The cost of staff employment
Apart from the gross salary paid to the employee, the employer is expected to cover other expenses.
The employee’s salary is only 60% of the expenses incurred by the employer who wishes to hire an employee on the basis of an employment contract.
The employer must deduct off the employee’s gross monthly salary:
- Income tax advance (18%),
- Various insurance contributions.
Let’s look at the below example
An employee whose gross monthly salary is PLN 2,000 will receive their pay less:
- Pension contribution: 2 000 × 9,76 % = 195,20
- Benefits contribution: 2 000 × 1,5 % = 30,00
- Sick pay contribution: 2 000 × 2,45 % = 49,00
- National insurance contribution: 1 725, 80 × 9% = 155,32 (this is calculated from the monthly gross salary [here - PLN 2,000] less social insurance)
The total of contributions paid by the employee will amount to PLN 429,52.
Apart from the gross salary paid to the employee, the employer is expected to cover other expenses. Contributable cost of employing a person on an employment contract amounts to 20,74% of the employee’s gross salary.
An employee receiving a gross monthly salary of PLN 2,000 will cost the employer additional:
• Pension contribution: 2 000 zł × 9,76 % = 195,20 zł
• Benefits contribution: 2 000 zł × 6,50 % = 130,00 zł
• Accident fund contribution: 2 000 zł × 1,80 % = 36,00 zł
• Employee fund contribution: 2 000 zł × 2,45 % = 49,00zł
• Guaranteed Employee Benefits Fund contribution: 2 000 zł × 0,10 % = 2,00 zł
In total, the Social Insurance Institution contributions financed by the employer will amount to PLN 412,20. The employer’s cost of employing a person is at least PLN 2412,20.
Apart from the monthly salary payments to the employee and Social Insurance Institution contributions, the employer is obliged to cover the cost of:
- employee’s medical examination conducted by the occupational health physician,
- Occupational Health and Safety training,
- provide safety measures and workwear (clothing and footwear),
- equipping the employee’s work station.
The employment of an additional person causes an increase in the cost of payroll administration.
In this case the total cost of employing a person is dependent on the employee’s position:
- should the fee-for-task agreement be the employee’s sole source of income, the employer’s costs will be the same as in the event of employing a person on an employment contract (gross salary + Social Insurance Institution contributions),
- if the employee has another job where he is employed on the basis of an employment contract, however his salary is below the minimum wage (in 2017 this is PLN 2000 per month), then the employer will need to pay the person’s gross salary and all their Social Insurance Institution contributions,
- if the employee has another job where he is employed on the basis of an employment contract and his salary is above the minimum wage, then the secondary employer (the one looking to offer the fee-for-task agreement) will only be required to pay the public healthcare contribution,
- if the person employed on the basis of a fee-for-task agreement is a student under 26, there is no requirement to register them with the Social Insurance Institution. The only cost for the employer will be the employee’s gross salary.
Contract for specific work
This type of contract does not carry an obligation to pay Social Insurance Institution contributions except for two instances described below. The only cost the employer suffers is the employee’s gross pay.
An obligation to pay the aforementioned insurance contribution will arise if one is employed on an employment contract and the employer who is a party to that contract also becomes a party to the contract for specific work, or alternatively, if the recipient of the specific work (being the subject of a contract for specific work) is the said employer.