A. Update

Recently the legislation amending Act of 26 June 1974 on Labor Code was signed by the President of Poland. It provides for the below directives of European Parliament and of the Council of 20 June 2019 to bring significant changes in parlance to formation, extension, or termination of employment contract and on leave and work conditions:

• Directive (EU) 2019/1152 on transparent and predictable working conditions
• Directive (EU) 2019/1158 on work-life balance for parents and carers

The summary of payroll related changes is provided in section A and B while other labour law changes is covered in Section C as under:

A. Introduction of new statutory leaves

The new statutory leaves were brought in significantly to provide more work life balance and flexibility to working population in the form of time off as specified below

1. Emergency leave:

• An employee is eligible for 2 days or 16 hours of leave due to force majeure i.e., due to illness or accident with 50% of actual pay for a calendar year.
• Employer should provide the leave at the request of the employee.
• In case of part time employees with standard working hours less than 8 hours the hours of time off needs to be pro-rated based on working time.

2. Care leave:

• An employee is eligible for 5 days of care leave to support a family member for serious medical reasons or to provide personal care.
• The family member includes son, daughter, mother, father and spouse
• Employee should submit leave request at least 1 day before commencement of leave by mentioning the name and surname of the affected person, reason and relationship with the employee in case of a family member or address of residence in case of a person not a family member.

B. Changes in the existing statutory leaves

1. Parental leave:

An employee is entitled to revised parental leave once in not more than 5 parts in a calendar year as provided below till the end of calendar year in which child turns 6 years:

To make this more flexible, the following additions on the entitlement have been brought in

• Each parent has exclusive right for minimum 9 weeks of leave out of the total leave limit specified in point 1 to 4 above which cannot be transferred to other parent.
• Both the parents can simultaneously use the leave, but it should not exceed the limit specified in the above table.
• In case an employee does not utilize the entire eligible leave days in a calendar year then it can be carried forward till the end of the calendar in which the child turns 6 years.

2. Paternity Leave: An employee is eligible for paternity leave to raise a child until 12 months instead of 24 months as provided earlier.

3. Adoption leave:

Employees adopting a child are eligible for revised leave entitlement as mentioned in the below table

Rest of the conditions for the leave categories mentioned above in point 1 to 3 of part B remains the same.

4. Revision of certain aspects related to statutory leaves:

• For some specified leaves i.e., maternity leave (shortening of maternity leave) or claiming paternity and parental leave the documentation has been simplified just to provide certificate referred to in the Act of 4 November 2016. Apart from these all-other earlier requirements have been done away with.
• The Employees can request for change in terms of employment and employment type or apply for care leave, maternity leave, parental leave, paternity leave and adoption leave in electronic mode as well in addition to writing.
• The employer cannot initiate termination or terminate an employee during pregnancy or maternity or paternity or parental leave unless due to bankruptcy or liquidation or for working under flexible arrangement.
• At the end of the maternity, paternity and parental leave, the employer should allow the employee to work in a position that is not less favorable if the employee did not use the leave.

• Inclusion of criteria for extension of trial (probation) period.
• Inclusion of criteria for establishment of employment contract.
• Additional details that need to be provided in writing and intimated by employer to employee after formation of contract.
• Inclusion or removal of conditions for changing the employment contract i.e., to indefinite, definite or part-time.
• Criteria for posting an employee outside European Union (EU).
• Obligation of employer to conduct training and inform employee regarding details of employment such as working time, compensation etc.
• Change in break time.
• Inclusion of provisions for flexible work arrangement
• An employee being father raising a child or another member of the immediate family taking care during period of maternity leave is no longer eligible for full remuneration for the period of unemployment in case of termination.

For more details kindly refer to the document provided in the source section.

B. Statutory Compliance Release Date: April 04,2023

C. Effective Date: April 26,2023

A. Update

Minister of Infrastructure has released the Regulation amending eligible tax exempt reimbursement amounts for the costs incurred by an employee for the use of their own vehicle such as car, motorcycle, mopeds etc. during business trips in Journal of law 2023, item 5 as under:

If a declaration made by an employee for claiming the above mentioned reimbursements before the effective date of this regulation has not been considered by the employer at that point then the amended amounts will apply.

B. Statutory Compliance Release Date: January 02, 2023

C. Effective Date: January 17, 2023

A. Update

On September 20, 2022, the Council of Ministers adopted the draft Polish Budget for 2023 and passed the same to Sejm for further deliberations on September 30, 2022. Considering the current economic repercussions caused by COVID-19 and Ukraine war the draft Budget has re-emphasised to continue the reduction in Personal income tax (PIT) brought earlier in Polish Deal as mentioned under with a primary aim to provide maximum support to polish citizens

1. Change in PIT threshold from 85 528 zł to 120 000 zł
2. Change in PIT rates from 17% to 12% for the first tax bracket

The Budget does not provide for any further amendments in payroll and further clarification will be provided once the Budget gets enacted.

B. Statutory Compliance Release Date: September 30, 2022

C. Effective Date: January 01, 2023

A. Update

The Council of Ministers have adopted the revised minimum wage submitted by Minister of Family and Social Policy on September 13, 2022, then what was proposed earlier on June 07, 2022, as under:

The decision to adopt higher minimum wage is to safeguard all the individuals against the inflation that has arisen because of Ukraine war.

B. Statutory Compliance Release Date: September 13, 2022

C. Effective Date: January 01, 2023, and July 01, 2023

A. Update

Statutory Minimum wages are set generally to ensure that the workers are getting remunerated adequately, this in-turn improves the purchasing power of the individuals by contributing to the growth of the economy.

The Council of Ministers have adopted the proposal to determine minimum wage of employees twice a year, starting from 2023 onwards, as under:

The decision to revise minimum wage twice a year will also have huge impact in terms of curtailing the inflation effect.

B. Statutory Compliance Release Date: June 07, 2022

C. Effective Date: January 01, 2023, and July 01, 2023

A. Update

In furtherance to the last update “Polski Ład (Polish Deal)”, other significant changes related to personal income tax have been approved by the President, hence implementing the Polish Deal 2.0 program. These further changes are as follows:

• Change in Income tax threshold
  The tax rate for income less than or equal to 120 000 zł has been reduced from 17% to 12%.
• Increase in tax reducing amount
  The annual tax reducing amount has been changed to 3 600 zł (30 000 zł * 12%) from 5 100 zł (30 000 zł * 17%).
• Change in tax threshold for civil contractors
  The flat tax rate of 17% has been reduced to 12% for non-resident civil contractors if annual taxable income was up to 200 zł.
• Elimination of Middle-class relief
  Polish Deal introduced middle class tax relief if the annual salary income of an individual from employment contract falls between 68 412 zł and 133 692 zł but this relief has been eliminated considering the complexities involved in the calculation.

B. Statutory Compliance Release Date: May 12, 2022

C. Effective Date: July 01, 2022

A. Update

On November 16,2021, the President of the Republic of Poland approved the amendment in Personal Income Tax Act, the Corporate Income Tax Act, and certain other acts and the scheme approved is commonly known as “Polish Deal”.

Based on the public opinion gathered between March 24 to April 02, 2022, new amendments were proposed to the Polish Deal. These proposals are still under consideration and are expected to be effective from July 01, 2022, if enacted.

The significant changes related to personal income tax are as follows:

• Change in Income tax threshold
  
  The Polish Deal increased the tax bracket for income subject to higher tax rate of 32% from the tax year 2022 as under:

  For the tax year 2021			For the tax year 2022
  Annual Taxable Income From (in zł)	Annual Taxable Income up to (in zł)	Tax Rate	Annual Taxable Income From (in zł)	Annual Taxable Income up to (in zł)	Tax Rate
  0	85 528	17%	0	120 000	17%
  85 528	-	32%	120 000	-	32%

  As per the latest proposals made in April, the tax rate for 2022 is proposed to be reduced from 17% to 12%.
• Increase in tax-free amount and tax reducing amount
  
  Prior to Polish Deal, for individuals with income subject to progressive taxation, the tax-free income threshold was 8 000 zł, this threshold progressively decreases depending upon income earned and does not apply to individuals with an income above 127 000 zł.
  
  After the enactment of Polish Deal, the tax-free threshold has increased to 30 000 zł p.a. The annual tax reducing amount thus is 5 100 zł (30 000 zł * 17%), instead of 525,12 zł as in 2021.
  
  As per the proposals made in April, the annual tax reducing amount shall be further changed to 3 600 zł (30 000 zł * 12%).
• Change in tax threshold for civil contractors
  
  Earlier, flat tax rate of 17% was applicable for non-resident civil contractors if annual taxable income was up to 200 zł, but as per the April proposals, this tax rate may get reduced to 12%.
• Valuation of Benefit in Kind in form of company car used for private purposes
  
  The monetary value of a company car given to the employee for private use has been changed as under after the Polish Deal:
  
  Tax year 2021
  
  1. For motorcars with engine capacity up to 1600 cm 3 : 250 zł per month
  
  2. For motorcars with engine capacity above 1600 cm 3 : 400 zł per month
  
  Tax year 2022
  
  1. 250 zł per month
  
  
  • a) For motor cars with an engine power of up to 60 kW
  • b) For electric vehicle
  • c) For Hydrogen-powered vehicle
  2. 400 zł per month - for any other car not mentioned above
  
  
• Health Insurance contributions becomes non-deductible
  
  Earlier, for income earned under employment contracts, the health insurance contribution till 7,75% could be claimed as a reduction from income tax payable, i.e., it was tax deductible. After Polish Deal, such benefit can’t be claimed by an employee under employment contracts thus increasing the tax burden.
  
  
• Introduction of New Tax Reliefs
  
  
• 1. Return relief
  If an individual earning income from employment, personal service contract or non-agricultural business activity has shifted the place of residence to Poland after December 31, 2021, and becomes a Polish tax resident, then income up to 85 528 zł is exempt subject to certain conditions. The exemption applies for four consecutive tax years, subject to certain other conditions, starting from the year of transfer of place of residence to the territory of Poland or from the beginning of the following year.
  
  
• 2. Relief for families with 4 or more children
  If an individual earning income from employment, personal service contract or non-agricultural business activity takes care of 4 or more children during the tax year, then income up to 85 528 zł is exempt for each parent per year, subject to certain other conditions.
  
  
• 3. Relief for older workers
  If an individual earning income from employment, personal service contract or non-agricultural business activity is aged 65 years or more, in case of males, or 60 years or more, in case of females, then his/her income up to 85 528 zł is exempt.
  All the above three exemptions can be availed either in the annual tax return or during calculation of monthly advances. A written declaration has to be submitted by the taxpayer during the tax advance calculation to the employer that he/she satisfies the required conditions. However, there is no template available yet.
  
  For more details on the conditions for above three reliefs, kindly refer to the guide provided below.
  
  
• Middle class relief
  
  Polish Deal introduced middle class tax relief as per which if the annual salary income of an individual from employment contract falls between 68 412 zł and 133 692 zł, then they are eligible for relief as per the table below:
  
  

  Annual Taxable Income From (in zł)	Annual Taxable Income up to (in zł)	Eligible tax relief
  68 412	102 588	(Income x 6,68% -4 566 zł) ÷ 0,17
  102 588	133 962	(Income x (-7,35%) + 9 829 zł) ÷ 0,17

  As per the April proposals, this relief is proposed to be eliminated considering the complexity involved in the calculation.

• Extending time limits for collection and payment of tax advances
  
  The official gazette notification number 558 dated March 09,2022 amended the calculation of Tax advances relating to tax year 2022 in case of employees with gross revenue up to 12 800 zł are to be calculated in accordance with the Rules as in force on December 31, 2021, and as per Polish Deal. If more tax advance is payable under Polish Deal, the excess tax portion need not be collected from the taxpayer's income in the month of obtaining income and it can be deferred and paid later when tax advance calculated as per Polish Deal is lesser. As per the April proposals, these deferral of PIT advances are expected to be eliminated.
  
  
• No requirement for calculation of tax advances
  
  At the taxpayer's written request, the remitter may refrain from collecting tax advances on certain types of income from personally performed activities. Such a request may be submitted by taxpayers with annual income not exceeding 30 000 zł. As per the April proposals, this request may get submitted by any other taxpayer as well if the annual income does not exceed 30 000 zł.
  
  
• Change in tax forms
  
  Amendments brought by Polish Deal have resulted in changes in the PIT forms as well. Most of the changes concern information in PIT-11 as new tax reliefs have been introduced. The latest forms are available at https://www.gov.pl/web/finanse/pit-formularz.
  
  

B. Statutory Compliance Release Date: April 22, 2022

C. Effective Date: July 01, 2022

A. Update

Earlier, as per Article 32 of Personal Income Tax Act, Tax advances calculated by the employer may get reduced monthly by one-twelfth of the tax reducing amount i.e.,1/12 of PLN 525.12 if an employee has declared the following in PIT-2 form before the first payment of remuneration in the tax year:

• He is not in receipt of retirement or disability pension through the tax remitter
• He does not earn income from membership in an agricultural production co-operative or other co-operative dealing with agricultural production
• He does not earn income from business, rental and lease, on which it is obliged to pay advances
• He does not receive any cash benefits paid from the EGBF or the Guaranteed Employment Benefit Fund

Through official gazette notification number 558, the following amendments have been brought in:

• An employee can avail the tax reduction by submitting the PIT-2 form any time during the year.
• The first declaration mentioned above regarding receipt of retirement or disability pension through the tax remitter has been replaced by the declaration that the employee is not in receipt of old-age or disability pension through the tax remitter or receives a pension after the payer's mediation by submitting the required application.
• Subject to the conditions as prescribed, the reduction will start to apply from the month following the month of submitting the declaration.

B. Statutory Compliance Release Date: March 09, 2022

C. Effective Date: March 09, 2022

A. Update

Polish government has adopted the regulation determining minimum remuneration for work for the year 2022 which provides as follows:

• Minimum remuneration of work on monthly basis would be PLN 3010 (currently, PLN 2800), and
• Minimum hourly rate would be PLN 19.70 (currently, PLN 18.30).

B. Statutory Compliance Release Date: September 14, 2021

C. Effective Date: January 01, 2022

A. Update

Polish Government has unveiled some details of the new stimulus plan “Polski Ład”/“Polish Deal”. It proposes significant changes to the tax and other laws aimed at boosting post-pandemic economy. Following are the significant proposed changes:

• Increase in Tax-free allowance to PLN 30 000 per year
  At present, in the case of persons whose income is subject to progressive taxation, the tax-free amount progressively decreases and no longer applies to individuals with an income above PLN 127 000.
• Raising the threshold for entering the higher income tax bracket of 32% to PLN 120 000
  At present, it is PLN 85 528.
• The total tax and contribution burden to be increased since health insurance contributions would be non-deductible
  At present, for income earned under employment contracts, the monthly contribution rate for health insurance is 9% of the assessment base, where 7,75% of the contribution is deductible from tax.
• Employment under contract of employment to be made more attractive than civil law contracts
  The program announces that the use of civil law contracts will be limited by introducing the obligation to pay full social security contributions on the personal service contracts, followed by the introduction of one contract of employment in the future.

B. Statutory Compliance Release Date: May 15, 2021

C. Effective Date: Proposed to be effective from January 01, 2022

A. Update

In order to further support stable employment and ensure employment, and reduce the tax burden of the new recruits' personal income tax withholding, the following is an announcement¹ regarding the improvement and adjustment of the personal income tax withholding for those who obtain wages and salary income for the first time in the middle of the year:

• For a resident individual who obtains income from wages and salaries for the first time in a tax year, the withholding agent can calculate the cumulative standard deduction by multiplying 5000 Yuan per month by the number of months ending in the taxpayer's current year. This means that in the first month of employment of such first-time earners, cumulative standard deduction shall be granted starting from January till the month of tax withholding in a tax year.
  For example, for a fresh graduate who commences employment on July 01, 2020 and receives the first salary for July, the deduction for that month will be the standard monthly amount of CNY 5,000 plus the accumulated deductions of CNY 30,000 for 6 months, from January to June, prior to the commencement of the first employment, i.e. CNY 35,000 in total.
• If a student receiving full-time academic education obtains labor remuneration for internship, the withholding agent should withhold personal income tax in the erstwhile cumulative manner, without giving effect to this announcement. In short, this announcement is not applicable to interns.
• Employees who comply with the provisions of this announcement should promptly declare to the withholding agent/employer and truthfully provide the relevant supporting materials or undertakings. Such supporting materials or undertakings should be kept for future reference.

B. Statutory Compliance Release Date: July 28, 2020

C. Effective Date: July 01, 2020