higher wage and incidental wage costs from 2019
Increase in minimum wage
In the budget planning for 2019, companies should prepare for the expected increase in Polish labour costs. First, the adjustment of the minimum wage must be taken into consideration. Starting in January 2019, employers must pay at least PLN 2250.00 gross per month or PLN 14.70 gross per hour. As a result, the adjustment will mean an increase also when calculating surcharges for night-time work, as well as any compensation that is paid in accordance with the respective employment law regulations.
End of the contribution calculation limit?
A further measure that could ensure a significant increase in wage incidentals is the planned abolition of the contribution calculation limit for old age pensions and insurance for a reduction in earning capacity. Currently, the salary limit for the deduction of the premiums may not exceed thirty times the forecast average monthly salary for the respective calendar year. In 2018, this income threshold is PLN 133,290.00. This means that the income above this limit is not subject to the payment of contributions. If the planned changes come into effect, in the future, the entire income of the employee will be charged with contributions. In practice, this should be reflected in an increase in salary costs. The salary is stated in the employment contract as a gross salary, but employers would have to reckon with affected employees demanding for a salary increase. Indeed, if the contribution calculation limit were to be abolished, they would be left with less of their salary in their hand.
The adopted amendment to the law was supposed to be effective starting 01/01/2019, but has been brought before the Constitutional Court by the President. A decision about this has not yet been made. However, it cannot be ruled out that the Constitutional Court may deal with the matter by the end of this year, which means the new regulations may take effect in January as planned.
Old age savings plans
As of 2019, a new obligation for employers will be introduced in the area of occupational retirement schemes: the so-called employee capital plans "PPK" (a long-term investment in favour of the employees). The costs for this will be shared equally by employers and employees, whereby the employee will pay contributions of 2%. The Employer must assign 1.5% of the gross salary for each employee into the savings plan. This share can be increased voluntarily by a further 2% for the employee contribution and 2.5% for the employer contribution. All employees aged between 19 and 55 will automatically be included in the savings plan. At the request of the employee, a waiver of this is possible. Persons subject to mandatory insurance aged between 55 and 69 can join the programme on a voluntary basis.
The law adopted by the Polish Parliament comes into effect from 01/01/2019. However, its application will be planned according to the size of the company. The largest companies with more than 250 employees must apply the relevant regulations from 01/07/2019. For smaller business establishments with 50 to 250 employees, the savings plans should come into force at the beginning of 2020 and for those with 20 and more employees starting on 01/07/2020. Other companies still have until 01/01/2021 to prepare for the introduction of the employee capital plans.
Author: Katarzyna Gospodarowicz