practice area articles
By Wioleta Polak and Monika Walasek
Back to International Employment Law
KEY DEVELOPMENTS FOR 2020
The Polish Parliament adopted a number of acts (the "Anti-Crisis Shields"), which have introduced new measures aimed at supporting entrepreneurs affected by the economic crisis, including providing them with co-financing from the State.
- the Anti-Crisis Shields allow employers to obtain additional financing from the State to maintain financial liquidity;
- employers are allowed to modify employees' employment conditions more freely (including to reduce their remuneration or working time);
- if certain conditions are met, the severance pay and other benefits due on termination of an employment or a civil law contract cannot exceed 10 times the minimum remuneration;
- the parties to a non-compete agreement will be able to terminate it by giving seven days' notice (applicable not only to employment contracts, but also to agency agreements, mandate agreements, services agreements and contracts for specific work);
- employers may unilaterally grant employees up to 30 days of unused holiday leave from previous calendar years; and
- employers may suspend the duty of establishing or operating the company social benefits fund, making basic write-offs or paying holiday leave benefits.
The Anti-Crisis Shields amended or supplemented many Acts and Regulations, which will undoubtedly gravely affect many areas of companies' business activities over the next few months.
Increase to Minimum Wage
The Regulation of the Council of Ministers on the minimum monthly wage and minimum hourly rate in 2020 provides that employees in Poland should not be paid less than PLN 2,600 per month and PLN 17 per hour (in 2019, it was PLN 2.250 and PLN 14.70, respectively). This increase also affects other financial benefits received by employees that are calculated on the basis of the minimum wage, such as night work allowance, minimum remuneration for downtime, and statutory severance pay.
In addition, as of 1 January 2020, the seniority allowance is no longer taken into account when checking if the minimum national pay threshold has been met. Pursuant to the new legislation, the seniority allowance should be paid on top of the minimum wage, which may additionally increase an employer's financial burden. The objective of this amendment is to differentiate the financial situation of more experienced employees from those with less tenure.
Employee capital plans obligatory for medium-sized employers
Under the Act on Employee Capital Plans ("Act"), employers with at least 50 employees as at 30 June 2019 had been under an obligation, as of 1 January 2020, to introduce a new pension saving vehicle in the workplace. The first group of employers that were subject to this obligation included the biggest employers in the market. It is important to note that, even if the number of individual employees drops below 50 after 30 June 2019, the employing entity is still obliged to introduce an employee capital ("ECP") under the Act. The system not only covers employees, but also covers other eligible persons including civil contractors (for the ease of reference, we use the term 'employees' to address all individuals).
The ECP implementation process consists of several steps which must be followed. The first one is to choose an authorised financial institution to manage and operate the plan. Next, the employer is obliged to conclude two separate agreements:
- an ECP management agreement (by 27 October 2020 – the date was postponed due to the COVID-19 pandemic) between the financial institution and the employer; and
- an ECP operation agreement (by 10 November 2020 – the date was postponed due to the COVID-19 pandemic) between the financial institution and the employer on behalf of all employees.
Under the ECP, both the employing entity and the employee are legally obliged to pay monthly contributions to the ECP. The basic contribution by the participant amounts to 2% of their remuneration (for employees with lower income rates, it may be reduced to 0.5%), while the employer's mandatory contribution amounts to 1.5% of the participant's remuneration. Additional voluntary contributions of up to 2.5% of the employee's remuneration are optional for the employing entity, and up to 2% for the employee.
As of 1 July 2020, the Act also applies to entities employing at least 20 employees (as at 31 December 2019).
KEY DEVELOPMENTS FOR 2019
New way to save for retirement under Employee Capital Pension Schemes ("ECPS")
In January 2019, employing entities became obliged to:
- sign an agreement with a chosen authorised financial institution, which will set up and manage the ECPS; and
- conclude agreements to run the ECPS for each employed individual.
The obligation to set up ECPS will progressively affect the employing entities over the next few years, starting in July 2019 with those employing at least 250 Employed Individuals as at 31 December 2018, and gradually extending to smaller entities to cover all employing entities by 2021.
Both the Employing Entities and the Employed Individuals will be obliged to make contributions to the ECPS account, but an Employed Individual may resign from participating by submitting a declaration in this respect.
Certain employing entities will be released from the obligation to run the ECPS, provided that:
- they already operate Employee Pension Schemes (EPS) constituting an alternative and voluntary way to save for retirement, based on the currently applicable law;
- they pay contributions to EPS per each individual in the minimum amount of 3.5% of remuneration; and
- at least 25% employees of a given entity join EPS.
Retention of employment-related records/electronisation of the records
As of 1 January 2019, the retention period for employee records has been shortened from 50 to 10 years. This rule applies without limitation to persons employed as of 1 January 2019. Under certain conditions, it will be possible to apply the shortened retention period to those employed between 1 January 1999 and 31 December 2018.
In addition, the employer can choose whether to hold paper or electronic copies of employee records. In relation to all employees hired from 1 January 2019, employers are required to add a Part D to the employee files which contain all documents relating to the employees’ accountability such as disciplinary letters.
Right of civil law contractors to establish and join trade unions
As of January 2019, contractors performing work under civil-law contracts (e.g. contracts of mandate, contracts for performing a specific task) will have the right to establish and join trade unions provided the right will be granted to civil-law contractors who (i) perform services in consideration for remuneration and do not employ other individuals for such work and (ii) have such rights and interests connected with the performance of services which can be represented and defended by a trade union. Consequently, civil-law contractors will enjoy rights and privileges that were previously only guaranteed to employees e.g. protection against termination of contracts in particular cases.
KEY DEVELOPMENTS FOR 2018
Implementation of the GDPR
The GDPR will come into force in May 2018, pursuant to which employers will have to amend existing procedures for obtaining, collecting, processing and safeguarding personal data. Any employer who does not comply with the new guidelines will face financial penalties amounting to EUR 20 million or 4% of the overall global turnover for the previous financial year.
Ban on Sunday Trading
On 1 March 2018 a bill will come into force that will phase out Sunday trading by 2020. . Until the end of 2018, shops will be open on two Sundays of the month (first and last). In 2019 stores will be open only on the last Sunday, and in 2020 the ban will cover all Sundays (with some exceptions, e.g. before Christmas).
Draft Act on Transparency in Public Life - Protection of Whistleblowers at Work
Under a draft law aimed at protecting whistleblowers (expected to come into force in 2018) whistleblower status can be granted by a prosecutor to persons who report corruption related to an employer or client. This new category of employee, with whistleblower status, will be afforded protection from termination or less favourable changes to the terms of their employment without the prosecutor’s consent.
Higher Social Insurance Contributions
From 2019, the cap on social security contributions for salaries exceeding PLN 127,890 ($35,000) will be removed. This will result in higher taxes for both employers and employees.
KEY DEVELOPMENTS FOR 2017
Introduction of a minimum hourly pay rate
From January 2017, certain individuals engaged under service contracts will be entitled to a minimum rate of hourly pay, meaning time spent working will have to be recorded. Importantly, the new regulations will not apply to individuals who can choose the place and time of work, as well in cases where remuneration is based on the result of the performed work.
KEY DEVELOPMENTS FOR 2016
Changes to duration of parental leave
Parental leave has now been extended to up to 32/34 weeks (depending on the number of births). It is also now possible to take parental or child-raising leave until the end of the calendar year in which the child turns six.
New provisions in the Labour Code impacting employment contracts
- Employment contracts under Polish law for the duration of a specified task are not lawful. Individuals may, however, continue to perform work under employment contracts for a trial period, or an indefinite or definite period of time.
- Restrictions on use of fixed-term employment contracts. Employers are allowed to conclude a maximum of three fixed-term contracts with the same employee providing the total duration of these contracts does not exceed 33 months. After this period, a fixed-term employment contract will have the same effect as a permanent contract.
- There is a new right for employers to put employees on gardening leave.
- The notice periods for fixed-term contracts and permanent contracts will need to be the same and will be calculated based upon length of service with the particular employer.
- New rules concerning use of trial period contracts.
- New obligation to provide an employment contract before starting a new job. Employers who do not comply with the new regulations may incur a fine of between PLN 1,000-30,000.
Restrictions on posting employees to Poland
One of the most important changes of 2016 was the implementation of the EU Posted Workers Directive into Polish law. Under this legislation, foreign employers must ensure that the working conditions of employees posted to work in Poland meet the requirements of Polish law. Employers posting employees to Poland have to notify the National Labour Inspectorate (NLI) of certain matters necessary for conducting inspections at the workplace.
Review of protections for pregnant and breastfeeding women to bring it into line with EU law
From August 2016, new provisions of the Polish Labour Code provide certain protections for women who are pregnant or breastfeeding from harmful and difficult working circumstances. The amends stem from EU recommendations which provide that prohibiting women from performing certain types of work is a form of discrimination and, in fact, limits work possibilities. The Polish Council of Ministers will issue a new list of work prohibited for pregnant and breastfeeding women.