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.