Payroll in Poland: Your efficient overview for business compliance

The proper management of payroll in Poland is particularly important for several reasons, stemming from the complexity of the local labour market, legal regulations, and tax systems. Poland has detailed and frequently updated labour laws that regulate working conditions e.g. working hours, overtime, minimum wage requirements, employee rights e.g. vacations, protection of workers right, benefits connected to polish law, and employer obligations in the field of health protection, safety and working conditions. Failure to comply with these regulations can result in legal disputes, fines, and reputational damage. Payroll management ensures that companies adhere to these requirements and reduce the risk of non-compliance.

The Polish business environment has several key factors that influence payroll practices. Understanding these factors can help businesses operate smoothly while complying with Polish labour laws. The effective management of payroll in Poland is critical for businesses to ensure compliance with labour laws, taxobligations, and social security requirements. Proper management helps prevent costly mistakes, legal risks, and ensures that employees are paid correctly and on time, contributing to overall business stability and employee satisfaction.

In this article, you can read more about:

• The legal framework governing payroll in Poland, including key regulations and upcoming legislative changes.
• The components of payroll in Poland, such as salary structure, mandatory deductions, and contributions.
• The payroll process in Poland, including pay schedules, payslip requirements, and reporting obligations.
• The advantages of payroll outsourcing, how it ensures compliance, and tips for selecting the right provider.
• The challenges and compliance risks businesses face when handling payroll in Poland.
• Why a deep understanding of Polish payroll is essential and how partnering with local experts can make a difference.

Legal framework governing payroll in Poland

There is no single piece of legislation in Polish law on the basis of which payroll is prepared. The primary regulations governing payroll in Poland are based on several key legal frameworks, including:

• The Labour Code (Kodeks pracy): The most fundamental piece of legislation governing employment relationships, payroll, working hours, and employee rights. From January 1, 1975 in Poland, the act of June 26, 1974 – Labour Code applies, as amended.
• The Act on Personal Income Tax (Ustawa o podatku dochodowym od osób fizycznych): Governs the taxation of employee income and outlines the tax obligations for both employees and employers. Act of July 26, 1991 on personal income tax as amended.
• The Social Insurance System (ZUS – Zakład Ubezpieczeń Społecznych): Regulates mandatory contributions for social security, health insurance, and other benefits deducted from employees’ salaries. This is governed by the Act of October 13, 1998, on the Social Insurance System (Ustawa o systemie ubezpieczeń społecznych), which outlines the framework for pension, disability, and health insurance contributions.
• The Minimum Wage Act (Ustawa o minimalnym wynagrodzeniu za pracę): Establishes the minimum salary that must be paid to employees, which is revised annually. Act of October 10, 2002 on the minimum wage for work as amended.
• The Civil Code (Kodeks cywilny): Governs civil law contracts (umowy cywilnoprawne), commonly used for freelance or contract work (e.g., contracts of mandate, contracts for specific work). Although not directly related to employment contracts, it plays a critical role in defining the terms and conditions of civil law agreements often used alongside employment contracts. Acy of 23 April 1964. Civil Code as amended.
• The Act on Health and Safety at Work (Ustawa o bezpieczeństwie i higienie pracy): Governs workplace safety and health, impacting payroll in terms of compensation for workplace injuries. Act of 30 March 1965 on health and safety at work, as amended.
• The Act of June 25, 1999, on Cash Benefits from Social Insurance in Case of Illness and Maternity (Ustawa o świadczeniach pieniężnych z ubezpieczenia społecznego w razie choroby i macierzyństwa): Governs the rules for social insurance benefits paid to employees in the event of illness or maternity leave, affecting payroll administration when employees take such leaves.
• The Act on Employee Capital Plans (Ustawa o pracowniczych planach kapitałowych): Regulates the creation of employee capital plans (PPK), which are mandatory pension savings plans introduced in 2018. Employers are required to make contributions to PPK on behalf of their employees, which must be handled as part of payroll management.
• Minister of Labour and Social Policy Regulation of January 8, 1997, on the Detailed Rules for Granting Vacation Leave, Determining and Paying Vacation Pay, and Cash Compensation for Vacation Leave (Rozporządzenie Ministra Pracy i Polityki Socjalnej): Provides rules for calculating and paying vacation pay, including cash compensation for unused leave, which is integral to payroll processing.
• Act on the employment of temporary workers, July 9, 2003: Rules for temporary employment agency.

There have been several significant changes in recent years that businesses should be aware among the others:

• Changes to minimum wage: The minimum wage is revised annually, and businesses must ensure payroll systems reflect any increase. For 2025, a significant increase is expected.
• Tax reform: The “”Polish Deal”” (Polski Ład) reforms, effective from 2022, introduced changes to personal income tax brackets, along with new reliefs, which companies must ensure they apply correctly.
• Employee capital plans (PPK): Since 2018, Polish law mandates that employers must contribute to employee capital plans, a program aimed at enhancing employee retirement savings. This requires specific payroll adjustments and record-keeping.
• Absences related to parenthood: In 2024 there have been significant changes altering the length of leave and the number of benefits granted.
• EU directive on equal pay  2023/970 May, 10 2023: It aims to combat wage discrimination and close the gender pay gap for equal work.  Adjustment in Poland should be made by the 2nd quarter of 2026

Payroll components: Salary structure and deductions

Employee’s gross remuneration consists of:

• basic salary resulting from the employment contract
• bonuses resulting from the employment contract or regulations
• remuneration for overtime work
• allowance for working at night

Mandatory deductions are paid by both the employee and employer.

Mandatory deductions paid by the employee: The employer is obliged to deduct from the employee’s remuneration:

• Social contributions:
  • Pension: 9.76%,
  • Retirement: 1.5%,
  • Sick leave: 2.45%
  • Health insurance: 9%
  • Tax: depending on the threshold it is either 12% or 32%.
  • Additionally, the employee can also apply for PPK – Employee Capital Plans and then the employer will also deduct this contribution from their salary – 2%.

Mandatory deductions paid by the employer: In parallel, the employer pays social security contributions, PPK contributions from the employer.

• Social contribution 9,76 %
  • Pension: 9.76%
  • Retirement: 6.5 %
  • Accident: 1.67 %
  • Work fund: 2.46%
  • Guaranteed employee benefits fund: 0.1%
  • PPK contribution: 1.5%

Payroll process in Poland

Pay schedules and payslips

According to the Polish Labour Code, the employer is obliged to pay the employee’s remuneration no later than on the 10th  of the following month, e.g. for May by June 10th . Of course you can pay in advance. Many companies pay employees at the end of the month, and this is also correct.

In addition, statutory payments to ZUS (till 15th of next month), the Tax Office (till 20th of next month), PPK (till 15th of next month), PFRON (till 20th of next month) and in selected cases other institutions are mandatory elements of payroll in Poland.

The Polish payslips contain the following information:

• Name, surname, and identification number
• Company name and nip (tax identification number)
• Gross salary, any performance bonuses or other forms of compensation, if applicable
• If relevant, details on overtime hours, paid leave, or sick leave
• Value of deducted ZUS contributions
• Value of the deducted health insurance
• Value of the tax deducted
• PPK value
• The basis from which social contributions and health insurance contributions were calculated
• Remaining deduction – benefits, e.g. The value of medical care, sports card
• Bailiff deductions

Filing and reporting obligation

 The provision of Art. 94 point 9a of the Labour Code lists among the employer’s basic obligations the keeping and storing in paper or electronic form:

• employees’ personal files,
• documentation in matters related to the employment relationship,

referred to collectively as employee documentation.

In turn, Art. 94  point 9b of the Labour Code requires storing employee documentation in a way that guarantees its confidentiality, integrity, completeness and availability, in conditions that do not pose risk of damage or destruction during the period of employment, as well as, for an appropriate period after the termination or expiration of the employment relationship. The storage period of employment documentation depends on the date of employment of the employee.

ZUS Reporting: Employers are required to submit monthly reports to the Zakład Ubezpieczeń Społecznych (ZUS), Poland’s social security office, detailing social security contributions and employee data by the 15th of each month for the previous month. In addition, the employer is obliged to report all information on new and terminated employees within 7 days from the date of the actual action.

Tax filing: Employers must submit yearly tax declarations (PIT-4R) detailing the payroll taxes withheld from employees’ wages. Additionally, the annual tax reconciliation (PIT-11R/IFT-R) must be submitted to the tax office by the end of January and by the end of February to employees.

Other reporting may occur depending on the scale of the business:

• GUS (Central Statistical Office)
• PFRON (State Fund for the Rehabilitation of Disabled People) – by the 20th of each month for the previous month, if applicable
• PPK / PPE (Employee Capital Plans)

Data protection in Polish payroll

Payroll in Poland must follow some stringent data protection requirements, which concern:

• GDPR Compliance: Since the implementation of the General Data Protection Regulation (GDPR), employers must ensure that employee payroll data is protected with the highest standards of confidentiality and security. This includes ensuring the secure transmission of payroll data and controlling access to personal information.
• Payroll data: Sensitive employee information, such as salary, social security contributions, tax data, and medical records, must be handled carefully to avoid breaches. Employees must also be informed of how their data is being used. GDPR valid from May 2018.
• Data storage and access: Employers are required to securely store payroll information and limit access to authorized personnel only. As of 1 January 2019, the Act of 10 January 2018 amending certain acts in connection with the shortening of the retention period of employee files and their electronification is in force. As of this date, the retention periods for employee files have changed from the current 50 years to 10 years. This automatically applies to all persons who were hired after 31 December 2018. The personal files of these individuals only need to be kept by the employer for 10 years. As far as payroll records are concerned, the employer is obliged to keep them for 50 years.

Payroll outsourcing in Poland

Outsourcing payroll in Poland offers several key benefits, including:

• Cost efficiency: Outsourcing payroll eliminates the need for an in-house payroll department, which can be costly in terms of both staff and resources. It also reduces the risk of penalties for non-compliance with complex regulations.
• Expertise and compliance: Payroll outsourcing providers are specialized in local labour laws and tax regulations, ensuring full compliance with Polish laws, including changes to taxation, social security contributions, and reporting requirements.
• Focus on core business: By outsourcing payroll in Poland, companies can focus their resources on their core business activities, rather than dealing with the time-consuming tasks of payroll management and compliance.
• Risk mitigation: Outsourcing payroll in Poland helps to mitigate the risk of errors in calculations or missed deadlines, which can result in costly fines and penalties. Providers ensure timely and accurate payroll processing.
• Scalability: Payroll outsourcing offers flexibility, allowing businesses to scale up or down based on their needs, which is particularly useful for businesses experiencing growth or seasonal fluctuations.”

For foreign companies operating in Poland, ensuring compliance with local payroll laws can be particularly challenging due to the complexity of the legal and tax system. Outsourcing payroll in Poland helps in several ways:

• Local expertise: Payroll providers specializing in Poland have in-depth knowledge of local labour laws, tax regulations, and social insurance requirements, which reduces the risk of non-compliance for foreign businesses unfamiliar with these rules.
• Adherence to reporting requirements: Outsourcing providers manage and submit all required reports to authorities, including tax declarations, social security contributions, and employee statements, ensuring that deadlines are met and that all necessary documentation is properly filed.
• Accurate tax calculations: Payroll providers ensure that tax calculations are performed in accordance with Polish tax laws, including proper withholding of income tax, health insurance, and social security contributions, minimizing the risk of mistakes.
• Updates on legal changes: Outsourcing partners keep track of any changes in Polish legislation, such as amendments to the Labour Code or tax reforms and make necessary adjustments to ensure continued compliance with the latest regulations.

When choosing providers, we recommend seeking someone with significant experience in handling payroll for companies operating in Poland, particularly those familiar with the complexities of local regulations and compliance.

In particular, pay attention to the following qualities:

• Technology and reporting capabilities: Ensure that the payroll provider uses modern, secure software systems for payroll processing and reporting, and can deliver timely and accurate reports in line with Polish legal requirements.
• Customer support: The provider should offer strong customer support to address any questions or issues that may arise. This includes timely assistance with payroll discrepancies, tax issues, or compliance concerns.
• Data security: Ensure that the provider has robust data security measures in place to protect sensitive employee information, particularly in light of GDPR regulations.
• Flexibility and scalability: Consider how easily the provider can adapt to the company’s changing needs, whether it’s adjusting for new employees, changes in business size, or evolving legal requirements.
• Cost: While cost should not be the sole determining factor, businesses should compare pricing structures to ensure the services offered align with the company’s budget.
• Reputation and references: Research the provider’s reputation in the market, and consider asking for client references or case studies to assess the quality and reliability of their services

Challenges and compliance risks

The most common challenges that foreign companies face when handling payroll in Poland are:

• Understanding local taxation and labour laws: Poland has specific rules governing social security contributions, taxes, and labour laws, which can differ significantly from other countries. Foreign companies may struggle to keep track of these complex and often-changing regulations.
• Language barriers: Official documentation, tax forms, and communication with Polish authorities are usually in Polish. Non-native speakers may find this a challenge, especially in terms of ensuring accuracy in filing and payroll.
• Working hours and overtime regulations: Poland has specific rules around working hours, overtime pay, and paid leave entitlements. Foreign companies may face difficulties in ensuring compliance with these rules.

The most frequent compliance risks associated with payroll errors or delays in Poland are:

• Incorrect tax withholding: Poland operates a progressive income tax system and employers are responsible for withholding the correct amounts of income tax. Errors here can lead to significant fines.
• Failure to pay social security contributions: Companies must pay both employer and employee social security contributions (ZUS), which are significant. Errors or delays in these payments are subject to penalties.
• Improper settlement of employee benefits: Benefits such as private medical care, sport and lunch cards, and other allowances must be correctly settled on payrolls, and any discrepancies could result in fines or audits.
• Failure to follow working hours and overtime rules: Non-compliance with the rules around working hours and overtime pay could expose companies to legal claims from employees or labour authorities.
• Delays in payment of wages: If wages are not paid on time or correctly calculated, companies may face claims from employees and potential fines or legal action from the authorities.

Penalties for non-compliance in Poland can be quite severe. For example, failing to pay the correct amount of social security contributions (ZUS) can result in penalties, interest on overdue amounts.

Companies that fail to comply with tax regulations, including incorrect payroll tax withholding, can face financial penalties, and in some cases, criminal charges if the violation is deemed intentional.

There are also penalties for improper handling of employee contracts, including failure to issue the proper documentation for termination or breach of labour law regarding working hours.

According to the labour code, an employer who does not pay the salary or other benefit due to an employee within the set period is subject to a fine of PLN 1,000 to PLN 30,000.

Why a deep understanding of Polish payroll matters

Understanding labour law, tax and contribution regulations, along with their interpretation and practical application, is essential for the effective management of a company’s human resources and payroll functions. Failure to comply with the applicable regulations is associated with various consequences. Failure to pay wages on time may result in the need to pay a fine, interest, notification of the National Labour Inspectorate, the employee filing a lawsuit for payment to the labour court.

For some failures, e.g. in the obligation to pay ZUS contributions, there is also a penalty of restriction of liberty. Various negligence and errors in human resources and payroll in Poland are subject to various consequences described in the regulations. In addition to the consequences listed in the law, improper understanding of the regulations regarding the broadly understood calculation of wages leading to various types of errors and failure to fulfil the employer’s obligations may result in a loss of the company’s image in the eyes of employees and a loss of reputation on the labour market.

If a company wants to properly and effectively carry out payroll in Poland, it is necessary to hire a competent and experienced payroll specialist. Hiring the right person is a long, expensive and tedious process of recruiting such an employee. Therefore, it is a good idea to transfer this area of the company’s operations to an external company.

By choosing to outsource HR and payroll in Poland, the company gains access to experienced labour and tax law specialists who are familiar with payroll, insurance and tax regulations and can interpret them correctly. Outsourcing HR and payroll reduce the risk of errors and non-compliance. Professional payroll services ensure proper record-keeping, which allows entrepreneurs to avoid legal and financial sanctions.

In summary, the first step is to think about how to organize a company and the second step is to decide on HR and payroll outsourcing.

A local payroll expert or service provider can make a huge difference for companies navigating Polish payroll requirements. A payroll specialist must become very familiar with labour, tax and social security laws and be able to interpret them properly. Tax and labour law changes in recent years are very frequent and extensive. Understanding them requires knowledge and experience and is crucial to the proper functioning of a company. A good specialist knows how to navigate the rewrite, where to look for interpretations and which institution to ask for support. Payroll calculation is not only knowledge of the labour code here you need interdisciplinary knowledge from different areas. An experienced specialist is able to work with and various institutions and bodies and knows how to deal with inspections by supervisory authorities and public institutions.  The key to the success of the company is to hire a specialist with experience who focuses on his own development and acquisition of knowledge.

A local payroll expert or service provider can make a huge difference for companies navigating Polish payroll requirements. At Accace, our Polish payroll specialists are exceptionally familiar with labour, tax, and social security laws, and they are adept at interpreting these regulations accurately. Recent years have seen frequent and extensive changes in tax and labour laws and understanding them requires not only knowledge but also significant experience.

Our Polish payroll team possesses interdisciplinary knowledge covering various areas of payroll calculation, ensuring the smooth and proper functioning of your company. Our experts know how to navigate complex regulations, locate necessary interpretations, and seek support from the appropriate institutions.

Our payroll specialists can effectively collaborate with various institutions and supervisory bodies, ensuring your company is well-prepared for inspections by public authorities. Trust Accace to provide the expertise and support needed to handle your payroll operations seamlessly and efficiently.

Izabela Grajber

Payroll Supervisor | Accace Poland

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Barbara Ostrowska

Payroll Manager | Accace Poland

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