Under current laws the basis for calculating certain social security contributions (retirement and disability contributions - Polish składki na ubezpieczenia emerytalne i rentowe) cannot be higher in a given calendar year than 30 times the estimated average monthly remuneration for that year (in 2018 - PLN133,000/€31,000). In practice this means that after a certain total remuneration is exceeded by a given individual in a given calendar year, pension and disability contributions are no longer payable.

The above rule may change shortly.

In December 2017, the Polish parliament passed a bill amending the Social Security System Act. According to the bill, the annual limit on the base for the calculation of pension and disability contributions will be removed. Under the new law, pension and disability contributions will be payable on the entire income of a person who is subject to compulsory pension and disability insurance, including employees. The new law is due to come into force on 1 January 2019. However, as some doubts have arisen regarding the compliance of the legislative process relating to the bill with the Polish Constitution (the doubts relate to whether the draft bill was properly consulted with the Social Dialogue Council, trade unions, and employers' organisations), on 5 January 2018 the Polish President referred the bill to the Constitutional Tribunal for examination. The Tribunal is to issue a ruling on 30 October 2018. If the Constitutional Tribunal confirms that the legislative process was compliant with the Constitution, the President will sign the bill and the bill will come into force.

Consequently, with respect to employees with a monthly gross salary higher than approx. PLN 11,000 the new law will result in: (i) a significant increase in employment costs and (ii) the reduction of the net salary.

The table below illustrates the impact of the new law on the employer's employment costs and on the employee's net salary (as determined in an employment contract):

Gross monthly salary (in PLN)

Difference in the employee's annual net salary

Increase in the employer's annual employment costs




approx. PLN 4,000

approx. PLN 8,400

approx. PLN 35,500

approx. PLN 8,500

approx. PLN 18,000

approx. PLN 76,800

The above table illustrates the differences in:

(a) the net salary received by a given employee depending on his/her gross monthly salary, and

(b) the employer's employment costs.

Compared to the respective amounts resulting from the regulations currently in force.

The new law will apply to individuals who are subject to compulsory pension and disability contributions under the Social Insurance System Act, including employees who are in the employment relationship in the meaning of Art. 22 of the Polish Labour Code and individuals considered employees pursuant to Art. 8.2a. of the Social Security System Act, contractors, and supervisory board members, unless the Act provides for special treatment with regard to pension and disability contributions.

There are engagement solutions which will not be affected by the new law. These solutions are worth considering before the new law comes into force. DLA Piper lawyers will be happy to provide you with any further advice in this regard.