Poland: Changes to Labour and Social Security Laws

Poland: Changes to Labour and Social Security Laws

2020 saw updates to Poland’s labour, tax, and social security landscape: what are the key changes?

From 1 January, numerous regulatory updates to Polish labour law came into effect, many as a consequence of amendments to the Income Tax Act in 2019. Affecting tax and social security, the amendments have broad consequences for payroll compliance in most businesses operating across Poland: accordingly, employers should ensure they’re familiar with the key changes for 2020.

Minimum Wage and Hourly Rate

From 1 January 2020, a new minimum wage of PLN 2,600 has been in effect. A 15% increase from the previous minimum wage of PLN 2,250.

The minimum hourly rate for contractors in Poland also went up to PLN 17 - from the previous rate of PLN 14.70.

Employee Capital Plans

Employee capital plans or savings plans were introduced in late 2019 to cover disability pension insurance and retirement. Known as PPK, the savings plans are voluntary but automatically cover employees aged between 18 and 55, with employers making contributions upon an employees’ request.

Initially, the capital plans were only implemented for the largest employers in Poland but on 1 January 2020 were expanded to a broader range of businesses - with further expansion planned across the following 12 months:

  • Businesses that employ at least 50 people must join the PPK scheme from 1 January 2020
  • Businesses that employ at least 20 people must join by 1 July 2020
  • Other entities will be obliged to join from 1 January 2021

PPK contracts for management employees involve their own deadlines. Employers must conclude PPL management contracts at least 10 business days before the first employee PPK running contract is required to be concluded. That means PPK management contacts must be concluded:

  • By 24 April 2020 in businesses with between 50 and 249 people
  • By 27 October 2020 for businesses with between 20 and 40 people
  • By 23 April 2021 for businesses with 0 to 19 people

PPK running contracts for all other employees must be concluded by the 10th of the month following the deadline by which firms should have created their own PPK scheme. That means that PPK running contracts must be concluded:

  • By 11 May 2020 for businesses with between 50 and 249 people
  • By 10 November 2020 for businesses with between 20 and 40 people
  • By 10 May 2021 for businesses with 0 to 19 people

Limit for Calculating Retirement and Disability Pension Insurance

On 28 November 2019, the Ministry of Labour and Social Policy announced a reduction in the annual basis amount for calculating pension contributions. The Ministry also set out the projected remuneration amounts that would apply to that calculation. In more detail:

  • In 2020, the annual basis for calculating retirement and disability insurance contributions is limited to PLN 156,810 (increased from PLN 142,950).
  • In 2020, the projected average salary for that calculation is PLN 5,227.

Income Tax Collection

Income tax advances: On 1 January 2020, the Personal Income Tax Act introduced changes to the way income tax advances are collected for individual earners. Under the new system, when monthly income exceeds the first tax band (17%), it will be charged at the second tax band (32%).

Tax return templates: Following the implementation of the Personal Income Tax Act, new tax return forms were also introduced. The new tax forms can be obtained via Poland’s Ministry of Finance tax portal.

For more information on the Polish tax and social security system, browse activpayroll’s Global Insight Guide to Poland: our guide also contains background on major Polish industrial sectors, the payroll process, and general business practices.

In other news...

activpayroll announces 2021/22 results
Carbon reduction plan
Charity Matters