Guide to Hiring in Poland

Poland Professional Employer Organization

With a mixed economy that has proven to be resilient and diverse, Poland is increasingly popular amongst international businesses. The relatively low cost of living combined with an advanced trading network results in a fruitful market with success at a low threshold. With our PEO service, this threshold becomes even lower, and you can start doing business in Poland within days.

Poland’s complex history did not only result in a resilient economy but also in a highly diverse economic environment. While over 60 per cent of the economy revolves around the service sector, the industry also contributes for over 30 per cent. Although Poland does not depend on export, it does have strong ties with most European countries with Germany as its main trading partner.
Due to the complexity of Poland’s economy, the country offers many surprising opportunities and benefits yet to explore. This combined with a substantial trading network can profit your business in numerous ways.

What is a Professional Employer Organization (PEO) for Poland?

A PEO offers you a launchpad for global expansion. By using a PEO in Poland there is no need to set-up a legal entity including all tax registrations and complicated paperwork, and you can start doing business within days.

At Bradford Jacobs, we made it our goal to gain expert inside knowledge on Polish payroll, taxes, labor laws, and other local regulations. By utilizing our sources, you can start your global expansion hassle-free and at a low cost. We can provide specific support for payroll, taxation, Human Resources, and compliance issues as you expand your operations and enforce your workforce.

If you are ready to start your global success with us, you can add new international talent to your company within days. We have the connections and network to locate talents that meet your needs and wishes on all levels. Without the need for you to create a Polish subsidiary, your new employee can benefit your business in Poland in days instead of months.

But incredibly important: we ensure your company complies with all regulations and laws, areas in which can incur severe penalties would you fail to adhere. Your chosen candidate is hired through our agencies in Poland and remains under your day-to-day control.

How a Professional Employer Organization (PEO) works in Poland

Your business is not like any other and we get that. Your international plans require solutions that match with these plans, your goals, and your business strategy. Therefore, our PEO services provide a consultative approach and a tailor-made solution because we know one size does not fit all.

A PEO works with Employer of Record (EOR) agencies. This agency can function as the employer of your new workforce. Our EOR agencies in Poland enable you to operate staff in-country without worrying about HR (Human Resource) services, tax, payroll, hiring, firing, or adapting to changes in local regulations and employment laws. The EOR will take on these tasks and will be fully responsible.

When you hire us as a PEO, we come to an agreement together and establish a contract between you and Bradford Jacobs. We also come to an agreement with your new employee in Poland and sign an employment contract with this person.

The daily workflow and tasks of your new workforce will be completely under your guidance. Although we function as your employee’s legal employer, he or she performs tasks for your business as a part of your team. Here is our process and how it can work for you:

• You want to deploy an existing employee or recruit new talent in Poland.
• Once the candidate is selected, Bradford Jacobs steps in as their EOR through our Polish entity. We guarantee compliance with employment contracts, payroll, HR, tax, required visas or work permits.
• Within a few days, your company has an international presence in a new market, in a prime position without the risks, hassle, or expenses of setting up your own subsidiary.
• You will have daily control of the employee, while we manage all work-related registration formalities. Our consultants inform your employee about their holidays, benefits, and entitlements policies.
• All approved declarations and completed timesheets are sent to us by the employee. We will invoice you and once the payment is completed, we will deduct all contributions to the authorities and transfer the balance into the employee’s account.

When expanding your business into Poland, there are many opportunities to seek and explore. With us as your trusted partner, you can solely focus on these opportunities without worrying about:

• Registering with the Tax Office
• Registering with the Social Security Organization
• Setting up a bank
• Creating employment contracts
• Applying for special expatriation status (if applicable)
• Calculating monthly salary and creating pay slips
• Researching available tax-free allowances
• Submitting wage tax returns and national insurance forms
• Corresponding with involved parties
• Annual accounts, administration, and year-end statements
• Creating payment schedule for wage tax, national insurances, and net wages
• Personal income tax returns

Polish Employer of Record

A mixed economy with the service and industry sectors as main pillars combined with a strong trading position makes Poland an appealing country for global expansion. By using our EOR service, you can easily find and hire your workforce in Poland compliantly without the need to get familiar with complex laws and regulations.

With increased improvements in the education system and several innovative policies in place to stimulate labour participation, Poland’s labour force is rapidly growing and professionalizing. In addition, Poland’s forward-looking approach resulted in a developed market and a highly diverse economy that has been growing steadily for years.

With Poland as its main trading partner and well-developed connections with the rest of Europe, Poland offers a great springboard to global expansion.

What is Employer of Record (EOR) in Poland

As an EOR we conclude an agreement with both you and the employee who will be working for your company. We become the legal employer of your new workforce and are responsible for taxes, labor laws, and other local regulations that might be unfamiliar to you now. Your company maintains control over the working relationship, work ethics, tasks, and daily responsibilities of your employee.

How Polish Employer of Record (EOR) Works

An Employer of Record (EOR) is the legal employer of your new workforce. Our agency in Poland will legally hire your selected employees while you are responsible for day-to-day activities.

At Bradford Jacobs, we are currently operating in over a hundred countries in which we use local networks of experts. This allows us to gain expert knowledge of local laws and regulations, but also of recruitment customs and trends. By partnering with us as an EOR your company will have access to this expert knowledge too.

Our contract with your employee is 100% compliant with the Polish labor laws and includes benefits such as insurance and pensions. We can hire, onboard, and manage your new employees in Poland within days.

This is what we can do for you: 

• We hire your new talent compliant with Polish laws and regulations
• We are responsible for the employment contract, HR (Human Resource), taxes, and payroll
• We provide and arrange the required visa or work permits
• Our team keeps your employee in the loop on holiday arrangements, benefits, or changes in labor laws
• We keep you posted on local law changes and adapt to these changes compliantly
• Your employees’ declarations are sent to us monthly. We will invoice you in time and once the payment is completed, we will deduct taxes and other contributions and guarantee your employees receive their salary on time
• You remain in control of the daily activities and responsibilities of your employee

Using a Polish Employer of Record (EOR) Provider Features and Benefits

The greatest benefit of using an EOR is probably that there is no necessity for you to set-up an entity in Poland. This process can take months and during this period, it is unlikely that you have legal resources to pay your employees in Poland resulting in a considerable delay in your global expansion plans.

Global expansion is an exciting step that often leads to a growing and successful business, but the red tape in a new country can be demotivating and frustrating. Imagine a way to globally expand your business without red tape and at low costs: that is what working with an EOR can do for you.

By letting us take care of the hard part, you can focus on the great part: expand your business into Poland. These are the aspects we can take away from you:

• Registering with the tax and social security office
• Immerse yourself in the local laws, customs, and regulations
• Get familiar with local labor benefits and other contract-related customs
• Approach potential employees and make them an offer
• Setting up the Payroll system compliantly
• Submitting wage tax returns and national insurance forms
• Staying up-to-date and compliant with changes in local regulations
• Worrying about whether or not you are working compliantly with all laws, restrictions, and regulations

Polish Market

Poland is rich in culture, heritage, and traditions where castles and palaces add a magical backdrop to what is nonetheless a vibrantly forward-looking nation and a growing economic power in the central and eastern European region. Poland ranked 23rd globally for nominal Gross Domestic Product (GDP) of 655.3 billion US dollars in 2021 and ranked ninth among European nations – a jump of two places since 2020.

North, south, east, and west are pulled together by Poland’s borders with Germany, the Czech Republic, Slovakia, Ukraine, Belarus, and Lithuania. This location creates the perfect launch pad for international companies’ international expansion.

A multi-lingual, well-educated, skilled, and cost-effective workforce add to the attractions. But incoming companies tempted to set up a subsidiary will find adjustments need to be made – and quickly. 

Starting a Business in Poland

The most popular choice for foreign companies opening a subsidiary in Poland is to form a limited liability company, a Spólka z ograniczonq odpowiedzialno?ciq, which is abbreviated to Spolka.z.o.o. o or Sp.z.o.o. The subsidiary is a legal entity, entirely independent of the parent company and is incorporated under the regulations of the Poland Company Act and is registered with the National Court Register (KRS) and the Central Register for Information on Business Activity (CEIDG). Requirements and provisions include:

• The company name must be unique with the suffix Spolka.z.o.o. or Sp.z.o.o.
• Provide notarized Articles of Association. This process can be completed by assigning Power of Attorney to an authorized agent
• Obtain Tax Identification Number for the company (NIP)
• The subsidiary can be established by a single shareholder or an entity, but not if the entity in question itself has only a single shareholder
• Note: Failure to name all beneficiaries in the Register can incur fines of up to PLN 1,000,000 (€220,313, US$251,512)
• Name at least one shareholder with no upper limit on numbers. If share capital exceeds PLN 500,000 (€110,156, US$125,756) or there are more than 25 shareholders, it may be necessary to form a supervisory board
• A Polish bank account must be opened to provide proof that minimum share capital of PLN 5,000 (€1,100, US$1,260) has been deposited
• Establish a board of directors chosen by the supervisory board or general meetings of the shareholders
• Composition of the management board must be lodged with the National Court Register within six months

Expanding into Poland

Poland is a member of the European Union (EU), though not the Eurozone, and uses the zloty as its currency. It is also a key player in the Central Eastern Europe (CEE) economic bloc and is recognized as the strongest of the former ‘Eastern bloc’ nations, according to the International Monetary Fund.

Besides this, Poland is a member of the World Trade Organization (WTO) and the Organization for Economic Cooperation and Development (OECD). In addition to being perfectly placed for business with Western Europe and further east, Poland’s Baltic coastline gives access to Scandinavia and into the North Sea and Atlantic.

Opening a business in any overseas territory brings issues. Moving staff across the world means lengthy processes to obtain visas and work permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination, and severance?

Drawing up an expansion blueprint is not enough. Your business plan will have to answer all these questions.

Poland welcomes foreign investment. However, the employment market is complicated by its mix of regulations and collective agreements affecting employee benefits and entitlements. There are other questions too: where will you find distributors, manufacturers, and offices?

There is a simple alternative. By partnering a Professional Employer Organization (PEO) and Employer of Record (EOR) such as Bradford Jacobs, companies can plot a time-efficient and cost-effective path to locating and employing staff in Poland

Poland Business Facts

• Capital – Warsaw
• Population – nearly 37.8 million in 2022
• Regions – There are 16 provinces (voivodships) of Poland. These are divided into counties (powiats) and further divided into communes or municipalities (gminas)
• Official language – Polish
• Economy and world ranking – GDP US$655.3 billion, ranked 23rd
• Leading sectors by GDP – Service 57.4%, industry 28.2%, and agriculture 2.4% end of 2020. Biggest growing industry is the business and finance sector. Also, largest industries include petrochemicals, polymers, automotive, ships and electronics
• Main exports include – Machinery and appliances e.g., computers, gas turbines, vehicles and parts, metals, food stuffs, pharmaceuticals
• Main imports include – Machinery e.g., broadcasting, office machines, cars and parts, mineral fuels, and oils
• Main trading partners – Germany, Italy, Netherlands, UK, Czech Republic
• Government – Democracy, republic, parliamentary republic
• Currency – Polish zloty (PLN)

Advantages and Challenges of the Polish Market

Advantages of expanding into Poland include:

• Location: Strategic geographical position for trade with central, eastern, and western Europe
• Links: Baltic coast gives access to Scandinavia, the North Sea and Atlantic
• Employment: Cost-effective labor
• Workforce: Well-qualified professionals, generally multi-lingual
• Buying Power: Growing consumer base contributing 60% to GDP, exceeding the European Union average
• Infrastructure: Developing program of construction and real estate projects
• Business: The World Bank ranked Poland 40th out of 190 nations for ease of doing business in its most recent report

Challenges of expanding into Poland include:

• Labor: Combination of low birth rate, emigration and low unemployment creates labor shortages in some sectors
• Red Tape: Complex processes for obtaining work permits and visas
• Trading: Regulations covering cross-border trading for imports and exports take around 17 days to deal with, above average for Organization for Economic Cooperation and Development (OECD) members
• Politics: Uncertainty over future relations with the European Union

Limited Company / Subsidiary or Branch in Poland?

The most popular choice for foreign companies opening a subsidiary in Poland is to form a limited liability company, a Spólka z ograniczonq odpowiedzialno?ciq, which is abbreviated to Spolka.z.o.o. o or Sp.z.o.o. The subsidiary is a legal entity, entirely independent of the parent company and is incorporated under the regulations of the Poland Company Act and is registered with the National Court Register (KRS) and the Central Register for Information on Business Activity (CEIDG). Another option is to open a branch.

Subsidiaries have independent legal status from the parent company, which is generally free from responsibility for any debts or liabilities. Subsidiaries can have a different name from the parent company, pursue different business activities and form their own contracts.

Branches in comparison, are an extension of the parent company and are not a separate legal entity. Subsidiaries and branches have differences in how they are registered and operate.

Polish Top Talent

Finding and recruiting top talent in any overseas territory poses many opportunities, as well as potential trip wires, for companies taking steps to build their international profile. This potential – and the challenges it brings – underlines why Bradford Jacobs’ global experience is indispensable for taking the smartest recruitment route into Poland.

The Recruitment Process in Poland

Although businesses still tend towards a hierarchical structure, Poland has proved the most successful of the economies that emerged from the former Communist system. Its growth as a free-market economy has been driven by the younger elements of a well-educated, motivated, and focused workforce.

They have played a strong entrepreneurial role, particularly among start-ups. Many of the younger managers have added English, German, and Russian language skills to their Polish, nurturing an internationally minded outlook.

In-comers can be reassured that Poland provides a comprehensive framework of regulations and statutes that safeguard employment rights.

Recruitment is the first stage of making your company operational and competitive in Poland. Once recruited, companies must then consider the implications of handling payroll for their staff and dealing with the tax and social insurance authorities. It is not a legal requirement in Poland to establish a legal entity to undertake these responsibilities, but strict registration procedures must be followed. These include:

• Applying for the employees’ Tax Identification Numbers (NIP)
• Registering employees with the Social Insurance Institution (ZUS)
• Registering employees with the National Statistics Agency (GUS)
• Filing forms for remitting tax with the National Revenue Administration (KAS)
• Withholding and remitting tax and social insurance contributions to the relevant authorities
• Compiling Personal Income Tax (PIT) returns comprising all income from employment, including bonuses and overtime, as well as benefits in kind
• Making advance monthly or quarterly PIT payments
• Filing PIT returns for employees where required, by April 30 of the year following the tax year

Legal Checks on Employees in Poland

• Scope: Poland’s Labor Code and other statutes allow employers to collect information verifying educational and professional qualifications and work history. Obtaining other personal information will require the candidate’s permission.
• Medical Checks: Permitted if relevant to a particular type of role, but not if the applicant provides a medical certificate for performing the same role with a previous employer.
• Educational Qualifications and References: Permitted.
• Criminal Record Checks: Permitted only if statutory regulations state this as essential for filling certain positions.
• Sensitive Information: Employers are allowed to process personal information relating to such as political and religious beliefs, biometrics and genetics, sexuality, and gender orientation, for example, only if the candidate initiates offering the information.
• Required: Relevant work permits for foreigners not from EU or EEA member states.

Basic Facts on Hiring in Poland

Companies hiring staff for international expansion into Poland must comply with a framework of employment and taxation regulations. Some are subject to mandatory state regulations, while collective and trade union agreements can improve on the statutory basic minimums. Directives from the European Union (EU) can come into play. Basic requirements cover the following:

• The Employment Rights Act 1996 stipulates employers must provide a written statement detailing terms and conditions of their employment on the first day of employment
• In the absence of a written contract, the employer must provide a written statement before the first day of employment giving full details of the parties, remuneration, start date and if applicable end date of the employment, type, and place of work
• Poland’s Labor Code covers fixed term and open-ended contracts, including one for probationary periods
• Any changes to the terms and conditions, particularly pay, must be confirmed in writing
• Additionally, it is possible to conclude a part-time employment contract, which must not have inferior terms and conditions to full-time employees undertaking the same work
• Fixed-term contracts must not exceed three in number over a maximum of 33 months, after which it becomes an open-ended (indefinite) contract. Contracts for trial periods must not exceed three months
• Notice periods can apply to contracts for trial periods, fixed term, or indefinite. They can vary between two weeks, one month or three months; or three days, one week or two weeks for trial periods
• After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.
• In Poland it is not a legal requirement for foreign companies to open a legal entity to run payroll for their staff, but they must register with various authorities.

Polish Payroll

Successful international expansion depends on making the right moves from day one. This is vital for foreign companies establishing a presence and planning to operate payroll in Poland. Although foreign companies need not set up a legal entity to run payroll in Poland, they must follow an exhaustive procedure of providing documentation and registering with tax and social insurance authorities.

Bradford Jacobs’ Professional Employer Organization (PEO) and Employer of Record (EOR) platforms and networks will provide complete answers to every question your company will encounter moving into the economy.

Our teams step in from the start by dealing with the National Revenue Administration (Krajowa Administracja Skarbowa, KAS) to obtain the Tax Identification Number (NIP) for each employee and also for the company. Further registration steps are also required with the social security agency and the register for business activity.

What Poland Payroll Options are available for Companies?

1. Remote Payroll: This option allows businesses to operate under a single payroll system, by adding employees in Poland to the parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
2. Internal Payroll: You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Poland. However, this does require hiring dedicated HR staff who understand Poland’s employment and compliance laws.
3. Poland Payroll Processing Company: If you are considering outsourcing, then working with a Polish payroll company will help in processing your payroll – but not when it comes to compliance.
4. Poland Payroll Outsourcing: However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Poland. We lift the administrative stress from your shoulders so you can focus on what you do best.

Polish Payroll Services

Companies advancing their international operations into Poland open a vista of opportunities in the Central and Easter Europe (CEE) region, throughout the European Union and further afield.

Challenges come alongside the potential benefits, however. Payroll management is among those challenges, whether your company is considering moving employees abroad or hiring new staff in-country. Employment laws, payroll and income tax regulations are areas where you cannot afford mistakes.

Foreign companies wanting to hire staff and operate their payroll in Poland have the option of establishing a legal entity, although this not a legal requirement. A limited liability company – known as a spolka.z.o.o. – is the typical choice for incoming businesses and requires minimum share capital of PLN 5,000 (€1,100, US$1,260). This is the most popular form of company set-up in Poland. The company must be registered with both the National Court Register (KRS) and Central Register for Information on Business Activity (CEIDG).

Taking this step before running payroll in Poland requires an in-depth knowledge of company, employment, and taxation laws, which changed in January 2022 – and keeping up to date with these changes.

However, there is an alternative and simpler route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently. We recruit the staff in-country and then put into action our comprehensive knowledge of tax and payroll regulations. As part of our service, Bradford Jacobs files returns, and remits associated payments for tax and social security contributions directly from our payroll system to the relevant authorities.

Outsourcing your payroll in Poland will streamline your operations by dealing with the following: 

• Applying for the employees’ Tax Identification Numbers (NIP)
• Registering employees with the Social Insurance Institution (ZUS)
• Registering employees with the National Statistics Agency (GUS)
• Filing forms for remitting tax with the National Revenue Administration (KAS)
• Withholding and remitting tax and social insurance contributions to the relevant authorities
• Compiling Personal Income Tax (PIT) returns comprising all income from employment, including bonuses and overtime, as well as benefits in kind
• Making advance monthly or quarterly PIT payments where required
• Filing PIT returns for employees where required, by April 30 of the year following the tax year

What is required to set up Polish Payroll?

Companies planning to run payroll by establishing a legal entity subsidiary in Poland, typically select a private limited liability company known as a spolka.z.o.o. It operates under Poland’s Company Law, which incorporates the Accounting Act, The National Court Register Act, the Commercial Companies Code, and the Act of Freedom of Economic Activity. Requirements include:

• Registering with the National Court Register (KRS)
• Registering with the Central Register for Information on Business Activity (CEIDG)
• Obtaining company Tax Identification Number (NIP)
• Registration with the National Revenue Administration (KAS) for Corporate Income Tax (CIT), Value Added Tax (VAT) and for withholding and remitting income tax contributions
• Registering with the Social Insurance Institution (ZUS)
• Registering with the National Statistics Agency (GUS)
• Having one or more shareholders
• Proof of having deposited minimum share capital of PLN 5,000 (€1,100, US$1,260) in a business bank account
• The 13-digit REGON number needed to open the account, available from the GUS website once company details have been registered
• The procedures for forming and dissolving the company
• Management board
• A supervisory board if share capital exceeds PLN 500,000 (€110,340, US$126,000) or there are more than 25 shareholders

Once incorporated, other steps must be followed in order to employ staff and operate payroll. The main requirements include:

• Apply for the employees’ Tax Identification Numbers (NIP)
• Register employees with the Social Insurance Institute (ZUS)
• Register employees with the National Statistics Agency (GUS)
• Filing forms for remitting tax with the National Revenue Administration (KAS)
• Withholding and remitting tax and social insurance contributions to the relevant authorities
• Compiling Personal Income Tax (PIT) returns, disclosing all income from employment, including bonuses and overtime, as well as benefits in kind
• Filing PIT returns for employees where required, by April 30 of the year following the tax year

Polish Tax Laws

Dealing with tax, payroll, and employment regulations for your staff from overseas is always a tricky process and poses complications that demand expert guidance. Poland is no exception, with layers of taxation applying both at individual and corporate levels, including advance payments and, in the case of personal taxes, a complicated credits system.

Overview of Taxes in Poland

* Poland is a member of the European Union, but not the Eurozone and uses the zloty (PLN) as its unit of currency. 

Residents’ Personal Income Tax (PIT): The rate up to PLN 120,000 (€26,549, US$30,273) is 17%. Excess is taxed at 32%, plus a payment of PLN 14,539 (€3,204, US$3,673). Taxed on worldwide income. There is a tax-free allowance of PLN 30,000 (€6,636, US$7,566). Income up to PLN 85,528 (€18,854, US$21,592) earned by persons under 26 years old is tax free, since August 2019

Non-residents’ Personal Income Tax (PIT): Certain categories of income are taxed at a flat rate of 20%. Otherwise taxed at normal rates on income sourced in Poland.

Social Insurance Taxes: Employees contribute a total of 13.71% to pension, disability, and sickness insurance from gross salary. Employers contribute a total of 20.38% of the employees’ gross salary towards pensions, disability and accident insurance, the employee guaranteed benefits fund and the Labor Fund. As of January 2022, the 7.75% contribution to health insurance is no longer tax deductible.

Corporate Income Tax (CIT): The standard rate is 19% on taxable profits, with returns and final payment completed three months after the tax year. Monthly CIT advance payments are made by the 20th of the following month. A rate of 9% applies to companies with revenue up to PLN 5,451,970 (€1,200,000, US$1,374,877). The lower rate can apply in some circumstances to start-ups launched since 2019. Proposed CIT changes include providing computerised accounts (not until January 2023), changes on transfer of assets outside Poland and a new tax of 0.4% on large corporations.

Withholding Tax (WHT): The domestic rate for dividends is 19%, with 20% withheld on interest and royalties paid to non-resident companies or individuals. Lower rates may apply below a threshold of PLN 2,000,000 (€442,540, US$504,877) paid to single recipients in a tax year.

Value Added Tax (VAT): The standard rate is 23% applied to goods and services. A reduced rate of 8% applies to such as pharmaceutical products and transport services; 5% to books, journals, and some foodstuffs, for example. Changes proposed from July 2022 affect tax groups, some financial transactions, and refunds to businesses.

Poland Individual Tax – Single, Married

Liability for personal income tax is based on residency. Individuals whose personal and economic base is in Poland and who reside there for more than 183 days in a tax year are residents and are taxed on their worldwide income. Those who are not based in Poland and do not reside there for more than 183 days are non-residents and taxed only on Polish-sourced income. Married couples can file joint returns in certain circumstances.

Polish Contracts

Foreign companies hiring employees in Poland must operate within a framework of legislation, collective agreements, and European Union (EU) directives that provide safeguards and entitlements for the workforce.

Most aspects of employment legislation in Poland are covered by the Polish Constitution and the Labor Code, which was implemented in 1974 and is periodically updated and amended. The Employment Rights Act deals with contracts. The State Labor Inspectorate (SLI) supervises compliance with regulations and instigates prosecutions where rules are ignored.

A minority of employees in Poland are covered by Collective Bargaining Agreements (CBAs), which operate mainly at company and workplace level. Where in place, CBAs can improve statutory minimums but not undercut them.

Employment Contracts in Poland

Apart from the specific terms, employees must be given their formal written contract no later than the first day of employment. In the absence of a formal contract, a written agreement must be given to the employee before the first day.

Although there are no legal requirements for the language used in a contract, the terms must be fully understood by all the parties, whatever their nationality or native tongue. Mandatory information required for all contracts includes identities and addresses of all parties, employment start date, place, and type of work, working hours, annual leave, notice periods, type of contract and any trial period contract.

Generally, the standard contract is open-ended and indefinite. The Labor Code allows fixed-term contracts only in certain cases and they cannot exceed a total of three over 33 months. A trial period contract is separate and precedes the formal employment contract.

The main types of employment contract are:

• Open-ended, Permanent, Indefinite Employment Contracts: This typical type of contract can be terminated by mutual agreement; by either employer or employee giving notice; by either of the parties without giving notice. The employer can terminate the contract only by complying with the Labor Code and by giving specific reasons, in writing, for terminating.
• Fixed-term Employment Contracts: These are signed for a specific period, but automatically becomes open-ended if it is renewed a third time in a period of 33 months. Otherwise, the contract ends at the specified time without the employer required to give notice. These terms also apply to a fixed contract tied to a specific project but will also become open-ended if it is renewed a third time.
• Probation Period Employment Contracts: This contract type pre-dates a full employment contract and cannot exceed three months. The contract can be terminated by mutual consent, but not unilaterally. Notice periods are three days, seven days or 14 days depending on the length of the trial period.
• Collective Bargaining Agreements (CBAs): Collective bargaining and trade union agreements cover a minority of workers in Poland, in such areas as wages, working hours, notice periods, overtime, general working conditions and vacations. Such agreements overwrite other statutory minimums and provide a higher level of benefits and operate mainly at company and workplace level. They are governed by the Labor Code.

Work Culture

To succeed in business in Poland, it is vital for both employers and employees to have a strong understanding of the business culture.

As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about Poland work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in Poland to start your expansion well-informed.

Poland has successfully emerged from the Soviet-era to become one of Europe’s most attractive nations for foreign expansion with a cosmopolitan, internationally minded workforce.
Poland ranked 23rd globally for nominal Gross Domestic Product (GDP) of 655.3 billion US dollars in 2021 and ranked ninth among European nations – a jump of two places since 2020.

In addition to being a member of the European Union (EU), Poland is also a key player in the Central Eastern Europe (CEE) economic bloc. Poland is recognized as the strongest and most open and forward-looking of the former ‘Eastern bloc’ nations, according to the International Monetary Fund.

Poland’s growth as a free-market economy has been driven by the younger elements of a well-educated, motivated, and focused workforce. They have played a strong entrepreneurial role, particularly among start-ups. Many of the younger managers have added English, German, and Russian language skills to their Polish, nurturing an internationally minded outlook.

Incomers need to be up to speed to make their mark in this highly competitive environment. The workforce is well-educated, highly skilled, multi-lingual and Poland’s employment market proves a magnet for workers from those countries enjoying free movement across Europe’s borders.

Here are a few tips on taking the right steps and avoiding the pitfalls:

• Language: Polish is the official language, obviously, but being enclosed by several other nations has encouraged language skills in many businesspeople. Russian and German are commonly spoken. English is regularly used in business meetings where Polish is not the first language among attendees.
• Punctuality: Show respect by being on time, although senior managers often like to be the last to arrive.
• Attitudes: An initially formal and reserved outlook runs alongside being direct, decisive and ‘getting to the point’.
• Business Environment: Welcoming to international involvement, with SMEs particularly keen to engage with foreign partners. Decisions tend to come down from the top, reflecting that the business environment still tends towards the hierarchical.
• Negotiations: Because of potential language issues, always best to stick to written agreements. Show interest in the company and the process – do not seem to be in a rush to ‘close the deal’ as this may in fact slow things down. Initial meetings may be with a middle manager to assess ‘trustworthiness’ before senior levels become involved.
• Presentations: Make them clear, precise, and backed up by charts and stats.
• Meetings: Poles are generally happy for small talk at the beginning and end of meetings. Show respect to senior members of the other team.
• Greetings: Maintain eye contact and shake hands – with everyone – thereafter allowing a good arm’s length personal space. Until formality is put aside, stick to titles and surnames. ‘Pan’ for Mr. and ‘Pani’ for Mrs. Married women take their husband’s last name, but if it ends in a ‘y’ or an ‘I’ the letter changes to an ‘a’. So, if you are introduced to a Mr. Kowalski and Mrs. Kowalska, there is a good chance they are a married couple.
• Dress Code: Formal for men and women in meetings, though can be more relaxed during office hours and ‘dress down’ Fridays.
• Gift-giving: Make them modest and thoughtful, and open immediately.

Polish Minimum Wage

Poland has a federal mandatory minimum for wages, which from January 2022 is PLN 19.70 (€4.35, US$4.97) per hour and PLN 3,010 (€664, US$760) each month. The monthly wage reflects an increase of PLN 210 (€46.40, US$53) over 2021.

Probation Periods in Poland

Trial periods are subject to a formal contract, prior to being employed on a full contract, and cannot exceed three months. The probationary contract can be terminated by mutual consent, but not unilaterally. Notice periods are three days, seven days or 14 days depending on the length of the trial period.

Working Hours in Poland

Working hours are restricted to eight in a 24-hour period, or no more than 40 in a five-day week averaged over a period determined by the employer, which cannot exceed four months. Extended limits can be agreed to meet production demands. Employees are entitled to a paid 15-minute break for working six hours, with the option of an unpaid lunch break of 60 minutes – although this means making up the hour at the end of the day, so is often not taken. Flexible working hours are allowed under the Labor Code.

Overtime in Poland

Overtime is restricted to 150 hours in a calendar year unless the employment contract, a collective agreement or the employer’s workplace regulations state otherwise. Total weekly working hours, including overtime, should not average more than 48 in the reference period determined by the employer. Overtime is 100% above the normal hourly salary for working Sundays or bank holidays; 50% extra for overtime on other days; 100% extra for every hour worked above the norm contractually agreed for the reference period.

Polish Visas, Work Permits and Migration

Expanding a business into new territory can be both thrilling … and daunting, especially if it’s thousands of miles away. Dealing with immigration legislation and risking sanctions and fines for non-compliance is a major consideration unless you are in the hands of experts such as Bradford Jacobs, a Professional Employer Organization (PEO) and Employer of Record (EOR).

We are experts in hiring staff, applying for work visas in Poland and ensuring employees meet Polish work visa requirements with the correct documentation. Our team is trained to research the latest information on Polish visas and work permits and therefore, we created a guide to introduce you to the rules and requirements. This guide highlights the complexities of obtaining the necessary documentation.

What Types of Work Visas, and Permits for Poland are there?

Citizens of the European Union (EU), European Economic Area (EEA) and Switzerland have ‘free movement of persons’ entering, living, and looking for employment in Poland. They do not require entry visas or work permits. They can stay for three months with just their EU passports or ID card. After this, they must register with the ‘voivodship’ (state or province) where they live for a temporary residence permit for up to three years. This is an easy process with no charge.

Third Country Nationals (TCNs) to visit, holiday or for unpaid business purposes who are not visa-exempt, must apply for:

• Schengen C Visa gives them a 90-day stay in a six-month period
• For stays of more than three months, a National D Visa is required

Generally, all TCNs who wish to enter Poland for employment, require a work permit. There are a few exceptions related to scientific research. 

Also, some countries have an agreement with Poland allowing for an Employer’s Declaration of Entrusting Work to a Foreigner’ rather than a work permit, such as the Ukraine, Russia, Armenia, Moldova, Belarus and Georgia. 

Conditions include: 

• For six months in a 12-month period
• Employers make a ‘written declaration’ to provide the employees with work
• The declaration has to be posted in Poland’s Labor Office

They have up to 90 days visa free, after which they must apply for the appropriate visa or temporary residence permit for the length of their stay.

All other TCN citizens require a work permit which is applied for by the employer at the ‘voivodship’ (state or province) they will work and live. The employer pays for the permit and must give a copy to the employee on acceptance.

Main Work Permits

• Type A is the standard permit for foreigners who have been offered a job by Polish employers
• Type B is for a board member residing in Poland for six out of 12 months
• Type C is for ‘intracompany’ transfers sent to a branch of non-Polish employer for more than 30 days
• Type D is for employees sent to non-Polish employers to perform a service
• Type E for employees working with non-Polish employer sent to Poland (intracompany) for longer than three months
• Freelance / Entrepreneur permit for the self employed
• EU Blue Card which is a combined work permit (A Type) and residence permit for highly skilled and qualified workers or professionals with five years’ experience

As well as the work permit which gives permission for employment, TCNs also require a National D Visa to enter and stay in Poland legally. This can be applied for in the home country from a local Polish Embassy or Consulate or their official representative. A Residence Permit can be applied for when arriving in Poland.

Note:
Work permits are issued on the basis of:

• A specific employer
• A particular job position
• A designated period of employment

So be careful, you may need to apply for a new work permit if there is a change of employer and if all documents are rendered invalid by the move.

Being illegal in Poland can bring fines and sanctions for both employee and employer. Reasons include:

• Not having the relevant visa or residence card to live in Poland even though employees may have a work permit
• Performing work that is not specified in the work permit or not having a work permit
• Being employed with documentation which does not cover paid employment

Fines up to PLN 5,000 (€1,103, US$1,264) for individuals and expulsion from Poland and the Schengen area for three years can apply. Employers must cover all costs relating to the expulsion of employees PLUS fines which can be excessive if the employee was asked to work illegally.

TCNs seeking employment – from outside of Poland

• A job offer is required with initial contract detailing working conditions, salary, start date etc. However, the position should have been offered first to Polish/EU/EEA nationals (Labor Market Test) through the local labor office or the European Job Bank (EURES). This needs to have been verified before the employer can apply for the work permit for a TCN. Exceptions apply if their occupation is on a skill shortage list
• The employer applies and pays for the work permit. This is the legal permission to work in Poland. It is typically the standard Type A permit or Type C/E for intracompany transfers
• A National D Visa is also legally required by employees to enter and live in Poland. This D Visa can be applied for when the ‘voivodship’ (state or province) to which the employer has issued an employment application, sends an invitation to the employee
• The employer must ensure that the Visa or Residence Permit are legally correct and keeps a copy
• The contract needs to be concluded before the employee starts work. Failure results in a fine of PLN 3,000 (€662, US$758). Type of contract determines if employees are covered by the Labor Code. Employment contracts are covered but civil contracts are not e.g., task contract, agency contract or contract of mandate (for a determined period) are covered by the Civil Code
• Employees are legally entitled to a copy of the contract in a language which they are familiar with and is provided by the employer
• Within four days of entering Poland, the employee must register at the ‘voivodship’ where he lives and works
• Within seven days of the contract being signed, the employer must register the employee with the social security and health insurance authorities, so the employees are covered for health care as well as benefits and entitlements
• After entering Poland, a residence permit can be applied for during the legal stay (i.e., documents are still valid) at the ‘voivodship’

For foreign employees already in Poland

These employees can apply for a combined Temporary Residence and Work Permit or an EU Blue Card, also known as a “Temporary Residence Permit for the purpose of highly qualified employment”. This permit allows foreign nationals to live and work in Poland. Certain conditions and documents are required when applying.

Polish Entity Set Up

Poland welcomes foreign investment into its continually developing free market economy. Poland ranked 23rd globally with nominal Gross Domestic Product (GDP) of 655.3 billion US dollars in 2021 and ranked ninth among European nations – a jump of two places since 2020.

Even so, expanding overseas is a major step, especially for companies considering opening a legal entity in their new territory. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into a new territory, maybe thousands of miles overseas.

How to set up a Poland Subsidiary

Setting up a subsidiary in Poland? First, choose a company type. The typical – and most popular choice – for foreign companies is to establish a limited liability company known as a Spolka.z.o.o. or Sp.z.o.o. The subsidiary is a legal entity entirely independent of the parent company and is incorporated in Poland as a local company under the Poland Company Act. Various documents and procedures must be completed to set up the subsidiary. These include:

• The company name must be unique with the suffix Spolka.z.o.o. or Sp.z.o.o.
• Provide notarized Articles of Association. This process can be completed by assigning Power of Attorney to an authorized agent
• Register with the National Court Register (KRS) and the Central Register for Information on Business Activity (CEIDG)
• Register with the National Statistics Agency (GUS), through which companies can obtain the 13-digit REGON number necessary for opening a business bank account
• Obtain Tax Identification Number (NIP)
• Articles of Association should include the name and address of the subsidiary, the internal regulations, the objectives, the name of the shareholders and beneficiaries, their contribution to the capital and details regarding the shares and their attached rights
• The subsidiary can be established by a single shareholder or an entity, but not if the entity in question itself has only a single shareholder
• Note: Failure to name all beneficiaries in the Register can incur fines of up to PLN 1,000,000 (€220,313, US$251,512)
• Name at least one shareholder with no limit. If share capital exceeds PLN 500,000 (€110,156, US$125,756) or there are more than 25 shareholders, it may be necessary to form a supervisory board
• A Polish bank account must be opened to provide proof that minimum share capital of PLN 5,000 (€1,100, US$1,260) has been deposited
• Establish a board of directors chosen by the supervisory board or general meetings of the shareholders
• Composition of the management board must be lodged with the Court Register within six months

Benefits of setting up a Subsidiary in Poland

Specific advantages for a foreign company opening a limited liability subsidiary in Poland include that the subsidiary has independent legal identity under Poland’s Company Law. The subsidiary is responsible for its own debts and liabilities, but the shareholders are liable only to the limit of their own share contribution. Additionally, the parent company generally has no liability for debts or liabilities.

The subsidiary, as a resident local company, will be liable for tax on its worldwide taxable profits and must register for paying Corporate Income Tax (CIT) and Value Added Tax (VAT). The standard CIT rate is 19% on taxable profits. A rate of 9% applies to companies with revenue up to PLN 5,451,970 (€1,200,000, US$1,374,877). The lower rate can apply in some circumstances to start-ups launched since 2019. Companies must register for VAT if their sales in the tax year will exceed PLN 200,000 (€44,014, US$50,437).

Through its subsidiary, the parent company has the advantage of exploring the Polish market and further afield among other European Union member nations, into the Central Eastern European (CEE) economic bloc and even further east.

Other benefits for a subsidiary:

• Easier to obtain regulatory approvals, loans and finance and enter into contracts with other Polish and European Union companies
• More impact with clients and suppliers, as subsidiaries imply more permanency than branches
• Employees feel there is more stability and job security than from being with a branch

In the wider commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case the opportunities offered by the European economies.

However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Poland.

Employee Benefits

Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in Poland might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Poland, including local benefits.

When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few.

Benefits and entitlements for employees in Poland are based on the Polish Constitution and the Labor Code, which updates provisions with occasional amendments. European Union (EU) directives, case law and collective and trade union agreements also play a role The State Labor Inspectorate (SLI) supervises compliance with regulations and instigates prosecutions where rules are ignored.

Foreign companies hiring employees in Poland must operate within this fluid arrangement of legislation that provides safeguards and guarantees for the workforce. Minimum guarantees include:

• Minimum wages
• Paid vacations
• Working hours
• Termination, severance, and notice periods
• Sick leave
• Maternity allowances and benefits

The responsibilities of foreign companies reach further than simply complying with tax, social security, and payroll regulations. Failure to comply with specific regulations applying to benefits and entitlements runs the risk of fines and sanctions. It is vital that employers have a firm grasp of what is guaranteed for their employees, as this will affect the employer-employee relationship.

What Compensation Laws exist in Poland?

The bulk of legislation concerning the employees’ rights and employers’ obligations are drawn together under the Labor Code and the Polish Constitution, while the Employment Rights Act largely deals with contracts. A minority of employees in Poland are covered by Collective Bargaining Agreements (CBAs), which operate mainly at company and workplace level. Where in place, CBAs can improve statutory minimums but not undercut them.

The Labor Code: This is the key piece of employment law governing the entitlements of employees and the duties of employers in all areas of employment law. Employers cannot attempt to enter contractual agreements with employees which are less advantageous than terms laid out in the Code. The Code is periodically updated in relation to various employment regulations, which in other countries are often formed in separate acts or statutes

The requirement for employers to respect employees’ rights stretches further than simply complying with tax and payroll procedures. Legislation and binding collective agreements apply to such as maternity allowances and benefits, holidays, sick pay and severance payments, minimum wages and working hours.

Drawing up contracts is tricky enough, but in Poland it is vital for employers to be up to speed with responsibilities to their staff over benefits, compensation, and minimum requirements. Employees must be given a written contract no later than the first day of employment. Do not take the risk of paying penalties for ignoring these responsibilities … or being late!

Compensation, entitlements, and benefits include the following, all of which can be improved by collective agreements, but not diminished.

• National Minimum Wage: The minimum was set at PLN 19.70 (€4.35, US$4.97) per hour and PLN 3,010 (€664, US$760) each month in January 2022
• Working Hours and Breaks: Working hours should not exceed eight in 24 hours, or more than 40 in a five-day week averaged over a period determined by the employer up to four months. Employees are entitled to a paid 15-minute break for working six hours, with the option of an unpaid lunch break of 60 minutes – although this means making up the hour at the end of the day. Flexible working hours are allowed under the Labor Code
• Overtime: The permitted maximum is 150 hours in a calendar year unless otherwise covered in the employment contract, collective agreement, or workplace regulations. Total weekly working hours, including overtime, should not average more than 48 in the reference period determined by the employer. Overtime is paid at 100% above the normal hourly rate for Sundays or bank holidays; 50% extra for overtime on other days; 100% extra for every hour worked above the norm contractually agreed for the reference period
• Termination and Severance: Contracts may be terminated by mutual agreement. Employers terminating contracts with immediate effect must provide a ‘termination letter’ justifying the reasons. Employees protected from termination include those within four years of retirement; those on maternity, paternity, parental, childcare, or sick leave; those on vacation and trade union or works council members. Employers may need to notify trade unions of intended terminations. Severance may apply if the employer terminates a contract either with notice or by agreement between the parties; if the employer is responsible for the termination and if they have more than 20 employees. Employees are entitled to severance pay of: One month if they have worked for the employer for less than two years; two months for between two and eight years; three months if they have worked for the employer for over eight years. Severance pay cannot exceed 15 times the national minimum wage
• Notice Periods: Statutory minimum notice periods for indefinite contracts are: At least one week if employed between one month and two years; one week for each year if employed between two and 12 years; 12 weeks’ notice if employed for more than 12 years. Improved terms can be agreed contractually or by collective agreements. Probationers are entitled to three days, one week or two weeks’ notice depending on the length of the trial period

Social Security in Poland

Poland’s social welfare system is administered by the Social Insurance Institute (Zaklad Ubezpiecze? Spolecznych, ZUS), and comes under the Ministry of Family and Social Policy. ZUS is responsible for collecting contributions and distributing benefits.

There are four categories covering old age pension, disability pension, sickness insurance including maternity benefit and work accident insurance.

Employees contribute a total of 13.71% to pension, disability, and sickness insurance from gross salary. Employers contribute a total of 20.38% of the employees’ gross salary towards pensions, disability and accident insurance, the employee guaranteed benefits fund and the Labor Fund.

Statutory Employer Costs in Poland

• Social Insurance: All employers must be registered with the Social Insurance Institute (ZUS) to remit the contributions. Employers in Poland must contribute the equivalent of 20.38% of their employees’ gross salary towards pensions, disability, and accident insurance in addition to the employees’ supplementary benefits fund and the Labor Fund
• National Minimum Wages: All employers must comply with minimum wages that are set either by statutory regulations, contracts, or improved by Collective Bargaining Agreements (CBAs). Poland has a federal mandatory minimum for wages, which from January 2022 is PLN 19.70 (€4.35, US$4.97) per hour and PLN 3,010 (€664, US$760) each month
• Corporate Income Tax (CIT): Employers face the statutory cost of corporate taxes on their taxable profits. The standard rate is 19%, with returns filed and final payments made within three months of the end of the tax year. A rate of 9% applies since January 2020 to companies with revenue up to PLN 5,451,970 (€1,200,000, US$1,374,877). The lower rate can apply in some circumstances to start-ups launched since 2019.