Poland: Labour Law Highlights in 2017

16.11.2017

Liquidation of the limit for retirement and pension security contributions

It is very likely that starting from 1 January 2018 there will be no limitation for retirement and social security contribution payments for all employees.

Under the actual binding provisions, salaries exceeding the equivalent of 30 times the average monthly pay in a given calendar year (in 2017 it is approx. EUR 30,450 (PLN 127,890)) are not subject to retirement and pension security contributions. These contributions constitute approx. 27.52% of employee’s salary and more than half of it (16.26%) is covered by the employer – in fact, this amount is an added cost of the salary paid to the employee. The rest (11.26%) is deducted from the employee’s salary.

Recently, the Polish government has introduced a change under which no limitation will apply and, consequently, retirement and pension contributions will be calculated from the whole salary received by the employee. The change will affect almost 350,000 employees and will mean that:

  • employees earning EUR 2,550 (PLN 10,700) or more will receive lower salaries due to additional social security deductions,
  • employers will have to finance additional contributions – almost EUR 905 million (PLN 3.8 billion) more than they finance now,
  • the personal income tax paid will be lower due to a lower calculation basis (generally, it will be the basis in the salary minus social security contributions – higher social security contributions mean lower basis),
  • higher retirement and pension contribution will also affect the health contribu-tions.

The change of law proposal has now been presented to the Polish Parliament and is likely to come into force on 1 January 2018.

Conclusions: It will become more and more crucial to introduce employment and earning related solutions attractive for employees and favorable for employers in order to make the decrease of net salary unnoticeable as much as possible and, on the other and, to arrange for intra funding for higher social security contributions. This is how the new field for employer branding develops.

Employers also have to prepare for new data protection law

The General Data Protection Regulation (“GDPR”) was approved on 27 April 2016 and is set to come into force on 25 May 2018. It will replace the EU Data Protection Directive of 1995 on the protection of individuals with regard to the processing of personal data and the free movement of such data and the current national legislations on data protection. Although the GDPR will be directly applicable, some national laws will have to be introduced mostly to adapt existing areas of law to new data processing regulations.

Particularly, the Ministry of Digitization (PL: Ministerstwo Cyfryzacji) has presented proposed changes to the Labour Code. The changes are to strengthen the employer's position. For example, now the employer has only the "right to demand" specific personal data from the prospective employee. Under new rules, he will be able to demand this data from the candidate. Additionally, the scope of data to be processed by the employer will change: the databases will no longer contain names of employees’ parents; instead, the candidate’s email address and phone number may be included.

The employer will also have the right to process the employee's biometric data. However, the biometric data shall be processed only if the employee agrees in writing or by electronic means.

The rules on monitoring in the workplace has also been defined – it may be used by the employer to protect employees, property or inside information. Nevertheless, monitoring must not cover the premises where the actual work is not performed, i.e. sanitary premises, dressing rooms, smoking rooms or canteens.

Two crucial changes have been proposed with regard to banking law and banking sector employers. The first enables the bank to verify criminal history of prospective employees, if they would have access to the bank’s and/or clients’ data at work. Moreover, the bank will be entitled to demand and process employees biometric data to control their access to information or premises.

Conclusions: Even though those who process only employee’s data must be aware that the GDPR will affect their activities. Consequently, employers will have to amend internal procedures on recruitment and employee’s documentation. On the other hand, the change in data processing law will enable employers to introduce new monitoring and controlling measures.