Taxes and payrolls: diving into the peculiarities of the Polish labour market
Each labor market has some peculiarities. Foreigners may find it difficult to fully comprehend payment methods, taxes, and other benefits. TalentUp is starting a series of different blog articles, one for each country. This article analyzes the Polish labor market.
Even if the national currency is the Polish Złoty (PLN), the whole article is in EUR to compare easily across countries and exchange rates.
General data about the Polish labour market
| Minimum wage | 828,76€ |
| Payment basis | Paid monthly. |
| Payment | The 10th day of the following month at the latest. |
| Maximum working hours a week | 40h |
| Maximum working hours a day | 8h |
| Maximum overtime hours a week | 8h |
| Maximum overtime hours a year | 150h |
| Working hours compensation | Either: – compensated at 150%. – compensated at 200% for work performed at night or on holidays (including Sundays). – equally rest hours. |
Social Security contributions in Poland
| Payroll contributions | Employer % | Employee % | Total % |
| Pension | 9.76 | 9.76 | 9.76 |
| Disability | 6.5 | 1.5 | 8 |
| Accident | 0.67 to 3.33 | 0 | 1.67 |
| Sickness | 0 | 2.45 | 2.45 |
| Health insurance | 0 | 9 | 9 |
| Labor fund | 2.45 | 0 | 2.45 |
| Guarantee Employee Benefits Fund | 0.1 | 0 | 0.1 |
| TOTAL | 19.48 to 22.14 | 22.71 | 33.43 |
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
| Taxable Income | Income tax |
| Up to 6,892.82€ | 0% |
| From 6,892.82 to 27,707.56€ | 12% |
| Over 27,707.56€ | 32% |
DG contracts
DG contract workers cooperated with businesses without being employed by them. DG contracts have some differences with contracts of employment:
- They are not entitled to leave pay in case of illness.
- They are less retired.
- They are not subject to the Labor Code, they are just covered by the contract.
DG contracts earn higher salaries each month but have less of other benefits.
In other countries, the DG countries are the ones related to self-employees; but in this country, it is a more extended practice. The tax rate for all self-employed people in Poland is flat and it is 19%.
These contracts pay different contingencies:
| Payroll contributions | Employee |
| ZUS | 100.82€/month |
| Accountancy | 31€/month |
| Total before taxes | |
| Personal income tax (PIT) | 19% |
Example of net salary in Poland
As a reference, we use the average salary of a software engineer. In Poland, on average, software engineers earn annually 40,000€. We will see the process from gross to net salaries both is the software engineer has an employment contract or a DG contract.
| EMPLOYMENT CONTRACT | DG CONTRACT | ||||||
| Employer | Employee | Employee | |||||
| % | € | % | € | % | € | ||
| Gross salary (annually) | 40000 | Gross salary (annually) | 40000 | ||||
| Gross salary (monthly) | 3333.333 | Gross salary (monthly) | 3333.333 | ||||
| Pension | 9.76 | 325.3333 | 9.76 | 325.3333 | ZUS | 100.82 | |
| Disability | 6.5 | 216.6667 | 1.5 | 50 | Accountancy | 31 | |
| Accident | 0.67 to 3.33 | 22.33 to 111 | 0 | 0 | |||
| Sickness | 0 | 0 | 2.45 | 81.66667 | |||
| Health insurance | 0 | 0 | 9 | 300 | |||
| Labor fund | 2.45 | 81.66667 | 0 | 0 | |||
| Guarantee Employee Benefits Fund | 0.1 | 3.333333 | 0 | 0 | |||
| TOTAL (monthly) | 19.48 to 22.14 | 649.33 to 738 | 22.71 | 757 | TOTAL (monthly) | 131.82 | |
| TOTAL (annualy) | 7,791.96 to 8,856 | 9084 | TOTAL (annualy) | 1581.84 | |||
| Income tax | 12 | 2497.77 | Personal income tax (PIT) | 19 | 7299.45 | ||
| 32 | 1026,70 | ||||||
| NET SALARY (annually) | 27,391.53 | NET SALARY (annually) | 31118.71 |
| DG CONTRACT | ||
| Employee | ||
| % | € | |
| Gross salary (annually) | 40000 | |
| Gross salary (monthly) | 3333.333 | |
| ZUS | 100.82 | |
| Accountancy | 31 | |
| TOTAL (monthly) | 131.82 | |
| TOTAL (annually) | 1581.84 | |
| Personal income tax (PIT) | 19 | 7299.45 |
| NET SALARY (annually) | 31118.71 |
In employment contracts, the employer contributes 7,791.96 to 8,856€ to social security and the employee 9,084€. In DG contracts, the employee contributes 1,581.84 to social security.
After paying the income tax, the employee has a net salary of 27,391.53€ in employment contracts and of 31,118.71€ in DG contracts, coming from a gross salary of 40,000€.
Papaya Global has the possibility to calculate automatically the net salary from the gross salary for any country and currency.
Unemployment regulation in Poland
There exists a probation period but it lasts no longer than 3 months.
Employment can be terminated by:
- Mutual agreement
- A ‘statement of will’ of one of the parties with a period of notice
- Expiry of the contract term.
| During probation period | |
| Notice Period | If the probationary period is up to… |
| 3 working days | 2 weeks |
| 1 week | 3 months |
| For temporary or permanent employment | |
| Notice Period | If the employee was employed for up to… |
| 2 weeks | 6 months |
| 1 month | 3 years |
| 3 months | more than 3 years |
Severance payment is given by employers who have at least 20 employees, and the dismissal of the employee is the fault of the employer.
| Severance Pay | If the employee was employed for up to… |
| 1 month | 2 years |
| 2 months | 8 years |
| 3 months | more than 8 years |
Different kinds of leaves in Poland
In Poland, there are 13 public holidays.
Employees are entitled to 20 days of paid leave a year if they have been employed for
less than 10 years and 26 days if they have been employed for 10 years or more.
Sick leave is paid at 80% of the allowance basis. However, it is paid at 100% of the allowance if the illness occurs during pregnancy or if it was caused by an accident on the way to or from work.
- For employees 50 years of age or less: up to 33 days in a calendar year paid by the employer. From the 34th day onward, sick leave is paid by the Social Security Office (ZUS).
- For employees 50 years of age or above: up to 14 days in a calendar year paid by the employer. From the 15th day onward, sick leave is paid by the ZUS.
Sick leave caused by an accident at work or due to the employee’s sick child or another sick relative is financed from the beginning by ZUS.
Other leaves include:
- Child-leave from 16 hours to 2 days to take care of a child that is 14 years old or less.
- 2-days leave for weddings, the employee’s child’s birth, and the death of a spouse, child, or parent.
- 1-day leave for the employee’s child’s wedding, or death of a sister, brother, or in-law.
Paid parental leave
Mothers are entitled to 20 weeks of maternity leave, which can take up to 6 weeks prior to giving birth. This leave does not depend on the length of service with the current employer.
Fathers are granted 2 weeks’ leave which can be used in its entirety or divided into two parts (7 days each). Paternity leave can be used until the child reaches the age of two. 100% is paid by the ZUS.
In addition, parents are entitled to 32 weeks of parental leave that can be granted to any of the parents. The leaves are at a rate of 100% for the first 26 weeks and a 60% rate for the remaining weeks paid by the Social Security Institution (ZUS).
Employees that use both maternity leave and parental leave will receive an 80% allowance for the entire leave.
Parents are entitled to 36 months of unpaid leave until the child reaches the age of 6.
Expected benefits offered by Polish companies
| Benefit | % of companies with this benefit |
| Health insurance | 24.6 |
| Casual dress code | 20.5 |
| Professional development | 11.7 |
| Flat hierarchy | 11.6 |
| Mobile phone | 6.1 |
How to employ a Polish worker
There are two different types of contracts for when there is no company or branch of the employer established in Poland. In either case, the retirement and health insurance are withheld.
- Commission Contract → Under this contract, your social security and health insurance are not paid on your behalf.
- Contract of Mandate → This contract stipulates one obligation and the rules associated with the obligation.
You are required to pay taxes if you are a Polish tax resident (you live in Poland or stay in Poland for more than 183 days).
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
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