How to determine remuneration, what is the minimum remuneration and what are the components of remuneration – the answers to these and other questions can be found in this article.
The amount of remuneration payable to employees is an essential element of employment contracts.
The remuneration for work should be such as to correspond, in particular, to the type of work carried out and the qualifications required for the performance of the duties, as well as the quantity and quality of work. In no case may remuneration payable to employees be lower than that specified in provisions on the minimum remuneration.
Remuneration for full-time employment cannot be lower than the minimum remuneration.
In 2020, the minimum remuneration is PLN 2 600 gross.
The amount of the minimum remuneration is the same for all persons employed on a full-time basis and does not depend on the length of service. If, due to the dates of payment of certain components of remuneration or the working time schedule, employees’ remuneration is lower than the minimum remuneration in the month concerned, adjustments to remuneration are required.
In the case of persons employed under an employment contract on a part-time basis, the amount of the minimum remuneration is determined in proportion to the number of hours to be worked by an employee in the month concerned.
In accordance with the principles of employment and remuneration statistics set out by the Central Statistical Office (Główny Urząd Statystyczny), personal remuneration includes:
- basic remuneration (time-based remuneration, piecework remuneration, commission-based remuneration or other)
- length-of-service allowances and other allowances (additional remuneration) for special characteristics of work, special qualifications or working conditions
- bonuses and awards, statutory and discretionary in nature
- allowances for overtime
- additional remuneration for work performed during regular working hours, but not falling within the scope of duties
- remuneration for activities to be carried out outside normal working hours at the establishment or at another place designated by the employer, for example on-call duty or emergency services
They should be taken into account when calculating the minimum remuneration for employees, except for:
- length-of-service award
- severance payments due to employees who are to receive old-age pensions or disability pensions for incapacity for work.
- remuneration for overtime
- allowance for night work
- length-of-service allowance.
Basic remuneration is the essential component of remuneration. It is fixed in nature and may be the only element of remuneration. Basic remuneration usually results from the pay grade, based on an hourly or monthly rate.
Apart from basic remuneration, remuneration may also include other additional components:
- allowances (for example, a length-of-service allowance, a duty allowance, a special duty allowance, an allowance for the knowledge of foreign languages, an allowance for work in harmful conditions).
Employees may also be granted cash awards (for example, for the performance of a specific task).
The additional components of remuneration are optional and left to the discretion of employers. Under the Labour Code, employees are entitled to certain additional components of remuneration, for example an allowance for overtime or night work, which they cannot be deprived of under rules established by the employer concerned.
Allowance for night work
Employees working at night are entitled to an allowance for each hour of night work, amounting to 20% of the hourly rate resulting from the minimum remuneration.
For employees who permanently work at night outside the establishment, the allowance may be replaced with a lump-sum payment corresponding to the expected duration of the night work.
The minimum amount of the allowance is set out in the Labour Code. Employers may opt for a higher amount.
Night work covers an 8-hour period between 21.00 and 7.00 Employers select specific 8 consecutive hours on their own or in cooperation with trade unions, depending on how the working time schedule is determined.
Remuneration and allowance for overtime
An employee is always entitled to regular remuneration for each hour of overtime work. Normal remuneration is understood as remuneration regularly paid to employees. In addition, overtime work must be compensated by either an allowance (100% or 50%) or time off work.
An of 100% of the remuneration is payable to employees for overtime work falling:
- at night
- on Sundays and public holidays which are not work days for the employee, in accordance with their working time schedule
- on a day off work granted to the employee in exchange for work on a Sunday or public holiday, in accordance with their working time schedule
- for each hour of overtime in excess of the standard weekly working time of 40 hours in the settlement period adopted, unless this standard has been exceeded as a result of overtime for which employees are entitled to an allowance of 50%.
An allowance of 50% of the remuneration is payable to employees for overtime work falling on days which are work days for the employee, in accordance with their working time schedule (including working Sundays and public holidays). There is an exception for overtime night work (with additional remuneration equal to 100% of the remuneration).
Free time on the basis of a written request from the employee is granted in the amount equal to the number of hours worked. In that case, the free time may also be granted outside the settlement period during which the overtime work occurred.
Free time without the employee’s request is granted in the amount larger by a half than the number of hours worked. In this case, the free time must be granted at the latest by the end of the settlement period. Such compensation for overtime cannot, however, result in the remuneration due to employees for the full monthly working time being reduced.
Important! In the case of employees who are permanently working outside the establishment, it is permissible to replace the remuneration and the allowance for overtime work with a lump sum. The amount of this lump sum should correspond to the predicted duration of overtime work.
The labour law guarantees that employees are paid remuneration in certain cases of incapacity for work.
Employees retain the right to 80% of the remuneration if their incapacity for work was caused by an illness or isolation due to an infectious disease – lasting up to 33 days in total during 1 calendar year, and lasting up to 14 days in total during 1 calendar year if employees have reached the age of 50. Labour laws adopted by the employer concerned may provide for higher remuneration in such a case.
Employees retain the right to 100% of the remuneration if their incapacity for work was caused by:
- accident on the way to or from work
- illness during pregnancy
- undergoing necessary medical examinations for donors of cells, tissues and organs and undergoing collection of cells, tissues and organs
and last up to 33 days in total during 1 calendar year, and if employees have reached the age of 50 - 14 days during 1 calendar year.
The period of 33 or 14 days of incapacity for work for which employees are entitled to remuneration financed with employers’ own resources constitutes the limit for the calendar year concerned. After it expires, employees acquire the right to a sickness allowance under a social insurance scheme if they continue to be incapable of working.
The remuneration for the period of incapacity for work is calculated in accordance with the rules applied to determine the sickness allowance assessment basis and is paid for each day of incapacity for work, not excluding non-working days.
The remuneration is not paid in cases in which employees do not have the right to a sickness allowance. Employers are not required to pay the remuneration if employees were incapable of working during unpaid leave, parental leave or pre-trial detention.
Employees are entitled to remuneration despite not performing any work if they were ready to work but were not allowed to by employers. The basis for calculating this remuneration is the hourly rate of remuneration resulting from the pay grade. If an hourly or monthly rate was not specified when determining the remuneration conditions, the basis for calculating the remuneration for readiness for work is 60% of the remuneration. The hourly rate of the remuneration expressed as a percentage is calculated in accordance with the rules applied to determine remuneration for leave. In such a case, 60% of the remuneration for leave is the basis for determining the hourly rate and the amount of remuneration for readiness for work. In no case, however, may this remuneration be lower than the minimum remuneration determined under separate provisions.
Readiness for work should be understood as the physical and mental ability to work of an employee who intends to perform work while remaining at the disposal of the employer.
Remuneration resulting from the pay grade is understood as components of remuneration which are fixed in nature and directly related to the function or position (basic remuneration, special duty allowance).
Remaining at the disposal of the employer, which is an element of readiness for work, should be understood as a state in which an employee may immediately start working at the request of the employer.
Being employed by another employer does not in itself negate being ready for work. However, this concerns a situation in which such work does not preclude the availability of the employee, i.e. does not prevent the employee from immediately commencing work which he or she undertook to perform for the employer who hindered its performance.
Employees retain the right to remuneration for periods of inactivity only if labour laws so provide. This is the case with idle time for reasons not attributable to employees. The basis for calculating this remuneration is the hourly rate of remuneration resulting from the pay grade. If an hourly or monthly rate was not specified when determining the remuneration conditions, the basis for calculating the remuneration for idle time is 60% of the remuneration. The hourly rate of the remuneration expressed as a percentage is calculated in accordance with the rules applied to determine remuneration for leave. In such a case, 60% of the remuneration for leave is the basis for determining the hourly rate and the amount of remuneration for idle time. The remuneration for idle time for reasons not attributable to an employee cannot be lower than the minimum remuneration.
If idle time was due to the fault of an employee, the employee is not entitled to remuneration.
Idle time occurs when work is unexpectedly interrupted due to disruptions in the operation of an establishment for reasons relating to the employer. These reasons are technical or organisational, not economic, in nature.
Idle time must occur due to unexpected, atypical and exceptional circumstances that make it impossible to accurately predict and plan interruptions to work. Thus, idle time will occur when an establishment cannot operate due to a failure or a power cut, but not when production is scaled down due to a decrease in demand for products.
For the duration of idle time, employers may assign other appropriate work to employees (work which matches their qualifications or similar work which they are able to perform), for which the employees are entitled to remuneration. However, this remuneration cannot be lower than the remuneration resulting from the pay grade, based on an hourly or monthly rate. If such a component of remuneration was not determined, employees are entitled to 60% of the remuneration. If idle time was due to the fault of an employee, the employee is entitled only to the remuneration for the work performed (which means that the remuneration may lower than that resulting from the pay grade).
If idle time was caused by weather conditions, employees performing work which depends on these conditions are entitled to remuneration for idle time only when labour laws so provide. Relevant provisions in this regard may be included in collective agreements, remuneration regulations or individual employment contracts.
If employers assigned other appropriate work to be performed during idle time caused by weather conditions to employees, the employees are entitled to remuneration for the work performed, unless labour laws provide that the rules for assigning other work during normal idle time must be applied in such cases.
For on-call duty, employees are entitled, in the first place, to time off work equivalent to the length of on-call duty.
If employers cannot grant time off to employees, they must pay them remuneration for on-call duty. The basis for calculating this remuneration is the hourly rate of remuneration resulting from the pay grade. If an hourly or monthly rate was not specified when determining the remuneration conditions, the basis for calculating the remuneration for on-call duty is 60% of the remuneration. The hourly rate of the remuneration expressed as a percentage is calculated in accordance with the rules applied to determine remuneration for leave. In such a case, 60% of the remuneration for leave is the basis for determining the hourly rate and the amount of compensation for on-call duty.
Compensation for on-call duty is not payable:
- if the on-call duty took place at home
- to employees who manage establishments on behalf of their employers, regardless of where the on-call duty took place.
If, however, employees were instructed to perform work during on-call duty, then the hours actually worked will constitute working time for which normal remuneration is due. Work during on-call duty, i.e. outside normal working hours, may lead to overtime.
For the period of annual leave, employees are entitled to the remuneration which they would have received if they had worked during that time.
The remuneration for annual leave is determined taking into account remuneration and other benefits arising from the employment relationship, excluding:
- one-off or non-periodic payments for the performance of a specific task or for a specific achievement,
- remuneration for readiness for work and for idle time for reasons not attributable to employees,
- length-of-service awards,
- remuneration for annual leave as well as other periods of justified absence from work,
- cash equivalent of annual leave,
- additional remuneration for legal advisers for legal representation,
- remuneration for a period of incapacity for work caused by an illness or isolation due to an infectious disease,
- adjustments to remuneration up to the minimum remuneration,
- awards from the company bonus fund, additional annual remuneration, and amounts due for a share in profits or in balance surplus,
- retirement and disability severance payments or other severance payments,
- remuneration and compensation due for the termination of employment.
The fixed components of remuneration included in the monthly rate are taken into account in the remuneration for leave due to an employee in the month in which the leave is used. These components include, inter alia, the basic monthly remuneration, the special duty allowance and the length-of-service allowance.
In the case of variable components of remuneration (inter alia, remuneration based on an hourly rate, remuneration for overtime, together with relevant allowances, bonuses for periods not exceeding 1 month), the components paid to an employee over the 3 calendar months preceding the month in which the leave is used are added up.
Please note! If there are significant fluctuations in the level of the variable components, these components may be taken into account when determining the total remuneration for leave paid to an employee over a period not exceeding 12 calendar months preceding the month in which the leave is taken. This sum is then divided by the number of hours during which the employee performed work in the period for which the assessment basis was determined. The remuneration for 1 hour of work determined in this manner is then multiplied by the number of hours which the employee would have worked during normal working hours, in accordance with the applicable working time schedule, if he or she had not been on leave at that time.
A person employed on a full-time basis earns a basic remuneration of PLN 3 000. He also receives a fixed length-of-service allowance of PLN 500 and received various performance bonuses: PLN 500 in January, PLN 300 in February and PLN 200 in March. In January, the employee also received PLN 300 for overtime. From January to March, he worked 519 hours in total. In April, he takes leave – 7 working days (7 x 8 h/day = 56 h).
In order to calculate the remuneration for leave on the basis of the variable components of remuneration, the employer:
- adds up all the variable components of remuneration paid to the employee from January to March (without the length-of-service allowance, which is a fixed component of remuneration):
PLN 500 + PLN 300 + PLN 200 + PLN 300 = PLN 1 300
- divides the amount calculated in this manner by the number of hours worked from January to March:
PLN 1 300/519 h = PLN 2.5
multiplies the resulting hourly rate by the number of hours that would have been worked during the leave:
PLN 2.5 x 56 h = PLN 140
In the case of certain changes in employees’ life situation or in employers’ situation, employees are protected against the risk of a reduction in remuneration by the obligation to pay a compensatory allowance.
As regards changes in employees’ life situation, the compensatory allowance is payable to:
- pregnant or breastfeeding employees performing work which is strenuous, hazardous or harmful to their health – if changes in the working conditions in their present positions, reduced working hours or a transfer to another job results in a reduction in remuneration
- employees who have been found to exhibit symptoms of an occupational disease and have therefore been assigned another work which does not involve exposure to the agents that have caused these symptoms, if this results in a reduction in remuneration – for a period not exceeding 6 months
- employees who have become incapable of performing previous work as a result of an accident at work or an occupational disease (and have not been recognised as unfit for work), if a transfer to another job results in a reduction in remuneration – for up to 6 months.
The compensatory allowance is payable to employees also if the modification of remuneration conditions and working conditions results in a reduction in remuneration.
In the case of collective redundancies, the compensatory allowance is payable to specific categories of employees (inter alia, those who have no more than 4 years left until retirement age, pregnant employees, employees on maternity leave, leave on the terms of maternity leave, parental leave and paternity leave). The compensatory allowance is payable until the end of the period in which they would have enjoyed special protection against redundancy or termination of the employment relationship.
In the case of individual redundancies, the compensatory allowance is payable to employees whose employment relationships are subject to special protection against redundancy or termination under separate provisions and for whom employment relationships may be terminated as part of a collective redundancy. The compensatory allowance is payable for up to 6 months. Employees who are on leave or are absent from work for other justified reasons are not entitled to the compensatory allowance if the period during which contracts of employment may be terminated without notice has not yet expired.
The compensatory allowance is the difference between the remuneration from the period preceding a transfer to another job and the remuneration after the transfer. The remuneration on the basis of which the compensatory allowance is determined is calculated in accordance with the rules applied to determine remuneration for leave.
If an employee works for the employer on Sundays or holidays:
- the employer should grant the employee another day off work:
- in exchange for work on a Sunday – within 6 calendar days preceding or following such a Sunday
- in exchange for work on a holiday – within the settlement period
- if a day off work granted in exchange for work on a Sunday cannot be used within this period, the employee is entitled to a day off work up until the end of the settlement period
- if a day off work in exchange for work on a Sunday or a holiday has not been granted by the end of the settlement period, the employee is entitled to an allowance for overtime of 100%
- the employee should have a free Sunday at least once every 4 weeks. However, this does not apply to employees who work on weekends alone.
The rules for work on Sundays apply to work performed on a holiday falling on a Sunday.
Please note! Failure by employers to grant a day off work in exchange for work on a Sunday or a holiday to employees, may lead to overtime.
Deductions without the consent of an employee
Remuneration is subject to special protection and employers cannot make any deductions without the consent of employees, except where applicable laws permit this.
Employers may deduct only the following amounts due from remuneration, listed below in the order of their priority, without the consent of employees:
- amounts enforced under enforceable titles to cover maintenance payments
- amounts enforced under enforceable titles for claims other than maintenance payments
- cash advances granted to employees
- financial penalties provided for in Article 108 of the Labour Code.
Please note! Deductions are made after deducting social security contributions, advance payments for personal income tax and payments made to employee capital plans if employees did not choose not to make such payments.
Relevant provisions specify the limits on deductions:
- in the case of enforcement of maintenance payments – up to three fifths of the remuneration may be deducted
- in the case of enforcement of other amounts due or deduction of cash advances – up to half of the remuneration may be deducted
- the total amount of deductions of amounts enforced under enforceable titles for claims other than maintenance payments and advance payments granted to employees cannot exceed half of the remuneration, and three fifths of the remuneration together with maintenance payments
- the financial penalty for one offence cannot be higher than the daily remuneration of an employee and the total amount of financial penalties cannot exceed one tenth of the remuneration to be paid to the employee, after other amounts are deducted.
In the case of enforcement of maintenance payments, awards from company bonus funds, additional annual remuneration and amounts due to employees for a share in profits or in balance surplus are attached in full.
Amounts paid to an employee on the previous payment date for a period of absence from work for which the employee does not retain the right to remuneration are deducted from the remuneration in full. Deductions may only be made on the next remuneration payment date.
The remuneration payment date is the 28th day of each month. An employee who receives a fixed monthly rate of remuneration, was absent from work without justification on 30 June (i.e. already after he received the full remuneration for June), for which day he did not retain the right to remuneration. When paying remuneration in July, the employer may deduct the amount corresponding to the remuneration for 1 day on account of the absence from work in the previous month.
At the same time, when making deductions from remuneration, employers must take into account the amount free from deductions, i.e. the minimum amount of remuneration to be paid to employees. The amount free from deductions depends on the reason for making a deduction.
Table. Amounts free from deductions
||AMOUNT FREE FROM DEDUCTIONS
|amounts enforced under enforceable titles for claims other than maintenance payments
||of the minimum remuneration determined under separate provisions, payable to persons employed on a full-time basis, after deducting social security contributions, advance payments for personal income tax and payments made to employee capital plans if employees did not choose not to make such payments
|cash advances granted to employees
|financial penalties provided for in Article 108 of the Labour Code
Please note! If employees work on a part-time basis, amounts free from deductions are proportionally reduced.
The enforcement of maintenance payments is restricted only by the maximum limit for deductions – three fifths of the remuneration. In this case, the amount of remuneration remaining to be paid is not limited by a fixed amount (there is no amount free from deductions).
The remuneration of an employee, after deducting social security contributions and advance payments for income tax, is PLN 1 500. During enforcement proceedings, the bailiff seeks to recover a maintenance allowance of PLN 750, in addition to payments other than maintenance allowance totalling PLN 200. The employer should deduct from the remuneration the full amount of the maintenance allowance due – PLN 750. However, further deductions to satisfy claims other than the maintenance allowance will not be possible, as the remuneration remaining to be paid will be lower than the minimum remuneration after the maintenance allowance is deducted.
The procedure for the recovery of maintenance payments by a claimant is simplified – the employer must make deductions from remuneration at the claimant’s request, on the basis of an enforceable title provided, without the need to initiate enforcement proceedings.
Deductions without enforcement proceedings to cover maintenance payments are impossible if:
- the maintenance payments are to be deducted for several claimants and the total amount that may be deducted is not sufficient to cover all the maintenance payments due
- remuneration has been attached as a result of court or administrative proceedings.
Deductions with the consent of an employee
Amounts due other than those listed in the Labour Code may be deducted from an employee’s remuneration only with that employee’s written consent. A specific amount to be deducted should be indicated in the employee’s consent. In such cases, the amount of remuneration free from deductions is as follows:
- the minimum remuneration – when amounts due are deducted for the benefit of the employer
- 80% of the minimum remuneration – when other amounts due are deducted (for example, contributions to trade unions or repayments of loans from the Company Social Benefits Fund).
Please note! The rules for making deductions from remuneration also apply to other benefits arising from the employment relationship (for example, payments in lieu of annual leave not taken, retirement severance payments, length-of-service awards).