Employer of record in Poland | Employment Law

Employment Law in Poland

Contracts

In Poland, employment contracts are categorized into fixed-term and indefinite-term agreements, each governed by the Polish Labour Code. Indefinite-term contracts are the standard form of employment and must detail essential terms such as job responsibilities, workplace location, remuneration, working hours, and the commencement date. Fixed-term contracts are permissible but are subject to specific limitations. An employee may be employed under a fixed-term contract for a maximum of 33 months, and no more than three consecutive fixed-term contracts are allowed; exceeding these limits results in the contract being deemed indefinite.

Employees under both contract types are entitled to statutory benefits, including social security, health insurance, paid leave, and other mandated benefits. Employers are required to register employees with the Social Insurance Institution (ZUS) to ensure access to these benefits.

Polish law also recognizes apprenticeship agreements aimed at vocational training for individuals aged 15 to 18. Employers engaging apprentices must provide structured training aligned with approved curricula, pay apprentices a stipend in accordance with government regulations, ensure a safe working environment, and adhere to standard working hours.

Termination and notice periods

In Poland, employment contracts can be terminated by mutual agreement, with notice, or without notice under specific circumstances. The Polish Labour Code mandates that terminations must be in writing, stating the reason for termination and informing the employee of their right to appeal to a labor court.

The notice period for terminating an employment contract depends on the employee’s length of service with the employer:

• Two weeks’ notice for employees with less than six months of service
• One month’s notice for employees with at least six months but less than three years of service
• Three months’ notice for employees with three or more years of service
• These notice periods apply to both indefinite and fixed-term contracts

Termination without notice, often referred to as disciplinary dismissal, is permissible under Polish labor law for just causes, including serious misconduct, gross violation of basic employee duties, willful disobedience, fraud or breach of trust, commission of a crime against the employer or their family. Such termination must occur within one month of the employer becoming aware of the grounds for dismissal.

Employees terminated for reasons not attributable to them, such as organizational changes or economic downturns, may be entitled to severance pay. The amount depends on the employee’s length of service and the size of the employer.

As your employer of record (EOR) in Poland, we can assist you in managing employee terminations compliantly, providing legal guidance and a personalized process to ensure adherence to Polish labor laws.

Probation periods

The Polish Labour Code governs probationary periods, allowing them to last up to three months. This period enables employers to evaluate an employee’s suitability for a role. During probation, either party can terminate the employment with notice periods varying based on the probation’s length.

Working hours and overtime

In Poland, the standard workweek typically runs from Monday through Friday, with employees working eight hours per day, totaling 40 hours per week. Employers are required to ensure that working hours do not exceed these limits without appropriate compensation.

Any work performed beyond eight hours in a day or 40 hours in a week is considered overtime. Employees are entitled to additional compensation for overtime hours, calculated as follows:

• 50% premium over the regular hourly rate for overtime hours worked on regular workdays
• 100% premium over the regular hourly rate for overtime hours worked at night, on Sundays, public holidays, or on a day off granted in exchange for work on a Sunday or public holiday

Taxes

Polish employers are responsible for adhering to robust tax and regulatory compliance frameworks.

Income tax

Employers must withhold personal income tax (PIT) from employees’ salaries based on progressive tax rates: 12% for annual income up to 120,000 PLN and 32% for income above this threshold. Withheld amounts must be remitted monthly to the tax office and reflected in annual PIT returns. Late or incorrect filings may result in penalties.

Social contributions

Both employers and employees are obligated to contribute to Poland’s national insurance system, which covers pensions, disability, sickness, and healthcare. Key programs include:

• Social Insurance Institution (ZUS): Pension, disability, sickness, and accident insurance
• National Health Fund (NFZ): Public health insurance

Employers are required to withhold the employee’s share and remit total contributions monthly.

Business tax compliance

Employers in Poland must adhere to various taxation and regulatory compliance requirements to operate legally and avoid penalties.

• Corporate tax: The standard corporate tax rate is 19%. Small taxpayers with annual revenues not exceeding €2 million EUR may qualify for a reduced rate of 9%.
• Value added tax (VAT): VAT applies to businesses with annual turnover exceeding 200,000 PLN. Employers must register, file monthly or quarterly returns, and pay VAT on applicable goods and services.
• Withholding tax: Employers must deduct withholding tax from employee salaries, vendor payments, and contractor fees. Taxes withheld must be remitted by the 20th of the following month, and periodic returns must be filed.
• Income tax returns (ITR): ITRs are filed annually based on company profits. Companies must also file annual financial statements with the Polish tax authorities.

Employer payroll contributions

In Poland, employers are obligated to withhold income taxes from employees’ salaries before disbursement. This process involves deducting advance payments of personal income tax (PIT) based on progressive tax rates of 12% and 32%, depending on the employee’s income level. Employers must remit these withholdings to the tax authorities monthly. Employers are required to provide both the revenue office and employees with a PIT-11 form. This document details the income earned and the taxes withheld, enabling employees to accurately file their annual tax returns.