall at the weekend. Outside of these, employees in Poland are entitled to 20 days’ paid leave each year, rising to 26 days once they have worked for ten years in total. Once ten years of employment has been reached, employees are not required ten years of service with their current employer, or indeed any single employer, to qualify for the higher rate. An extra ten days are given to employees with disabilities.

Generally speaking, leave is taken as one big block in the summer, however, it can be split into two as long as one of the blocks is at least 14 leave days in duration. Any unused leave can be transferred into the first nine months of the following year.

New hires and part-time workers accrue holiday time on a pro-rata basis. Employees can also request unpaid leave over any period of time, although granting this is at the discretion of the employer.

Maternity leave entitlement in Poland is set at 20 weeks, six of which are taken prior to the birth. Additional time is given for multiple births, while pregnant women or those on maternity or parental leave cannot be dismissed by their employer. Paternity leave is two blocks of one week each, taken within the first two years of the child’s birth. Both maternity and paternity leave pay are 100% of normal salary, and are covered by social security.

Parental leave is 41-43 weeks depending on the number of births. Each parent has the exclusive right to nine weeks, while the remainder is flexible between parents. Normally, parental leave is paid by social security at 100% of salary for the first six weeks and 60% thereafter. However, this can be changed to 80% for the full period if it’s requested within three weeks of the child’s birth. 

There is also an additional two days leave per year, paid by employers, for parents who have at least one child under the age of 14. Two days of paid leave are also given for life events like weddings and funerals.

If an employee is signed off sick by a doctor, then the employer pays for the first 33 days of illness (14 days for employees over 50), after which payments are made through social security. The sick pay rate is normally 80% of salary, but rises to 100% if the illness or injury occurs during pregnancy, or while traveling to or from work.

In Summary

Poland may not be the low-cost European business destination that it used to be, but it still offers great value in relative terms. The fact its rules and regulations are clearly defined and fairly straightforward makes it an even more attractive proposition. But don’t forget that you don’t have to go alone, whether trying to ensure payroll and employment compliance, or needing help integrating your new Polish payroll with the rest of your international workforce. The help of a global payroll partner can make a real difference in both of these areas.

This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional.

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