From January 1, 2020, a large increase in the minimum wage
Since January 1, 2020, the monthly minimum wage for work has increased up to PLN 2600 gross, which means an increase of as much as PLN 350 (by 15.6%) in relation to the minimum wage from the previous year.
This means that the minimum wage will already represent 49.7% of the average wage forecasted for 2020 in the national economy.
The increase also affects certain benefits in the employment relationship corresponding to the amount of the minimum wage, or a multiple thereof, as well as all those bases, thresholds and indicators in force in labour and social security law for which the national minimum wage is based.
Together with the minimum wage, the minimum hourly rate for certain civil law contracts introduced in 2017 also increases. Its main objective is to reduce the abuse of civil law contracts and protect the lowest paid.
In 2020, the minimum hourly rate will be PLN 17 gross – up from PLN 14.7 in 2019.
The amount of remuneration of an employee employed on a full-time, monthly basis cannot be lower than the minimum remuneration established by the Council of Ministers in a regulation. (Regulation of the Council of Ministers of September 10, 2019 on the minimum wage and minimum hourly rate in 2020). According to this regulation, from January 1, 2020, the minimum wage for full-time employees will be 2600 PLN. The employee is guaranteed a minimum wage for each month worked.
In order to calculate the amount of remuneration, in order to compare it with the statutory minimum, the components of remuneration and other benefits resulting from the employment relationship, classified according to the principles of employment and remuneration statistics specified by the Central Statistical Office as personal remuneration, shall be assumed.
However, the calculation of remuneration does not take into account:
- the jubilee award;
- the cash severance pay due to an employee on retirement or disability pension;
- overtime pay;
- the night work allowance and from January 1, 2020 also the seniority allowance.
This means that from January 1, the seniority bonus will not affect the minimum wage. Workers will be guaranteed a monthly minimum wage and will receive a traineeship allowance. It will thus be excluded from the salary set for the minimum wage check. The revision of the legislation aims to ensure a fairer and more transparent form of minimum wages and to improve the situation of workers who are paid at the lowest level.
Payments to PPK
The issue of payments to the PPK cannot be omitted when calculating salaries. The largest employers are already implementing it, and others will be implementing it in 2020. The first payments already appeared on the payroll in November 2019, so it should be borne in mind when settling them:
- the basic payment is financed by the employee at 2 %, the employer at 1,5 %; the basis for the calculation of the payment is the wage to be contributed;
- no social security contributions are collected from the payment financed by the employer; however, it constitutes taxed employee’s income, which arises in the month of making the payment by the employer to the selected financial institution;
- the payment financed by the employee is deducted from his income after tax.
An increase in the minimum wage means increased costs for the employer
The cost of work of one employee is the gross monthly salary and the cost of contributions to the Social Insurance Institution (ZUS), financed by the employer as the payer: pension contribution, pension contribution, Labour Fund, Guaranteed Employee Benefits Fund. The employer also pays the full contribution to the accident insurance. From 2020, an employer employing an employee with a minimum wage will have to pay 421.67 PLN more monthly than in 2019.
Minimum wage for employees up to 26 years of age.
From August 1, 2019, the income from the business relationship, employment relationship, imposition work, cooperative employment relationship and contracts of mandate, constituting the income from the activity performed personally, received by the taxpayer until the age of 26, up to the amount not exceeding 85 528 PLN in the tax year, are exempt from income tax. This limit applies to revenues earned from January 1, 2020. A person who earns the minimum wage, i. e. 2600 gross per month, will therefore receive 2041.62 PLN (without PPK) for payment. The remuneration will be reduced only by social security contributions and full health contribution.
Minimum wage according to working hours
If the employee is employed on a part-time basis, the minimum wage shall be set at an amount proportionate to the number of hours worked by the employee during the month in question, taking as a basis the minimum wage set for a full-time job. The correct determination of the minimum wage for a part-time employee consists in multiplying the wage rate, i. e. PLN 2600, by the number of hours to be worked in a given month, appropriate for part-time and divided by the number of hours to be worked in that month for full-time.
Minimum wage at the turn of 2019/2020
Workers paid at the minimum rate are guaranteed a higher amount from January 1, 2020. This means that the remuneration for December 2019 paid in January 2020, in accordance with the payment deadline adopted in the company postponed to the following month – is due in the amount in force in 2019, i. e. 2250 PLN. The remuneration is due for work performed in a given period, in this case in December.