Payroll and Employment in Poland: Key Facts for Foreign-Owned Businesses

If you plan to set up a foreign-owned business in Poland, understanding labour laws and the cost of employment is vital. Not only will staying compliant and informed allow you to avoid headaches and penalties in the future, but it will also help you maintain a positive relationship with your workforce.

In this article, trusted accounting, tax, and payroll experts Leinonen Poland will explain the essentials. Covering everything from payroll and social security to employee benefits and working hours, we will help set your foreign-owned business in Poland up for long-term success.

Cost of Employment for Foreign-Owned Businesses in Poland

The total cost of employment in Poland includes several components aside from gross salary (the amount paid to the employee before any deductions). This includes social security contributions, Labour Fund, PPK fund, and more.

Social Security Contributions

Employers in Poland are required to contribute to various social security funds on behalf of their employees, and these contributions must be submitted to the Social Insurance Institution (ZUS) by the 15^th of the following month.

As a percentage of gross salary, these contributions are:

• Pension insurance – 9.76%
• Disability insurance – 6.5%
• Accident insurance (calculated based on number of employees and business sector) – typically 1.67%
• Labour Fund – 2.45%
• Guaranteed Employee Benefits Fund – 0.1%
• Employee Capital Plans (PPK) – 1.5% to 4% (depending on employee participation)

Contributions to pension and disability insurance are only paid up to the threshold of PLN 260,190 gross salary.

How is Accident Insurance Rate Calculated?

While employers with fewer than nine employees pay a flat rate of 1.67% for accident insurance, employers with nine or more employees may contribute a different rate. The rate ranges from 0.67% to 3.33%, depending on industry classification. However, it is important to note that foreign employers only pay the flat rate of 1.67%, regardless of company size.

Labour Fund and Guaranteed Employee Benefits Fund

Employers in Poland must also contribute to the Labour Fund and Guaranteed Employee Benefits Fund at rates of 2.45% and 0.10% respectively. These funds will provide unemployment protection and wage guarantees in case of insolvency.

Employment Capital Plans (PPK) Fund

Most employers are also required to provide an additional retirement savings plan under the Employment Capital Plans (PPK) fund, and should contribute a minimum of 1.5% of gross salary to this (with the option to increase contribution up to 4%).

State Fund for Rehabilitation of Disabled People

This contribution is paid by employers who fail to hire the required number of disabled employees (6% of staff for those with at least 25 full-time employees). The amount paid is 40.65% of the average salary for the number of employees that would bridge the gap between actual number of disabled employees and the number of disabled employees that would make up the 6%.

Example Cost of Employment Calculation

The following example demonstrates the potential cost of employment for a gross salary of PLN 5,000.

Employee Remuneration in Poland

Minimum Salary

In 2025, the minimum monthly salary in Poland is PLN 4,666 gross, with a minimum hourly rate of PLN 30.50 gross.

Income tax Rates

There are two basic income tax rates for employees in Poland:

• 12% rate if the tax base does not exceed PLN 120,000
• 32% rate if the tax base exceeds PLN 120,000

Overtime

Overtime work is allowed in special cases. It must be approved by the supervisor, and employees are entitled to additional compensation. The amount varies depending on whether the work is performed at night, on Sundays and public holidays, or on other days. In exchange for overtime work, employers may grant employees time off (the same amount of hours worked).

For overtime work, employees are entitled to the following in addition to their normal remuneration:

1. 100% extra remuneration for overtime work performed:
   • At night
   • On Sundays and public holidays which are not usual work days for the employee
   • On a day off work granted in exchange for work on a Sunday or public holiday
   • Where work exceeds the average 40 hour working week
2. 50% extra renumeration for overtime work performed in any other situation than the above.

Working Hours in Poland

Working Hours and Breaks

The standard working week in Poland is eight hours per day and 40 hours per week.

On any given day, employees are entitled to the following breaks:

• Those working at least 6 hours are entitled to one rest break of at least 15 minutes
• Those working more than 9 hours are entitled to an additional rest break (15+ minutes)
• Those working more than 16 hours are entitled to a further rest break (15+ minutes)

Public Holidays

Work on public holidays can only be performed in specific situations.

According to Article 151 of the Labour Code, these include:

• Where it is necessary to conduct a rescue operation to protect human life or health, property or the environment, or to remove a failure
• In continuous operations, in shift work, and during necessary repairs
• In transport and communication
• In company fire brigades and in company rescue services
• When guarding property or protecting people
• In agriculture and breeding
• When performing works is necessary due to social utility and everyday needs of the population

Employee Benefits and Tax Deductions in Poland

Employee Benefits

Employee benefits play an important role in Poland’s payroll tax system. Some benefits – like lunch coupons and eye glasses refunds – are not subject to social security contributions or income tax. Contributions to the Company Social Benefits Fund (ZFŚS) are also excluded from ZUS contribution calculations.

But other benefits like holiday pay, private medical insurance, life insurance, and sports activities are subject to taxation. Other employee perks (like gym memberships) are also taxed, but may be exempt from social security contributions.

For instance, prizes in the form of jubilee bonuses and gifts for important life events (up to a certain limit) are exempt from social security contributions. Some benefits are also taxable without ZUS contribution if the employee contributes to the costs.

Tax Deductions

Additional tax deductions are available in some circumstances and up to a certain income level.

These scenarios include:

• Single parents with children
• Large families with 4+ children
• Individuals who have recently relocated to Poland
• Young people up to 26 years old
• Working seniors
• Couples filing taxes together

Get Informed on Payroll in Poland With Leinonen

For 17 years, Leinonen Poland has been providing invaluable consulting on accounting, tax and payroll in Poland. Our close-knit team of 25 financial experts is trusted by 80+ clients, and we specialise in equipping foreign-owned businesses in Poland with the tools and knowledge they need for long-term success.

Ready to meet your competent expert on accounting and payroll in Poland? Contact us today and speak to one of our consultants.