Minimum Wage

Poland has seen consistent increases in its minimum wage over recent years. As of July 1, 2024, the monthly minimum wage in Poland is set at 4,300 PLN (approximately €988.99). This marks a significant rise from previous years, reflecting the government’s efforts to improve living standards for workers.

For 2025, the Polish government has proposed a further 7.6% increase, which would bring the minimum wage to 4,626 PLN (about €1,059) per month. This proposed increase is more moderate compared to the substantial hikes of 19.4% in 2024 and 16.1% in 2023, which were implemented to counter high inflation rates.

Income Tax

Poland employs a progressive income tax system with two main tax brackets:

Annual Taxable Income (PLN)	Tax Rate
0 – 120,000	12% minus PLN 3,600
Over 120,000	PLN 10,800 + 32% of excess over 120,000

It’s important to note that the first 30,000 PLN of annual income is tax-free. This means that taxpayers earning less than this amount are exempt from paying income tax.

For high-income earners, an additional 4% solidarity tax applies to annual income exceeding 1 million PLN.

Employer Payroll Costs

Employers in Poland are responsible for various social security contributions, which typically range from 19.21% to 22.41% of an employee’s gross salary. These contributions include:

• Retirement Pension: 9.76% (applied on salary up to 234,720 PLN annually)
• Disability Fund: 6.50% (applied on salary up to 234,720 PLN)
• Accident Fund: 0.67% – 3.33%
• Labor Fund: 2.45%
• Guaranteed Employee Benefits Fund: 0.10%

Overtime Pay

Polish labor law strictly regulates overtime work to protect employees’ rights. The standard workweek in Poland is 40 hours, typically spread over five days. Overtime regulations include:

• Maximum overtime: 48 hours per week, not exceeding 150 hours annually
• Compensation rates:
• 50% additional pay for overtime on regular workdays
• 100% additional pay for overtime on Sundays, holidays, or night shifts

Employees can choose to receive time off instead of monetary compensation for overtime hours worked.

This comprehensive approach to pay and tax in Poland aims to balance fair compensation for workers with sustainable business practices. Employers must stay informed about these regulations to ensure compliance and maintain positive employee relations.

Regular & Maximum Working Hours

In Poland, the standard workweek is regulated to protect employees’ rights and ensure a healthy work-life balance. The typical working hours are:

• Regular working hours: 8 hours per day and 40 hours per week
• Maximum working hours: 48 hours per week, including overtime

Most employees work from 8:00 AM to 4:00 PM or 9:00 AM to 5:00 PM, often with up to one hour of unpaid lunch break. The Polish Labor Code stipulates that working time cannot exceed 8 hours in a 24-hour period, with some exceptions possible under specific circumstances.

Overtime Regulations

Overtime work in Poland is strictly regulated:

• Annual limit: 150 hours per calendar year
• Daily limit: Working hours, including overtime, must not exceed 13 hours per day
• Weekly limit: 48 hours, including overtime

Overtime compensation is as follows:

• 50% additional pay for overtime on regular workdays
• 100% additional pay for overtime on Sundays, holidays, or night shifts

Employers may also offer time off in lieu of overtime pay, with 1.5 hours of paid time off for each hour of overtime worked.

Leave Entitlements

Poland provides generous leave entitlements to ensure employee well-being:

Annual Leave

Years of Employment	Annual Leave Entitlement
Less than 10 years	20 days
10 years or more	26 days

Part-time employees’ holiday entitlement is calculated proportionally to their working hours.

Other Types of Leave

1. Sick Leave: Employees receive 80% of their salary for the first 33 days of illness in a calendar year.
2. Maternity Leave: 20 weeks for a single birth, with additional weeks for multiple births.
3. Paternity Leave: 2 weeks, to be taken within 24 months of the child’s birth.
4. Parental Leave: Up to 32 weeks, which can be shared between parents.
5. Childcare Leave: Up to 36 months, to be taken before the child turns 6 years old.
6. Compassionate Leave: 2 days for close family events (e.g., wedding, child’s birth, funeral).
7. Force Majeure Leave: 2 days per year, paid at 50%.
8. Unpaid Leave: Available upon employee request and employer approval.

Public Holidays

Poland observes 13 paid public holidays annually. In 2024, these holidays are:

1. New Year’s Day (January 1)
2. Epiphany (January 6)
3. Easter Sunday (March 31)
4. Easter Monday (April 1)
5. Labour Day (May 1)
6. Constitution Day (May 3)
7. Whit Sunday (May 19)
8. Corpus Christi (May 30)
9. Assumption Day (August 15)
10. All Saints’ Day (November 1)
11. Independence Day (November 11)
12. Christmas Day (December 25)
13. Second Day of Christmas (December 26)

If a holiday falls on a Sunday, employees don’t receive an extra day off unless they were scheduled to work that day. However, if a holiday falls on an employee’s regular day off in a five-day workweek, they are entitled to another day off in lieu.

Rest Periods

Polish labor law mandates specific rest periods for employees:

• Daily rest: At least 11 hours of uninterrupted rest
• Weekly rest: A minimum of 35 hours of uninterrupted rest
• Breaks: 15-minute paid break for work exceeding 6 hours, with additional breaks for longer shifts

By adhering to these regulations, employers in Poland can ensure compliance with labor laws while providing a supportive work environment for their employees. This comprehensive approach to working hours and leave entitlements contributes to employee satisfaction and productivity.

Termination Requirements

In Poland, employment termination is strictly regulated to protect employees’ rights. There are four primary methods of ending employment:

1. Mutual agreement
2. Termination with notice
3. Termination without notice (disciplinary)
4. Expiration of a fixed-term contract

When terminating an indefinite period contract with notice, employers must provide valid reasons for ending the employment. These reasons should be specific and real, allowing the employee to understand the grounds for dismissal clearly. While there is no exhaustive list of justifiable reasons, some common grounds include:

• Poor performance
• Violation of workplace rules
• Restructuring or economic reasons
• Loss of trust in the employee

To ensure a legal dismissal and minimize the risk of challenges in the Labour Court, employers should:

1. Document all issues leading to termination
2. Provide clear, written warnings when applicable
3. Conduct a fair investigation if misconduct is suspected
4. Consult with trade unions if the employee is a member
5. Deliver the termination notice in writing, stating the reasons for dismissal

Notice Periods

Notice periods in Poland are determined by the length of employment and are regulated by the Labour Code. These periods cannot be shortened by employment contracts, although they can be extended.

The statutory notice periods are as follows:

Length of Employment	Notice Period
Less than 6 months	2 weeks
6 months to 3 years	1 month
3 years or more	3 months

For probationary periods, different notice periods apply:

Length of Probation	Notice Period
Up to 2 weeks	3 working days
2 weeks to 3 months	1 week
3 months	2 weeks

It’s important to note that notice periods typically start at the end of the month in which the termination notice is given, unless it was given on the last day of the month. The 2-week notice period is an exception, as it ends on the Saturday following the expiration of the notice period.

Severance Pay

Severance pay in Poland is mandatory for companies employing 20 or more people when the termination is initiated by the employer for reasons not attributable to the employee (e.g., restructuring, economic reasons). The amount of severance pay depends on the employee’s length of service:

Length of Service	Severance Pay
Less than 2 years	1 month’s salary
2 to 8 years	2 months’ salary
More than 8 years	3 months’ salary

The maximum severance pay is capped at 15 times the minimum wage. As of 2024, this cap is 60,000 PLN (approximately €13,800).

It’s worth noting that severance pay is subject to income tax but exempt from social security contributions.

Probation Periods

Probation periods in Poland are typically used to assess an employee’s suitability for a position. The maximum length of a probation period is 3 months. However, recent changes to Polish labor law have introduced new regulations regarding probation periods:

1. For fixed-term contracts less than 6 months: maximum 1-month probation
2. For fixed-term contracts between 6 and 12 months: maximum 2-month probation
3. For fixed-term contracts of 12 months or more, or indefinite contracts: maximum 3-month probation

Employers can extend the probation period once for up to 1 month if justified by the nature of the work. Additionally, probation periods can be extended to cover periods of absence due to holidays or other excused absences.

It’s important to note that employers can only use a probation period with the same employee once, unless the employee is being hired for a different type of work.

During the probation period, either party can terminate the contract with shorter notice periods as mentioned earlier. However, employers should still provide valid reasons for termination to avoid potential legal challenges.

By understanding and adhering to these termination requirements, notice periods, severance pay regulations, and probation period rules, employers in Poland can ensure compliance with labor laws and maintain positive employee relations. It’s always advisable to consult with local legal experts when dealing with complex termination cases to mitigate risks and ensure proper procedures are followed.

Contractor vs. Employee: Key Distinctions

In Poland, the distinction between contractors and employees is crucial for businesses to understand. Misclassification can lead to significant legal and financial consequences. Here’s a comparison of the key differences:

Aspect	Contractor	Employee
Legal Status	Self-employed, operates under civil law agreements	Protected by Polish Labor Code
Tax Responsibilities	Responsible for own taxes and social security contributions	Employer withholds taxes and makes social security contributions
Work Schedule	Flexible, sets own hours	Fixed schedule set by employer
Workplace	Can choose where to work	Typically works at employer’s premises
Benefits	Not entitled to employee benefits	Entitled to statutory benefits (e.g., paid leave, sick pay)
Supervision	Works independently with minimal supervision	Works under direct supervision of employer
Multiple Clients	Can work for multiple clients simultaneously	Typically works for one employer
Equipment	Usually provides own tools and equipment	Employer provides necessary tools and equipment

Misclassification Risks and Penalties

Misclassifying employees as contractors is a serious issue in Poland. The Polish authorities, including the State Employment Inspectorate (PIP), actively investigate potential misclassification cases. Consequences of misclassification include:

1. Financial penalties: Fines ranging from 1,000 to 30,000 PLN (approximately €220 to €6,650)
2. Back taxes and social security contributions
3. Mandatory reclassification of the worker as an employee
4. Potential legal disputes and reputational damage

To avoid misclassification, employers should carefully assess the nature of the working relationship before engaging a contractor.

Contractor Agreements in Poland

When engaging contractors in Poland, it’s essential to have a well-drafted agreement that clearly defines the relationship. Key elements to include in a contractor agreement are:

1. Scope of work and deliverables
2. Payment terms and conditions
3. Duration of the contract
4. Intellectual property rights
5. Confidentiality clauses
6. Termination conditions
7. Liability and insurance requirements
8. Statement of contractor’s independence

Tax Implications for Contractors

Contractors in Poland are responsible for their own tax obligations. They typically operate under one of the following tax structures:

1. Linear tax rate of 19% on business income
2. Progressive tax rates (17% and 32%)
3. Lump-sum tax on recorded revenues for specific professions

Contractors must register their business activity and obtain a tax identification number (NIP) from the tax office. They are also required to make advance tax payments and file annual tax returns.

Social Security for Contractors

Unlike employees, contractors in Poland are responsible for their own social security contributions. The main components include:

1. Pension insurance
2. Disability insurance
3. Health insurance
4. Work accident insurance (optional)

Contractors can choose to pay lower social security contributions based on a declared amount, which is advantageous for those with higher incomes.

Best Practices for Engaging Contractors in Poland

To ensure compliance and minimize risks when working with contractors in Poland:

1. Conduct a thorough assessment of the working relationship before classifying a worker as a contractor
2. Use clear and comprehensive contractor agreements
3. Avoid exercising excessive control over the contractor’s work methods and schedule
4. Encourage contractors to maintain their independence and work for multiple clients
5. Regularly review the relationship to ensure it hasn’t evolved into an employment situation
6. Keep detailed records of all contractor engagements and payments
7. Consider seeking legal advice for complex cases or when in doubt about classification

Recent Trends and Developments

The gig economy has been growing in Poland, leading to increased scrutiny of contractor relationships. The Polish government has been considering new regulations to address the challenges posed by the rise of digital platforms and non-standard forms of employment.

Additionally, the COVID-19 pandemic has accelerated the trend towards remote work, blurring the lines between traditional employment and contractor relationships. This has prompted discussions about potential reforms to labor laws to better accommodate these new working arrangements.

By understanding the nuances of contractor classification in Poland and implementing best practices, businesses can effectively engage contractors while minimizing legal and financial risks. It’s crucial to stay informed about any changes in regulations and seek professional advice when necessary to ensure ongoing compliance.