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Payroll & Tax in Poland

Poland payroll & taxation

Poland is largely still undertaking the modernisation of its electronic payment systems, which makes payment to foreign employees complex at times as many employers continue to pay in cash. While there is no payroll tax in Poland, foreign companies are required to comply with Polish tax laws, primarily in regards to individual income tax, social security, withholding tax, and sales tax.

Your Payroll Options in Poland

Remote Payroll

A remote payroll in Poland is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Poland. One of the options available for a non-resident company to payroll its employees (local and foreign) in Poland is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.

Local Payroll Administration

Most employers in Poland utilise the country’s electronic clearing system, ELIXIR, to submit employee payments, while many others still pay in cash. In order to use ELIXIR, the employer needs to have a Polish bank account and a local signatory with the authority to represent the company.

Unlike many other countries, personal income tax deductions collected through payroll in Poland are the same for all employees, rather than a ‘pay as you go’ model.

Internal Payroll

Larger companies with a commitment to Poland may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in-country human resources personnel who have the background needed to manage a Polish payroll, and can fulfill all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Polish employment laws.

Fully Outsourced Payroll & Employment

Companies can outsource the employment and payroll of their staff in Poland to a GEO, like Shield GEO. This is possible for both foreign workers and Poland nationals. This is the easiest, fastest and safest way to payroll staff in Poland.

Shield GEO manages all aspects of payroll for workers in Poland, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Poland

Information Explanation
Currency ?

The Polish currency is the Polish złoty (PLN) with 1 PLN equivalent to approximately 0.25USD.

Employee Information Required ?
When taking on a new employee, employers need to know a range of information about the individual they are
taking on. This information will allow the employer to know more about the employee them self and be able to
send them information via post and their salary to their bank account.
Employee information:
• Name/ Date of Birth
• Address and Telephone
• Postal address
• Pension details
• NIP Number
• Qualifications
These are just some of the basic details in which are required for employers
Tax Registration Requirements ?
Polish employers must be registered in KRS (National Court Register) or CEIDG (Central Register and Polish employers must be registered in KRS (National Court Register) or CEIDG (Central Register and Information on Business Activity).
KRS and CEIDG are responsible for sending adequate application forms to the Tax Office, ZUS (Social Security
Institution) and GUS (Statistical Office).
Every time when employing new person, employer is obliged to register new employee in ZUS within 7 days.
Social Security Registration ?

FOR EMPLOYER WITH SEAT IN POLAND – official Polish registration documents are required, such as NIP, REGON, KRS.

Payers of contributions are required to prepare and provide to the Social Security Office notification of payer
contribution on the appropriate materials within 7 days from: date of firm employment of employee or arising legal relationship justifying inclusion of pension insurance and/or health insurance of the first person.
In Poland, social security consists of:
• old-age pension;
• invalidity pension;
• sickness and maternity insurance;
• insurance against accidents at work and occupational diseases;
• Health insurance.
Social insurance may be mandatory or voluntary. All people in active employment, that is, employees, the self-employed and farmers, are covered by mandatory insurance. Reporting these people to social insurance is the responsibility of either those who pay the contributions (employers), or, for the self-employed and clergy, of the individuals themselves.
Documentation Required for New Employees ?
An employment contract is concluded in writing and should be signed no later than on the day the employee starts working. If no contract is signed, then the employee should be provided with written confirmation of the contract conditions on the day he starts work at the latest.
Any changes in employment contract conditions should also be made in writing. The employer should include additional written information about certain engagement terms to the employment contract. Labour Code provisions set out the regulations that should be included in the employment contract and in the additional written information.
Types of employment contract – an employment contract can be signed:
1. for an indefinite term
2. for a fixed term
3. for the time it takes to complete a specific task
4. to replace an employee – in the event of his or her justified absence from work;
5. the employer can hire another worker under a fixed term employment contract for the period of absence

Payments

Information Explanation
Payment Mode ?
The payment of employee salaries can be made in a range of different way in the work place. Large scale companies, which employ a number of employees, may generally opt for Electronic Payments. Electronic payments allow the employer to pay each individual their wages in a fast and accurate way, which is important when needing to make a range of payments at one time. Small employers with only a few employees may choose to pay salaries using cash.
Another way of paying salaries is to use cheques; however cheques are becoming more unpopular and are soon to be taken out of use.
Frequency of Salary Payment ?
Employers in Poland can choose from range of different frequencies in which to their employees salaries.
These frequencies include:
• Daily
• Weekly
• Bi-weekly
• Monthly
• Quarterly
•Annually
Invoice / Payslips required ?

Yes

Minimum Wage ?

Yes

Employee Entitlements

Information Explanation
Working on Sundays ?
In Poland working on national holidays and Sundays is prohibited and employees show have these days as official days of no work, however there are many exceptions to businesses in certain circumstances emergency services. Shops, restaurants, hotels, transportation and hospitals may open on Sundays, yet not on National Holidays.
Employees that work under the weekend working time schedule may work both Sundays and national holidays,
and can carry out up 12 hours work time a day, which is 4 ours longer then the national legal limit of workers.
Any worker that does carry out work on a national holiday or Sunday can be rewarded by either a day off in lieu, or when not possible, an additional pay premium paid at the same rate as overtime working.
If an employee is carrying out Sunday work on a regular basis then their employer must ensure that the employee has one Sunday off for every 4 that they work.
Time Off Work ?
All employees are entitled to an annual unbroken paid vacation. An employee who is just starting his working life attains the right, in the calendar year in which he starts work, to vacation with every month that passes of 1/12 of the total vacation to which he is entitled after one year of work. An employee gains the right to the next vacation in each subsequent calendar year.
Vacation entitlement is as follows:
1. 20 days – if the employee has been working for less than 10 years
2. 26 days – if the employee has been working for at least 10 years
Medical Leave ?
While an employee is unable to work because of:
• Illness or isolation due to a contagious disease lasting in total up to 33 days in a calendar year, and in the case of an employee who has reached 50 years of age – lasting in total up to 14 days in a calendar year, the employee
retains the right to 80 per cent of his remuneration, unless the provisions of labour law binding at a given employer provide for a higher remuneration in this regard,
• An accident on the way to work or form work, or illness during pregnancy – within the period specified in point 1 – an employee retains the right to 100 per cent of his remuneration,
•Necessary medical examinations provided for candidates for donors of cells, tissues and organs, or undergoing an operation of gathering cells, tissues and organs – within the period of time determined in point 1 – the employee retains the right to 100 per cent of the remuneration.
• For the period of an incapacity to work, as referred to in § 1, lasting in total longer than 33 days in calendar year, and in the case of an employee who has reached 50 years of age – lasting in total longer than 14 days in a calendar year, the employee is entitled to sickness benefit under the principles determined in separate provisions.
• The provisions of § 1 point 1 and § 4 relating to an employee who has reached 50 years of age, apply to an
incapacity of an employee to work falling after the calendar year in which the employee reached 50 years of age.
Maternity and Paternity Leave ?
A female employee is entitled to maternity leave of:
• 20 weeks in case of giving birth to 1 child at one birth
• 31 weeks in case of giving birth to 2 children at one birth
• 33 weeks in case of giving birth to 3 children at one birth
• 35 weeks in case of giving birth to 4 children at one birth
• 37 weeks in case of giving birth to 5 children at one birth
An employee is entitled to additional maternity leave of:
• Up to 6 weeks in a case of giving birth to 1 child at 1 birth
• Up to 8 weeks in a case of giving birth to at least 2 children at 1 birth
It is granted right after maternity leave and can be used by one of parents, in 1 or 2 one after another parts. Male employee is entitled to the mentioned above, only in case female employee resigns of maternity leave after 14 weeks of the same or in case of use of the whole basic maternity leave by female employee.
A male employee is entitled to 2 weeks of paternity leave, which can be taken before the child reaches the age of 12 months.
Parental Leave ?
After maternity leave and additional maternity leave mentioned above, parents will be entitled to parental leave of 26 weeks. The length does not depend on the number of children born at 1 birth. It will be possible to use it by female or male employee or by each of them.

Employment Termination

Information Explanation
Termination of Employment ?
Upon the termination or expiry of an employment relationship, the employer is obliged to issue a work certificate to employee immediately. The issue of the work certificate may not depend on the previous settlement of accounts between the employee and the employer.
The employer is obliged to issue the employment certificate within 7 days after termination of employment relationship
1. Period of notice for a contract for a trial period
a. 3 working days if the trial period does not exceed 2 weeks,
b. 1 week if the trial period is longer than 2 weeks,
c. 2 weeks if the trial period is 3 months
2. Period of notice for a contract for an indefinite period of time- the period of notice for an employment contract concluded for an indefinite period of time depends on the employment period with a given employer and amounts to:
a. 2 weeks if an employee has been employed for less than 6 months,
b. 1 month if an employee has been employed for at least 6 months,
c. 3 months if an employee has been employed for at least 3 years.
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