Poland is well known for its low personnel costs. Due to this fact, it is currently Europe's main outsourcing hub, with companies such as Amazon, General Motors, Dell and various major banks moving plants and shared service centres to Poland. Easy access to qualified employees results from a state-paid university system, which produces many highly specialised and innovative workers, especially in the field of IT, engineering, and investment industry (KYC) and accounting.

Issues arising on hiring individuals

Immigration

The current regulations on employing foreigners in Poland differentiate between citizens of EU member states and other countries. There are also differences depending on the type of work performed by a foreigner. In the case of some professions, a permit is not required, while for other professions, simplified procedures apply.

Foreigners from EU member states and from states within the European Economic Area as well as their family members have unlimited access to employment within Poland. Foreigners from other countries must obtain a work permit and an entry visa if they want to work in Poland.

As a rule, it is the employer, rather than the non-EU citizen, who must obtain a permit. Most importantly, work permits are required for employees of foreign companies seconded to work for a term longer than 30 days in a six month period (with certain exceptions). Work permits are granted for a maximum 3 year period (with exemptions) but can be renewed.

Employment structuring and documentation

The most typical type of contract is the unlimited-term contract. Recently, however, there has been a trend to depart from this form of employment toward fixedterm contracts or agreements in civil law. A fixed-term employment contract terminates either on an agreed calendar date or on the date of a particular defined event in the future.

From 2016, amendments to the regulations on fixed-term employment contracts came into force as a result of the ruling of the Court of Justice of the European Union on 13 March 2015 stating that notice periods in fixed-term contracts constitute "employment conditions" and as such should not be subject to different treatment solely on the basis of the term of the contract.

As a result, amendments regarding the lifting of differences between the status of employees hired for a fixed-term and for an indefinite term have been introduced. Furthermore, a 33-month maximum period for fixed-term contracts has been introduced.

Regardless of its type, the employment contract should define the parties to it, the type of contract that it is, the date of its exclusion and the conditions of work and remuneration, in particular the kind of work, the work location, the remuneration (reflecting the type of work performed and the individual components of the remuneration), working time, and the date of commencement of work.

The employment contract should be concluded in writing. If not, then on the employee's start date at the latest, the employer should confirm in writing to the employee; the parties to the contract, its type; and the terms and conditions before the employee is allowed to work. In addition, the employer must notify the employee in writing about certain other terms relating to pay (as indicated in the Labour Code) within seven days of entering into the employment agreement. All changes to terms and conditions, including pay, must be in writing.

Issues arising during the employment relationship

Wages, annual leave and working time

The employee's remuneration is determined by reference to the employment contract. The most popular and important criteria for determining salary include the type of work to be carried out and the qualifications required to perform the work and the quantity and quality thereof. However, employees have a guaranteed minimum wage, which is set pursuant to the principles and the procedure provided for in the Act on Minimum Wage. If, however, a higher minimum salary has been set in collective labour agreements or the remuneration rules and procedures, then the employer is obligated to respect such agreements instead of the Act.

Certain working time regulations have been amended, including a wide acceptance of using settlement periods up to 12 months.

Working time may not exceed eight hours a day and 40 hours in an average five-day working week over an agreed reference period, which does not exceed four months. Now, working time regulations also allow an employee to work on Sundays and public holidays if such work involves the transmission of electronic data to a recipient in a country where the relevant days are working days. The employer must give the employee another day off work in lieu. This means that a normal week always has an average character and its character may vary depending on the system and organization of the working time. The Labour Code in certain circumstances allows the reference period and the working time per day to be shortened or extended. The weekly working time (including overtime) may not, however, exceed an average 48 hours per week over the agreed reference period.

Overtime is only permitted in two situations: if it is necessary to conduct a rescue mission to protect human life or health, to protect property or the environment, or to remove a breakdown; or in the event of an employer's special needs. It is the employer which assesses whether it has special needs which justify overtime.

Employees are entitled to annual, uninterrupted, paid leave of up to 20 or 26 days, depending on the number of years worked. Annual leave is granted on the days which are the employee's working days. At the employee's request, their leave may be divided into parts. However, at least one portion of the holiday leave should last not less than 14 consecutive calendar days.

From 2 January 2016, parental leave can be taken for an additional 32 weeks (when giving birth to one child at one birth) or 34 weeks (when giving birth to two (or more) children at one birth), after 20 weeks' maternity leave and may be used by either parent. The parent on parental leave will receive 60% or 80% of their basic allowance. The rate depends on the amount of allowance received during maternity leave - if it is 100%, then the parent on parental leave receives 60% of their basic allowance, and if it is 80%, they receive 80% of their basic allowance.

Employees are entitled to remuneration for annual leave which they would have received had they been working.

Trade unions

The essence of the right to freedom of association is an unrestricted right to establish trade unions and to join such organisations.

The structure of trade unions in Poland is defined by Statute and they have a separate legal personality. Trade unions represent employees and protect their dignity, rights and material and moral interests, both collective and individual. They also have a right to represent employees' interests internationally. Trade unions participate together in creating advantageous conditions for work, life and rest.

The special character of trade unions results from the fact that they were granted the right to negotiate and conclude collective labour agreements and other settlement agreements.

Social insurance

The principles of social insurance coverage and the rules relating to social insurance contributions are regulated in the Act on Social Insurance System, under which the employees are subject to mandatory pension, disability, health and accident insurance. The total contribution for each individual insurance type is calculated on the basis of the employee's remuneration and is deducted by the employer to be paid to the Social Insurance Agency.

Issues arising on termination of the employment relationship

Business transfers

The position of employees employed in an entity which is transferred to another employer in its entirety or in part is set out in the Labour Code, which provides that their employment relationship transfers to the new entity. Consequently, it steps into the shoes of the former employer and acquires any and all rights resulting from the employment relationship with the previous employer and all obligations to which the previous employer was subject. The employees preserve with the new employer, the rights they were entitled to prior to the business transfer, and they are bound by the same duties which they had towards the previous employer.

Terminating employment

An employment contract can only be terminated on the grounds listed in the Labour Code collective labour agreements and employment contracts cannot specify alternative grounds for termination. Under the Labour Code, employment contracts can only be effectively terminated: (1) under a settlement agreement between the parties; (2) by a unilateral statement by either party honouring the notice period (termination on notice); (3) by a unilateral statement by either party without honouring the notice period (termination without notice); (4) on the expiry of the term for which the employment agreement was concluded.

Terminating an employment contract without notice is a unilateral statement of will made by one party to the other, which immediately terminates the employment relationship. The Labour Code lists three reasons for an immediate termination where the employee is at fault. The list is exhaustive.

Where employment is terminated as part of a group dismissal or if there is an individual dismissal for reasons which do not relate to the employee personally, then if the employer employs at least 20 employees, the employee is entitled to a severance payment, which is calculated by reference to the employee's length of service and their salary.

An employee who considers that their employment was terminated in a manner that is in breach of the current provisions of the law or that was unjustified can file an appeal with a labour court.

Published in collaboration with L&E Global an alliance of employers’ counsel worldwide

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