Labour law in Poland
There are many basis under which work can be performed in Poland, including civil agreements, B2B contracts, employment contract. An employment contract provides a greater degree of job security compared to alternative forms of employment, such as civil law agreement. These advantages make employment contracts a preferred form of employment for both employees and employers.
Sources of Polish Labour Law
The basic legal acts that regulate labour law in Poland are :
- The Labour Code of June 26, 1974;
- Act on special rules for termination of employment relationships with employees for reasons not related to employees (also known as Act on collective redundancies)
- Act on minimum remuneration for work and other acts regarding rights and obligations of parties within employment relationship.
- collective labour agreements and other collective agreements based on the law, regulations and statutes determining the rights and obligations of the parties to the employment relationship.
Types of employment contracts in Poland
There are 3 types of employment contract in Polish labour law:
- probation period employment contract – probation period can only last up to 3 months and cannot be included in any other employment contract.
- fixed-term contract – only 3 such contracts might be concluded with single employee and only for period no longer than 33 months. After termination of 3rd define period contract or end of 33rd month of work on basis of such a contract, an employee must be offered permanent employment contract.
- indefinite employment contract – is concluded for indefinite period of time.
Working and pay conditions
Working hours – standard working time under the Labour Code is 8 hours a day, 5 days a week and 40 hours a week. The legislator gives the parties to an employment contract limited freedom to exceed these limits.
Remuneration for work – remuneration can and in most cases is paid monthly but it can be paid weekly and even daily. It can be defined either by basic month rate or hourly rate. The amount of remuneration shall be adequate to the work performed and cannot be less than minimum wage. The minimum wage is determined by the government.
Termination of employment contract in Polish labour law
a) Termination without notice
In case of a serious violation of one or more of the employees’ duties, the employment contract can be terminated without notice resulting in immediate termination of employment. This can only be applied when an employee violates their duties seriously enough and when an employee commits an offense, which makes further employment impossible. In that case, and if the offense is obvious or has been confirmed in the final court decision, the employee loses their permit required to perform employment related duties.
b) Termination with notice period
The employment contract can be terminated with notice period by each party. Notice periods are defined in Polish labour code as follows:
- notice period of 2 weeks – employees with job seniority below 6 months;
- notice period of 1 month – employees with seniority exceeding 6 months;
- Notice period of 3 months – employees with job seniority exceeding 3 years.
In the case of probation period contracts, notice periods are shorter as they depend on the duration of the probation period and amount to:
- 3 business days – if the probation period does not exceed 2 weeks;
- 1 week – if the probation period is longer than 2 weeks;
- 2 weeks – if the probation period is 3 months;
c) Mutual termination agreement
Parties to the employment relationship can terminate their contract by mutual termination agreement. With this way of termination, employee and employer can freely determinate their conditions of termination.
Severance pay
Severance pay is due to the employee if:
- they are dismissed under the group layoffs procedure, or
- dismissal is individual but made exclusively for reasons other than the employee’s conduct and performance, provided that the employer employs at least 20 employees.
Trade unions
In Poland, there are both sectoral trade unions and workplace unions that represent employees in specific companies. Unions can also be members of federations that bring together various trade organizations, allowing for more coordinated actions in defending workers’ rights.
Employees have the right to form unions and join them. Trade unions have the right to organize and represent their members according to the Labor Code. They act as representatives of employees in relations with employers, governmental institutions, and in matters concerning social and employment policies.
Trade unions are responsible for negotiating working conditions, wages, and other employment-related issues with employers.
Employee capital plans (PPK) and Employee Pension Schemes (PPE)
Employee Capital Plans (PPK) and Employee Pension Schemes (PPE) are long-term savings forms within the pension system. In both cases, funds are accumulated within selected investment funds.
PPK is an obligatory plan which is established by employers for the employees with the employee’s private savings being contributed to the employer and the state. PPK requires the conclusion of a management contract and several other contracts for the operation of a PPK for employees. The funds are invested by investment funds to increase savings. The funds accumulated in a PPK account can be withdrawn at any time but in the cases not specified in the act, 30% of the funds will be transferred to The Social Insurance Institution (ZUS) and the remaining 70% will be charged with the 19% capital gains tax. In the cases enumerated in the act, especially when an employee turns 60 years old and makes a withdrawal under the terms specified by the binding act, the payout will not be subject to any charges.
PPEs are currently established voluntarily by employers, with contributions from both the employer and employees. According to the binding act, PPEs are carried out in one of the four forms: employee pension fund, an investment fund, group life insurance with an insurance capital fund, or foreign management. All of these are forms of investing funds. Profits from investments within the PPE and the withdrawal of funds from the PPE are exempt from income tax.
The main objective of PPK and PPE is to provide participants with funds for when they stop being professionally active and on retirement.
