29 May 2020
Under Polish labour law, for each employee the equivalent of 80% of the statutory minimum net remuneration must remain free from any wage deductions. This rule must be considered when calculating the level of salary deductions that can be taken from Polish employees and used in relation to an incentive plan e.g. contributions used to purchase shares on behalf of employees.
As part of a legislative package adopted recently by the Polish parliament to soften the economic impact of COVID-19 on employees, the amount of remuneration that must remain free from deductions has now been increased for certain employees who, as a “result of measures adopted in Poland to prevent SARS-CoV-2 infections”:
- have been subject to a reduction in salary; or
- have a family member that has lost their source of income.
For affected employees, the amount of remuneration that must remain free from deductions has been increased in either case by 25%. A further 25% increase is then applied for each employee’s family member who does not have any income and who is economically dependent on the employee. A ‘family member’ includes a spouse / co-parent of child and children.
As an example: if an employee has two children who are economically dependent, and the employee’s spouse loses their job due to COVID-19 measures, there will be a 75% increase in the amount of the employee's remuneration that must remain free from any deductions.
The new rules mean that the amount of employee salary deductions that can be taken in relation to incentive plans could be restricted much further at the moment.
The new limits are complicated and individual employee circumstances will vary greatly, so proper consideration must be given when calculating any salary deductions - before the deduction is made. The new rules will affect low-paid employees the most, particularly if their family members have suffered a job loss due to COVID-19 or where they have several financially dependent family members, even if their own salary has not been reduced.
Local counsel advises it is not currently clear when the Polish authorities would consider that a reduction in salary / income loss is clearly due to measures to ‘prevent’ COVID-19 infections, rather than measures that may have been taken e.g. to counteract economic slowdown. Until further guidance is given by the Polish authorities, local counsel recommends it is sensible to apply the rules conservatively.
If you have employees in Poland and you are taking deductions from their salaries for any purpose in connection with incentive plans, then you should consider how you will work with HR and your employees to identify whether and when the rules apply, and how to calculate the new applicable limits going forward.
Thank you to our Polish local counsel Sołtysiński Kawecki & Szlęzak (SK&S) for updating us on the new rules.
We have been updating you each week with COVID-19 related global alerts. As business is starting to show signs of returning to a new normal in some countries, going forwards we will continue to keep you updated with changes fortnightly, or as and when we hear of them.
If we can support you with any of the points in this alert, please do contact us.
Sally, Emma and Sonia