What Global Companies Need to Understand About Payroll in Poland

Poland's Gross Domestic Product (GDP) increased by 4.1 percent in 2019 to $566 billion. On the same year, Poland ranked 40th in the World Bank's Ease of Doing Business Survey. This laid the path for Poland's vibrant and robust market economy to thrive even better. Manufacturing, agriculture, tourism, mining, banking, financial services, and energy are some of the most important sectors in the Polish economy.

Why is Poland a good choice for expansion?

When entering a foreign market, it is critical for an investor to examine a variety of variables. The list of perks and advantages below will help you decide whether or not to grow your business in Poland.

Geographic Location

‍ Poland is located in the center of Europe and provides a gateway to a number of major markets, including Russia, Scandinavia, Germany, and the Czech Republic. More significantly, Poland benefits from its membership in the European Union (EU). You can take advantage of the EU's free movement of labor and products, as well as a network that enables you to connect with a large number of prospective consumers.

Strong Labor Force

‍ Poland is renowned for having the finest educational system in Europe, in addition to its outstanding economic success. According to QS Top Universities, there are more than 500 universities in Poland. In the latest QS World University Rankings, the Poland universitiesThe University of Warsaw, Jagiellonian University, Warsaw University of Technology, Wroclaw University of Science and Technology (WRUST), and the University of Wroclaw are among the top-performing institutions.

Without question, a nation that offers a high-quality education creates highly competent and motivated workers who are well-suited for a competitive global market. In fact, more than half of Poland's labor force is engaged in the service industry, which has consistently produced clever and trained IT professionals, engineers, scientists, and a variety of other professions.

Resilient Economy and Market Opportunity

‍ According to Brookings, Poland was the only country in the European Union to escape recession during the 2008 global financial crisis. It indicates that Poland's economy is robust and powerful in comparison to other nations. It resulted in an economic rebound that fluctuated from 1.4 percent in 2013 to 4.6 percent in 2017**.**

Furthermore, with a population of 38 million people, Poland controls 30% of the Central European market. Poland is, without a doubt, the forefront of European investment, attracting money from all over the globe, particularly from the United States, the United Kingdom, and Germany.

Supportive Government

‍ Aside from its strategic location, EU membership, massive population, economic stability, cheap skilled labor costs, and a favorable fiscal system, Poland's government is also known as one of the most progressive in the world. It has recently undertaken measures to promote international investment projects.

The corporate tax rate in Poland is 19 percent while other nations like the Philippines impose an enormous 25 percent. Furthermore, the state has designated special economic zones for companies and provides financial incentives subject to specific criteria.

Required Documents for New Employees

A formal employment contract must be signed by both the employer and the employee no later than the employee's start date. In certain circumstances, if both parties fail to sign the contract, the employee should instead be given written confirmation of the contract's terms. Any amendments to the employment contract must be notified in writing.

Furthermore, any additional information regarding certain provisions of the employment contract should be indicated by the employer. An employment contract may be signed for a set period of time, or an indefinite period of time.

**Social Security Registration and Contribution **

Social security in Poland includes health insurance, accident insurance, sickness and maternity insurance, an invalidity pension, and an old-age pension. Except for individuals who are actively employed, it is specified that social insurance may be obligatory or optional. Farmers, self-employed workers, and other types of workers must all be covered by insurance. The employer and clergy should also register for social security.

Requirements for Tax Registration and Payroll Tax

Employers in Poland must be included in the National Court Register or the Central Register of Business Activity. These two organizations are responsible for submitting application forms to the Tax Office, Statistical Office, and Social Security Institution.

One of the most appealing aspects of Poland to international investors is the absence of payroll taxes. Additionally, foreign businesses may pay their workers on whatever timetable they want. It may be done once a year, quarterly, monthly, every other week, weekly, or daily.

**Required Employee Information **

Employers must be aware of critical facts about their new workers. Employee information may contain their full name, date of birth, address, phone/mobile/home number, post address, pension details, NIP number, and credentials.

Employment Termination

Termination Process

Employment can be ended through mutual consent; a 'statement of will' by one of the parties with a period of notice (termination of an employment contract with notice); or the contract term expires. The employment contract may be ended at any time by mutual consent.

Notice Period

The notice period for an employee on probation varies according to the length of the probationary period. If the probationary period is up to two weeks, there will be a three-day notice period. If the probationary period exceeds two weeks, a one-week notice will be provided. If the probationary period exceeds three months, a two-week notice will be given.

Additionally, the notice period varies according to the length of employment for temporary or permanent employees. If the employee was employed for up to six months, the notice period will be two weeks. If the employee has been employed for more than six months but less than three years, the notice period is one month. If the employee has worked for the company for three years or more, the notice period will be three months.

Severance Pay

Employers must pay severance if they have at least 20 employees and the employee was terminated due to the employer's fault. Employees with less than two years of service are entitled to one month's severance pay. Employees with tenures of between two and eight years are entitled to two months' severance pay. Employees with more than eight years of service are entitled to three months' severance pay.

Probation Period

The probation period must not be longer than three months in Pitcairn.

Read More:Guide to employment, payroll, and benefits in Poland‍

**Employee Benefits and Compensation **

In accordance with Polish Labor Law, each employee must receive the right treatment and protection from their employers, It includes benefits and compensation.

Minimum Wage

The minimum wage in Poland is 2,600 PLN/month. It only applies to full-time workers.

Overtime

The state allows employees to have a regular workweek of 46 hours, from 8 AM to 4 PM. However, in some circumstances, employers require their employees to render a few hours at work considering that they are getting overtime pay. The employee may elect to receive compensation in the form of time off rather than overtime pay. Executives and senior managers are entitled to overtime compensation for work performed on Sundays or holidays, but not for work exceeding 40 hours per week on average.

Holiday and Leave

Employees who work for their employers for ten years or less have 20 paid vacation days annually. Once an employee exceeds ten years, he or she is entitled to have 26 days per year.

Poland’s public holidays consist of Christmas, New Year, Christian holidays, and Independence Day. among others.

On the one hand, fathers are entitled to two weeks of paid leave, which can be taken in whole or in two halves (7 days each). Paternity leave is available until the kid becomes two years old. The Social Security Administration pays the entire amount (ZUS).

On the other hand, [mothers are entitled to 20 weeks of maternity leave, with the option of taking up to 6 weeks off before giving birth.](/employer-of- record/poland) Regardless of how long a mother has worked for the current company, she is entitled to maternity leave.

Parents are also entitled to 32 weeks of parental leave, which can be taken by either parent. The leaves are paid at a 100% rate for the first 26 weeks and 60% for the remaining weeks paid by the Social Security Institution (ZUS). Employees who take both maternity and parental leave will be paid an 80 percent stipend for the duration of their absence.

**Changes Due to COVID-19 **

The Polish government has put in place certain relief measures to help international investors, local businesses, and workers cope with the COVID-19 epidemic. The payment of social security contributions is at the top of the list.

Employees may now request for an exemption from paying their social security payments as a result of the reforms. It may be a partial or whole exemption. Second, the payment for the collection of personal income taxes has been stopped. Finally, individuals may include their 2020 losses in taxable income reported on their 2019 tax returns.

Final Thoughts

In conclusion, despite the many benefits and advantages your firm may get by growing its operations in Poland, the difficulties and dangers remain. The ZUS and the Labor Inspection Office are keeping an eye on foreign employers to ensure that Polish workers are properly protected and compensated. In this respect, you must increase your efforts to ensure that your business is completely compliant with all applicable local laws and regulations.

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