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Business opportunities and outsourcing advantages in Poland

Poland, officially known as the Republic of Poland, is situated in Central Europe. It shares borders with seven neighboring countries, namely the Czech Republic, Germany, Ukraine, Belarus, Lithuania, Russia, and Slovakia. The northern border of Poland grants it access to the Baltic Sea. Poland consistently ranks highly in global rankings, renowned for its above-average living standards, education, security, and healthcare. Moreover, it offers favorable conditions for business endeavors. Over the past two decades, Poland's economy has experienced rapid growth across various sectors, presenting excellent opportunities for companies. The domestic market in Poland is currently highly appealing to investors from both Europe and other parts of the world. Numerous multinational corporations have already established their headquarters in Poland, and this number continues to rise. Positioned at the heart of Europe, Poland offers a unique fusion of European and Western cultures, creating unparalleled prospects for company development.

In recent years, Poland has experienced a significant rise in its appeal for multinational companies seeking outsourcing opportunities. This is especially notable in the field of acquiring IT specialists and programmers, in which the country excels. It's important to highlight that Polish employees, regardless of their industry or position, are internationally renowned for their dedication, loyalty, ambition, and eagerness to learn. Poland stands out as a clear leader in outsourcing within Europe, primarily due to its highly skilled workforce. Additionally, the relatively lower personnel costs, encompassing both social security contributions and salaries, compared to other European nations, further contribute to its attractiveness as an outsourcing destination. An additional advantage in favor of Poland is its remarkable achievement of avoiding an economic recession during the global financial crisis of 2008-2009, a feat unmatched by any other European country. However, entrepreneurs contemplating business expansion in Poland must confront the intricate regulations governing business operations and employee hiring. Establishing a Polish business entity entails navigating through time-consuming processes, potential delays in expansion, complex administrative procedures, and language barriers. To mitigate these challenges, it is advisable to consider engaging the services of a Polish Employer of Record (EOR). Partnering with a reputable EOR service provider in Poland simplifies the process of expanding your business in the country. The involvement of an Employer of Record significantly reduces the management burden associated with employee employment and administrative matters, ensuring full compliance with Polish laws.

Overview of Poland: Culture, economy and society

Poland, the ninth largest country in Europe, covers a land area of 313,000 square kilometers. The climate in Poland is temperate, characterized by warm summers and relatively cold winters. The country is divided into 16 administrative provinces known as voivodeships. Warsaw, the capital of Poland, serves as the national business hub. While Polish is the official language, most Polish people speak multiple languages due to their close proximity to neighboring countries. English, especially among young individuals, is spoken at a communicative level by the majority of Poles. The official currency is the Polish zloty, and Poland has an estimated population of around 38.5 million. The country operates on GMT+1 time zone. As of now, Poland's GDP stands at approximately $1.363 trillion. The standard work week consists of 40 hours, and the minimum monthly wage is PLN 3,010 gross. Public holidays in Poland amount to 13 days a year, providing statutory days off. The current number of remote workers in Poland is estimated to be 813,700. The fiscal year aligns with the calendar year, starting on January 1 and ending on December 31. Typically, salaries in Poland are paid monthly and no later than the 10th day of the following month. Poland boasts a state university system, leading to a surplus of highly skilled workers in the Polish job market. The Roman Catholic Church holds prominence as the largest religious institution in Poland, with an estimated 95% of the population identifying as Catholics, and around 75% regularly attending services. Polish culture is deeply rooted in Slavic customs and traditions, albeit with some modifications influenced by the church. Family values hold great importance within Polish society.

Employer of Record services in Poland

A growing number of foreign investors who want to expand their operations in Poland are utilizing entities known as "employers of record." This approach serves as an alternative to direct employment, combining remote and temporary work. But what exactly is an employer of record service provider? An employer of record (EOR) is a third-party organization that, through a contractual agreement, assumes the legal responsibility of being the employer for the employees chosen by the client company. Its obligations encompass all aspects related to employee hiring, acting on behalf of the client company.

Employer of record services are commonly employed by companies that lack a registered business entity and have no immediate plans to establish one, yet still desire to enter the Polish market and employ Polish workers. When engaging with an EOR service provider, the provider becomes the exclusive legal employer of the client company's workforce. This employment model fully adheres to the existing legislation in Poland. While the service provider handles the employment formalities, the client company can concentrate on managing employees within their daily tasks. The employer of record establishes contracts with both the client company and the hired employees, assuming responsibility for tax payments, labor law compliance, and other relevant local regulations and obligations. The client company can have peace of mind regarding compliance matters, as they will be meticulously addressed, allowing them to focus on overseeing the employment relationship, assigning tasks to employees, and promoting a productive work environment.

Foreign companies and entrepreneurs often opt for Employer of Record services in Poland for several reasons, including:
1. The need to quickly hire employees in Poland without having a registered company in the country, leading to the exploration of viable alternatives.
2. The requirement to transition contractors into employees while avoiding the establishment of an additional business entity.
3. The desire to avoid the costs and risks associated with registering a new business entity in another country, particularly when the potential benefits are disproportionate or the activities are short-term in nature.
4. The search for a favorable solution that allows easy conversion of international contractors into employees for the company.
5. Willingness to invest resources in the process of converting contractors to employees.
6. Having a contractor located abroad and the intention to convert them into an employee.
7. Contractors requesting more stable employment conditions and the company's willingness to provide full-time employment.
8. The need to rectify a non-compliant relationship with a contractor.

An employer of record (EOR) in Poland can offer several services to foreign companies and entrepreneurs. Here are the benefits of using an EOR in Poland:
- Employment in accordance with Polish law: An EOR ensures that all employment practices comply with the relevant Polish labor laws and regulations. This includes adhering to minimum wage requirements, working hour restrictions, and other employment standards.
- Contract drafting and signing: The EOR handles the process of drafting and signing employment contracts between your company and the hired employees. This ensures that all necessary terms and conditions are included and that the contracts are legally binding.
- Visa and work permit assistance: For foreign employees, the EOR can provide support in obtaining the required visas and work permits. They are familiar with the immigration processes and can help streamline the paperwork and documentation needed for legal employment in Poland.
- Onboarding of employees: The EOR assists in the onboarding process, ensuring that new employees are properly integrated into their roles and responsibilities. They can help with orientation, training, and setting up necessary systems and procedures.
- Registration with authorities: The EOR takes care of the administrative tasks related to registering employees with the appropriate authorities, such as the Social Security and Tax Office. This includes handling the necessary paperwork and ensuring compliance with reporting obligations.
- Termination of employees: If there is a need to terminate an employee, the EOR can manage the process, including handling the notice period and any required severance pay according to Polish employment laws.
- Personnel management and administration: The EOR can handle various personnel matters on behalf of your company, including managing employee records, administering mandatory benefits, and handling HR-related inquiries and issues.
- Tax and social security compliance: The EOR takes care of paying the required taxes and mandatory social security contributions on behalf of your company and its employees. This ensures compliance with Polish tax regulations and relieves you of the administrative burden.
- Keeping up with labor law changes: The EOR stays up to date with any changes in labor laws and regulations in Poland. They can inform your company about these changes and assist in adjusting your business practices accordingly.
- Timely payroll services: The EOR handles the processing of payroll, ensuring that employees are paid accurately and on time. They handle the necessary calculations, deductions, and any other payroll-related tasks. Using an employer of record service in Poland can provide foreign companies and entrepreneurs with peace of mind, as they can focus on their core business operations while leaving the legal and administrative aspects of employment to the EOR.

Employer of Record presents an excellent option for companies that are unable or unwilling to establish a new business entity in Poland. It also serves as an ideal solution for entrepreneurs seeking to minimize taxes and employee expenses while expanding their business. When utilizing Employer of Record, hiring international employees, including those from Poland, becomes remarkably straightforward. The EOR service offers significant flexibility, making it adaptable to nearly any company's needs. It can be regarded as a viable solution for businesses across the board. Collaborating with an EOR service provider is a swift process, often allowing for the hiring of initial employees within a few days. These advantages are readily accessible, and there are no concerns about adhering to local laws and regulations.

Recruiting staff in Poland

Recruiting employees and providing incentives

To effectively attract and hire highly skilled Polish workers, it is important to know where to find them. The most suitable platforms for sourcing Polish employees are popular Polish job portals. Additionally, utilizing professional portals with international reach, such as LinkedIn, can be beneficial. While not as popular as before, posting job advertisements in Polish newspapers can still yield desired results. For remote recruitment, it is important to ensure that virtual interviews can be conducted. This can be facilitated through various online communication channels that are widely available. Furthermore, considering the time difference is crucial, and scheduling recruitment interviews at a suitable time for both the recruiter and the candidates is advisable. Typically, the responsibility of conducting recruitment lies with the company itself rather than the Polish Employer of Record. However, a reputable EOR service provider can offer valuable tips on sourcing Polish employees.

Many international companies, based on their experiences in other countries, engage in similar practices when entering the Polish labor market. This includes the common practice of conducting background checks on job applicants, which is strictly prohibited according to current Polish law. This prohibition is due to various data protection regulations. Therefore, it is recommended to have a knowledgeable Polish Employer of Record who can guide the client company and prevent them from engaging in activities that are illegal in Poland. International companies interested in hiring Polish employees often inquire about incentives or subsidies related to employing Polish individuals. Unfortunately, no such incentives exist. However, there are certain concessions, benefits, and advantages available to companies that hire employees with specific statuses. Companies that employ disabled individuals, the elderly, or the officially unemployed can apply for various attractive financial benefits from state institutions. If a company hires a person over 45 years of age for a position and provides appropriate training for their role, they can apply for reimbursement of up to 70% of the training costs. There are limits to this reimbursement, which cannot exceed 300% of the average national salary. Nevertheless, it is a beneficial option to consider. Additionally, if an employer decides to hire female employees over the age of 55 and employees over the age of 60, they are exempt from making contributions to the Labor Fund and the Guaranteed Employee Benefits Fund. It is important for international companies to be aware of these benefits, although they are often unfamiliar with them. A key responsibility of the Polish Employer of Record is to inform the client company about the potential concessions, benefits, and advantages available. Through such cooperation, businesses can maximize opportunities and leverage possibilities that bring greater benefits to their operations.

Visa types

When a company intends to hire foreign workers in Poland, they must adhere to the current immigration regulations and obtain the necessary visas. Unfortunately, Poland is known for its strictness regarding visas and hiring individuals from outside the country. The chances of obtaining a Polish visa and hiring a foreign employee are higher only if it can be proven that hiring a Polish employee for the position is not possible. In such cases, the Polish Employer of Record can provide invaluable assistance. This entity, with extensive experience in obtaining visas for foreign workers and a long-standing presence in the Polish market, is highly valuable for any international company.

A visa is required for citizens of all countries except the Schengen countries, Andorra, Argentina, Australia, Brazil, Brunei, Bulgaria, Chile, Croatia, Cyprus, Guatemala, Honduras, Hong Kong, Iceland, Ireland, Israel, Japan, Canada, Costa Rica, Liechtenstein, Macau, Malaysia, Malta, Mexico, Monaco, Nicaragua, New Zealand, Panama, Paraguay, Romania, Salvador, San Marino, Singapore, South Korea, Uruguay, the United States, the Vatican, Venezuela, the United Kingdom, and Northern Ireland. Citizens from these countries can enjoy visa-free travel in Poland, as long as their stay does not exceed three months within a six-month period.

In Poland, there are several visa types, namely A, B, C, D, E, and S visas.

Type A visa, known as an airport transit visa, is exclusively for citizens of Afghanistan, Bangladesh, Democratic Republic of Congo, Eritrea, Ethiopia, Ghana, Iran, Iraq, Nigeria, Pakistan, Sudan, and Sri Lanka. It allows the holder to transit through international transportation areas. It also applies to foreigners employed in Poland under an employment contract by an entity based in Poland, such as its headquarters, branch, or plant.

Type B visa is applicable to foreigners serving on the board of directors, as proxies, or general partners of a legal entity listed in the register of entrepreneurs or an organizing company. This visa is for stays in Poland lasting more than six months within a twelve-month period. A uniform Schengen visa, also referred to as a type C visa, grants its holder the freedom to move within the territories of all Schengen member states. It is valid for a maximum of 90 days within a 180-day period. Additionally, it is intended for foreigners employed by a foreign employer who are posted to Poland for over 30 days in a calendar year. Further details can be found in the Law of July 26, 1991, on personal income tax.

Type D visa allows its holder to enter and stay continuously or for multiple consecutive periods in the Republic of Poland for a total duration exceeding 90 days but not exceeding one year. The validity period of this visa is determined individually. Type D visa is designed for foreigners employed by a foreign employer without registered offices, plants, branches, or any other form of organized economic activity in Poland. Moreover, there is a requirement that the delegate must be transferred to Poland to perform temporary and occasional export services. An E-type visa is intended for foreigners contractually employed by a foreign employer, staying in Poland for purposes other than those covered by the previously mentioned visas, for a period exceeding 30 days within a six-month period.

The final visa type is the S visa, specifically created for foreign workers employed on a seasonal basis, covering short-term positions in fields such as tourism, agriculture, and horticulture. Foreign workers are allowed to stay and work in Poland for a maximum of nine months per calendar year. The S visa is available to workers of any citizenship. The visa application process is not overly complicated. Consuls representing the country of the foreigner applying for a visa in Poland handle visa issuance for specific countries. The specific requirements and procedures for obtaining a visa depend on the visa type. It is impossible to provide definitive requirements, as each consulate may have its own set of requirements that determine the approval or denial of a visa application. It is advisable to ascertain the necessary documents for a particular consulate before officially applying for a visa. The visa fee is relatively low, amounting to a maximum of 60 euros or the equivalent in Polish zlotys based on the current exchange rate of the National Bank of Poland. The waiting time for a visa cannot be precisely determined, as it is not regulated by any law and depends solely on the consulate where the foreigner applies. On average, the entire visa process takes approximately two weeks. This duration can be significantly reduced when assisted by a Polish Employer of Record, as they possess knowledge of the specific formalities involved in hiring employees from different countries, thereby minimizing errors, misunderstandings, and ambiguities.

Employment authorization

Employers in Poland must obtain appropriate work permits for foreign workers they wish to hire. However, there are certain groups of foreigners who are exempt from this requirement. These include:
I. Citizens of the European Union, the European Economic Area (EEA), Switzerland, and their family members.
II. Foreigners who hold long-term EU resident status in Poland.
III. Foreigners who already possess a settlement permit.
IV. Individuals who have been granted temporary protection, primarily refugees and those with "tolerated stay" status.
V. Foreigners who, based on specific regulations, are not obligated to obtain a work permit.

If a foreigner does not fall into any of the above-mentioned categories, the employer must obtain the necessary work permit before officially hiring them. Work permits are acquired from the appropriate provincial governor based on the employer's location. Typically, work permits issued by the governor's office are valid for a limited period, usually up to three years. However, permits for managers and board members can be issued for up to five years. The waiting time for permit issuance is generally around two weeks. There are also certain restrictions and conditions regarding work permits that should be known. It is crucial to ensure that the salary offered to the foreign employee is not lower than that of a Polish employee in a similar or equivalent position, as paying less would violate Polish law. Additionally, the starost (local authority) must confirm that the position cannot be filled by a Polish job seeker or someone registered as unemployed.

During the work permit application process, the employer must submit several required documents on behalf of the foreign worker. These documents include:
- Completed application form
- Passport copy
- Company contract
- Documents demonstrating the employer's current business activities
- Copy of the labor contract
- Proof of payment for application fees
- Proof of the applicant's health insurance
- Proof of registration with the National Court Register All documents submitted during the work permit application process must be translated into Polish. The cost of obtaining a work permit for a foreigner varies. For permits issued for employment lasting less than three months, the fee is PLN 50. For longer-term employment, the cost increases to PLN 100. If the foreign worker is being sent to Poland for export services related to their position, the cost rises to PLN 200. Renewal of an existing work permit incurs a fee of PLN 50. The process of obtaining a work permit for foreign employment in Poland may appear complex, especially for first-time employers. By partnering with an Employer of Record (EOR) service provider in Poland, the provider can handle all the tasks involved in applying for permits, saving the client company significant time and worry.

Preventive health checks

In many cases, before an employee can start working in a covered position, it is often necessary to undergo a preventive medical examination. These examinations are particularly important for certain roles as they ensure that the individual is physically capable of performing the job tasks. A doctor assesses the employee's health and issues a certificate based on the examination. It is the responsibility of employers to cover the costs of these medical examinations and arrange for them to be conducted by making the appropriate referral. The specific tests that employees undergo depend on their industry and position. There are various medical facilities in Poland where employers can send their employees for these examinations, such as LuxMed, Medicover, and Enel-Med, which are private establishments commonly preferred. However, traditional Polish medical centers can also perform these examinations. If an employer plans to hire a large group of employees, it is beneficial to establish a contract with a selected occupational medicine center, as this can significantly reduce the costs associated with preventive examinations. The fee employers usually pay for a preventive examination ranges from PLN 120 to 500 per employee, depending on the number of examinations and specialist doctors involved. Delegating the task of sending employees for preventive examinations is a routine activity that can be entrusted to a service provider like an Employer of Record in Poland. By doing so, the EOR takes care of the necessary paperwork while the client company can focus on tasks that require immediate attention.

Training in health and safety

Apart from the pre-employment health screenings, it is crucial for every employee to undergo occupational health and safety training. This training is essential to ensure that each employee is familiar with the applicable regulations and guidelines for workplace protection. The comprehensive occupational safety training program consists of two components: "general training" and "toolbox talk." General training is required to be conducted by a specialized entity that holds the necessary certifications in basic occupational safety and health regulations outlined in the Polish Labor Code. On the other hand, toolbox talk, although less strict in its requirements, can be carried out by either a specifically chosen entity or an authorized representative of the company who possesses sufficient knowledge and experience in the field. During this training, employees should acquire essential information about the overall work environment, potential health hazards associated with their job, and the tools required to mitigate those risks. The cost of a complete health and safety program typically ranges from 90 to 120 Polish zlotych per employee. It is not mandatory for the employer to have a contract with a provider for conducting occupational safety and health training. One option for providing such training is the Polish Employer of Record, which has extensive experience working with employees across various industries and possesses a vast knowledge of workplace safety.

Employment

Employment and legal regulations

The legal framework governing the employment of Polish workers in Poland encompasses various laws and agreements, including the Polish Constitution, which outlines the fundamental principles of labor freedom and social rights. Additionally, the Polish Labor Code and international labor law agreements, along with numerous legal acts, define the rights and obligations of both employers and employees. The majority of labor laws in Poland are governed by the existing Labor Code. There are also other regulations concerning safety, industrial disputes, trade unions, collective dismissals, and more. While slight deviations from the Polish legal framework are allowed in employment contracts, they are only acceptable if the terms offered to the employee are more favorable than what the regulations stipulate. It's important to note that Polish labor law comprises customary law and autonomous labor law. Customary law includes decrees and acts of parliament and specifies the relationship between employers and employees. Autonomous labor law consists of acts created by social partners and is recognized as legally binding for all employers and employees. Examples of such acts include external collective bargaining agreements and collective labor agreements. Foreigners are permitted to employ Polish workers, provided they are citizens of EU member states or countries within the European Economic Area (EEA). Foreign individuals intending to work in Poland must obtain a visa and work permit in advance. The multitude of regulations that employers must be aware of when hiring employees in Poland can be overwhelming. Therefore, it is recommended to engage a competent Polish Employer of Record who possesses essential expertise in this field. This significantly minimizes the risk of unintentional legal errors by the company.

Probationary Period

Under Polish legislation, there exists a specific trial period during which an employer can hire an employee, lasting precisely 3 months. To employ a potential candidate under this arrangement, it is necessary to draft a special employment contract. Once the 3-month probationary period concludes, the employer must either part ways with the employee or enter into a contract with them for an indefinite or fixed term. During the probationary period, there is also a requirement for a notice period.

The duration of the notice period depends on the length of the employee's tenure. If an employee occupies a position for less than 2 weeks, the notice period is 3 days. If the period of employment ranges from over 2 weeks to less than 3 months, the notice period extends to 7 days. In the case of employees engaged in a 3-month probationary period, the applicable notice period is 14 days.

There are certain exceptions that permit the initiation of another probationary contract with the same employee. These exceptions encompass scenarios where the employee assumes a completely different position and performs distinct duties from before, and when at least three years have passed since the termination or expiration of the previous employment contract with the employee. In the latter situation, it is inconsequential whether the employee's work is similar or dissimilar to their prior role. Employing the services of an Employer of Record in Poland simplifies the management of both probationary and contracted employees. Such a service handles all employment-related matters, enabling the client company to concentrate on issues that demand its specific attention.

Anti-discrimination legislation

When recruiting employees from different countries, who belong to diverse cultures and races, it is crucial to consider the existing anti-discrimination laws in Poland. These laws specify various requirements, such as the need to translate the employment contract into a language that the hired employee fully understands, even if it is not their native language. Additionally, employers in Poland have an obligation to prevent discrimination in the workplace. If an employee experiences any racial or xenophobic incidents while performing their job duties, they have the right to take legal action and seek compensation. By collaborating with an Employer of Record (EOR) service provider in Poland, you can ensure the establishment of a work environment that welcomes employees from all around the globe. EORs possess expertise in managing international staff, significantly reducing the likelihood of encountering such undesirable situations.

Protection of personal information

Protection of personal information is crucial to maintain confidentiality. The General Data Protection Regulation (GDPR) is responsible for establishing detailed guidelines for safeguarding personal data. It was enacted on May 10, 2018, based on the Law on Personal Data Protection. This legislation provides comprehensive regulations on the processing and security of personal information. It's important to note that it encompasses national laws pertaining to different forms of secrecy, making it widely applicable. For optimal protection of personal data, seeking assistance from an Employer of Record is highly recommended. Entrusting this matter to a specialist ensures that the confidentiality of personal information is effectively addressed, recognizing its sensitive nature.

Employment agreement

Under the current laws in Poland, in order to employ an individual in a fully legal manner, it is necessary to prepare a suitable employment agreement. This agreement should be signed by both parties and registered with the Social Security Administration no later than 7 days prior to the employee's commencement of work and fulfillment of their duties. Proper registration of an employee requires additional forms and declarations, which are detailed on the Social Security Administration's website. All submitted documents should be in either Polish or English. The following information must be included:
- Identifying the parties involved in the agreement (i.e., the employer and the employee).
- Date of signing the agreement.
- Duration for which the agreement is valid.
- Specific terms and conditions of employment, including the nature of the work, type of employment, workplace, start date, and details of the employee's compensation. In Poland, there are three types of employment contracts, categorized by their duration. The first is a short-term or probationary contract, which binds both parties for a maximum of 3 months. The second type is a fixed-term contract, which can last up to 33 months. This contract can be renewed up to 3 times, at the parties' discretion. The final and most desirable type of contract for employees is an indefinite-term contract. Once the agreement is properly prepared, signed, and the employee registered, the employer must provide the employee with all necessary information regarding working hours, payment frequency, and entitlement to annual leave. This information is often already included in the agreement, but if it is not, the employer has 7 days to inform the employee about it. The requirements for employment agreements in Poland can be somewhat unclear, especially for foreign investors. To avoid mistakes and ensure the correct drafting of the agreement, it is advisable to delegate this task to an entity experienced in this field. Employer of Record in Poland has extensive expertise in preparing employment contracts and can tailor them to specific employee situations.

Working hours mandated by law

In Poland, the standard work week consists of 5 days, with employees completing 40 hours of work during this period. It is permissible to work additional hours, provided the employer compensates the employee with extra time off within the same month. Typically, employees receive an additional day off during the week. A 15-minute break is entitled to employees who work for at least six hours per day, and this break is considered part of the working time, so employees do not need to extend their stay at work. If the employer allows, additional breaks of up to one hour can be taken during working hours. Polish regulations state that employees must have a minimum of 11 hours of uninterrupted time off per day and at least 35 hours of uninterrupted time off per week. Monitoring and managing working hours can be challenging, especially when dealing with numerous part-time or flexible hour employees. However, by utilizing the services of a Polish Employer of Record, a company can ensure proper supervision of employees' working hours, relieving itself of this routine task and enabling focus on more significant matters.

Salary

As per the measures implemented by the Polish government, Poland has a minimum wage policy. In 2022, the gross monthly minimum wage is PLN 3010. Furthermore, it has been determined that the minimum wage will progressively increase each year by up to 10% until 2024. If an employee works during the night, the rates undergo slight adjustments. In such cases, the employee is entitled to a supplementary allowance equal to 20% of the minimum wage per hour. Overtime refers to working beyond eight hours per day and 40 hours per week, with an annual limit of 150 hours. The overtime rate is higher, amounting to 150% of the standard rate, or 200% for work performed on holidays, during the night, or on Sundays. Employers in Poland are not obliged to provide bonuses to their employees.

Paid national holidays in Poland

In Poland, there are 13 public holidays that allow individuals to have time off from work while still receiving payment as if they were working. These holidays consist of the following dates:
- January 1st, known as New Year's Day
- January 6th, known as Epiphany
- April 4th, which is Easter Sunday
- April 5th, which is Easter Monday
- May 1st, recognized as Labor Day/May Day
- May 3rd, celebrated as Constitution Day
- May 23rd, known as Pentecost
- June 3rd, referred to as Corpus Christi
- August 15th, observed as the Assumption of Mary
- November 1st, recognized as All Saints' Day
- November 11th, celebrated as Independence Day
- December 25th, which is Christmas Day
- December 26th, also referred to as the second day of Christmas.

Vacations and different kinds of time off

Annual vacation time

Every worker employed in Poland is eligible for paid vacation time each year. The duration of the vacation is determined by the length of service. Employees with a minimum of 10 years of service have the longest vacation entitlement, which amounts to 26 days. Those with less seniority receive slightly fewer vacation days, specifically 20 days. Full-time employees receive their regular salary while on vacation, but calculating vacation pay for part-time employees is a bit more complex. It primarily depends on the hours worked by the employee and is proportionally calculated accordingly. If an employee chooses not to utilize their full vacation entitlement, they can carry over the unused days to the following year. This allows the employee to enjoy additional paid time off in subsequent years. The maximum duration for carrying over vacation time is three years. This policy also applies to "on-demand" sick days, with each employee having a total of four available.

Sick leave

Each employee who has a work contract has the right to take 33 days of sick leave per year, during which they will receive 80% of their regular pay. However, there might be situations where an employee needs more time off than the expected 33 days. In such cases, the additional sick leave is covered by social security, granting the employee an extra 180 days of leave. The situation is slightly different for employees aged 50 and above. If an older employee experiences health issues, the employer will pay their salary for only 14 days, after which social security takes over this responsibility. In special circumstances such as work-related injuries, disabilities, or pregnancy, the employee is entitled to receive full pay during this type of leave.

Maternity and paternity leave

The duration of maternity leave for women who have given birth depends on the number of children born. A working woman who gives birth to a single child can take a total of 20 weeks of maternity leave, during which she will receive social security benefits. The length of maternity leave increases with each additional child. For women who have twins, the entitlement is 31 weeks, for triplets it is 33 weeks, for quadruplets it is 35 weeks, and for quintuplets or more children, it is 37 weeks. Maternity leave is also granted to female employees who have experienced stillbirths or whose children have passed away after birth. The duration of leave in these cases is slightly shorter and varies based on individual circumstances. A working individual has the right to commence maternity leave before the expected due date, but no earlier than six weeks prior to that date. If at least 14 weeks of maternity leave have been taken, the employee has the option to waive the remaining period if desired. In such a scenario, the unused portion of the leave that was initially designated for the mother is transferred to the child's father. Female employees also have the option to utilize maternity benefits provided by the State Social Security, which is covered by the public health insurance fund. Special provisions are in place for female employees who have returned to work but continue to breastfeed their child. If an employee works more than six hours a day, she is entitled to two 30-minute breaks each day. For female employees who breastfeed two or more children, this time is extended to 45 minutes. In Poland, employees are also eligible for paternity leave, which is slightly shorter than maternity leave. An employee can begin using paternity leave as early as two weeks before the expected childbirth date, and it must be utilized within the first 24 months of the child's life. Paternity leave can be taken as a single continuous period or divided into two parts, with each part lasting at least one week. Once maternity or paternity leave concludes, employees have the option to take parental leave, which lasts for 32 weeks for a single child or 34 weeks for multiple children. Parental leave can be taken until the child reaches 6 years of age. It can also be divided into four segments, with each segment lasting a minimum of 8 weeks. It is important to note that the same rights apply to employees who choose to adopt a child.

Additional types of leave

Apart from the previously mentioned forms of leave, there are also specific types of leave that are granted during significant events in an employee's life. For events such as the birth, wedding, death, and funeral of an employee's child, they can expect to receive 2 days of leave. In the case of weddings, deaths, and funerals of other family members, 1 day of leave is granted.

Employee responsibility

In the event that an employee causes harm to a third party, there may be a question regarding the extent of the employer's liability in such a situation. According to Polish law, the employer can be held responsible for damage caused by their employee, provided that the damage occurred while the employee was performing their job duties. However, the employer is not without recourse in such cases. As per the Labor Code, the employer has the right to seek compensation reimbursement from the employee who caused the damage. The specific details regarding the scope of this reimbursement are outlined in the Labor Code. Employers sometimes also inquire about the liability of the parent company in such situations and whether it shares any responsibility. Polish law, however, clearly states that the parent company cannot be held accountable for the actions of its subsidiary's employees. This means that the sole entity responsible for any injury caused by an employee is their immediate employer. Dealing with employee liability can be challenging at times. By establishing a partnership with an Employer of Record (EOR) in Poland, the EOR entity assumes full responsibility for the employees as their legal employer. This is a major reason why many foreign companies entering the Polish market opt for this solution.

Employee record maintenance

Extent of employee files

In accordance with the Minister of Family, Labor, and Social Policy's decree implemented on January 1, 2019, one of the responsibilities of employers is to adequately manage employee records. It is crucial to maintain separate records for each employee. Employee files should contain various documents, including personnel files, time records, records of wages for paid labor, records of requested and granted vacation leave, records of assigned clothing, work shoes, and personal protective equipment, as well as records of work-related benefits. Regarding the organization of personal files in folders, recent changes have focused on dividing parts A, B, and C into smaller sections. This division has proven to be a significant improvement, as it allows for more efficient retrieval of necessary documents. For example, Part C can now be divided into smaller sections such as C1 and C2. C1 can be used to collect periodic health and safety training certificates and medical certificates, while C2 can be used for employee contracts and attachments. This division enables quicker document searches. Additionally, a new section, Part D, has been introduced to store files related to disciplinary proceedings and liability under separate regulations. This solves the problem of removing disciplinary proceedings from employee files. Employers are now responsible for grouping Part D files and assigning them consecutive numbers, such as D1, D2, etc. The inclusion of Part D eliminates the need to renumber and re-describe files when relevant disciplinary actions are taken. Another change introduced on January 1, 2019, involves clear guidelines on how employee files should be handled when an employer decides to rehire an employee. According to Article 94 of the Labor Code, a company's human resources department can continue maintaining an employee's records if the subsequent employment occurs during the period when record-keeping is required. This means that re-employment with the same company does not necessitate resubmission of previously provided documents. There is no obligation to re-submit school certificates or labor certificates. The employee's vacation seniority is calculated based on the existing records held by the employer. The Labor Code also provides information on the personal data catalog that an employer may request from a current employee. Since 2019, the preferred method of wage payment has been through bank transfers to an employee's provided bank account. However, cash payment is still an option if specifically requested by the employee in writing. The company must accept and keep such a request in the employee's file. The employer is also required to maintain time record cards, which include detailed information on various types of requests and declarations related to an employee's working hours, such as secondment permission or overtime work.

Employee files storage

In accordance with current regulations, employers have the flexibility to store different sections of employee files independently of each other. These files can be maintained in either electronic or paper format, depending on the employer's preference. Additionally, employers have the option to combine both formats if desired. If a decision is made to change the record-keeping format, specific actions must be taken. Transitioning from paper to electronic records requires scanning each file previously stored in paper format. These scanned files should be appropriately named for easy retrieval if needed, and they should bear the employer's qualified electronic signature or seal. Conversely, if an employer wishes to switch from electronic to paper records, all employee files in electronic format must be printed and manually signed. Employers have the freedom to change the form of record-keeping for employee files at any time, and the decision is not permanent. However, it's important to note that when changing the record-keeping format, the employer must notify both current and former employees of the change and allow them to collect their files if they are affected by the format change. Employees have 30 days from receiving the notice to pick up their files. Another significant amendment to the Labor Code, effective from 2019, pertains to the retention period for employee records. The duration varies based on the date of employment, with three distinct groups. The first group consists of employees hired before January 1, 1999, whose records should be retained by the employer for 50 years from the contract termination date. The second group comprises employees hired between January 1, 1999, and December 31, 2018. The employer must retain their records for a minimum of 10 years, although they can keep them for up to 50 years at their discretion. The last group encompasses employees hired on or after January 1, 2019. For this group, employee files should be kept for a minimum of 10 years after contract termination, but this duration can be subject to change. If the employer wishes to reduce the retention period for employees in the third group, specific formalities must be completed with the Social Security Administration. This involves submitting the appropriate OSW form (statement of intent to file reports for this employee group) and RIA registered reports, which replace Rp-7 forms (certificates of employment and salary for the entire employment period). All these documents must be prepared in paper format. If the paperwork is processed and a final decision is made to reduce the retention period, the next step is to provide each former employee with relevant information and an employment certificate. This information should include details on the duration of personnel file storage, the option for employees to collect their files at the end of the mandatory retention period, and the date of file destruction if an employee chooses not to retrieve them within the specified timeframe. Many employers view the recent changes in record-keeping positively. These regulations allow for streamlined maintenance of personnel files, eliminating the need for modifications after an employee's contract ends. Furthermore, various solutions can be implemented to facilitate easy retrieval of necessary documents. These new circumstances are particularly advantageous for large companies, as they not only reduce the costs associated with paper record-keeping but also mitigate the risk of file destruction due to unforeseen events such as floods or fires by enabling electronic storage.

Taxation

In Poland, employers are required to register their employees with the Social Security Administration at least 7 days prior to their start date. The social insurance system in Poland encompasses various benefits, including pension insurance, disability insurance, health insurance, maternity/paternity insurance, work accident insurance, and death insurance. The employer's contributions to social insurance can range from approximately 14% to 18% of the employee's total monthly salary.

Taxation of employers and employees

In Poland, the fiscal year coincides with the calendar year, ending on December 31st. The sales tax rate is 23%. Additionally, at the end of each fiscal year, income tax must be accounted for. The income tax rate varies based on the earnings for the year. If the annual income is below PLN 85,528, the income tax rate is 17%. However, if the income exceeds this limit, a 32% income tax rate applies. Income tax settlement must be completed no later than April 30th of the following year. When making the payment from a Polish bank account, the transferred money is received by the Tax Office on the same day. However, foreign payments are slightly more complex. When sending a transfer from a foreign bank account, it's important to note that these payments may not be credited by the Tax Office until 2-3 days later, or even later depending on the country. It's crucial to consider this to avoid inadvertently sending the transfer too late.

Retirement and pension system

The retirement age in Poland is presently 60 for women and 65 for men. Both employers and employees contribute to government pensions, with a deduction of 9.47% from the employee's monthly salary specifically for this purpose. Furthermore, employers are required to offer their employees either PPE or PPK as pension program options. There is an annual limit on the amount of pension contributions, and the combined contributions from both the employee and the employer cannot surpass PLN 133,290.

Eligibility criteria and entitlements for disability pension

Disability pension is provided to individuals who are no longer capable of working due to medical reasons. To be eligible for this benefit, individuals must have worked for a minimum of 5 years before their inability to work arose, should not be eligible for an old-age pension from the Social Insurance Fund or meet the criteria for its eligibility. Furthermore, the disability should have occurred within 18 months after the end of their contribution or non-contribution period as defined by the Pensions Act.

Healthcare coverage

In Poland, all citizens have the right to access healthcare services, whether on a permanent or temporary basis. The organization responsible for delivering healthcare is known as the National Health Fund (NFZ). The mandatory health insurance contribution amounts to 9% of an employee's salary. According to Polish law, it is permissible to deduct the health insurance premium from an employee's tax, but only up to a maximum of 7.75%. A growing trend observed among employers is to offer additional health insurance to their employees. This usually comes in the form of a contract with a specific medical facility or as a monthly health benefit provided to the employee.

Additional contributions

Apart from the previously mentioned instances, there are further obligations that need to be fulfilled and submitted to the appropriate state authorities. The employer is responsible for making a mandatory contribution to the Labor Fund, which amounts to 2.45% of the employee's gross monthly salary. Additionally, a contribution of 0.1% must be made to the Guaranteed Benefits Fund. These contributions serve the Social Insurance Institution and are linked to unemployment benefits. Another aspect worth considering is the aforementioned supplementary health insurance. While not obligatory, it has increasingly become the norm, especially for managerial and directorial positions in major cities. Regarding taxation, it is crucial to note that additional medical insurance is considered taxable income as per the law. Therefore, taxes and social security contributions must be paid on it. The tax system in Poland is intricate and can lead to significant complications. Given the ease of making errors, it is advisable to avoid risks and utilize the services of an Employer of Record in Poland. Engaging a Polish Employer of Record guarantees timely and accurate payment of all contributions.

Terminating the employment contract

If both the employer and the employee reach an agreement, it is possible to end the employment contract without any penalties for either party involved. However, terminating an indefinite contract is a bit more complex compared to a commission or work contract. In such cases, simply giving notice is not sufficient; specific reasons must also be provided by the employee or employer for terminating the employment relationship. It's important to note that if the reasons provided are questionable, the other party has the right to challenge them in a labor court to verify their validity.

When it comes to short-term or fixed-term contracts, there is no requirement for specifying the reason or justification for terminating the employment contract. However, employers must adhere to certain regulations outlined by Polish law when serving an employee with a notice of termination. A notice of termination cannot be given to an employee under the following circumstances:
- The employee will be eligible for retirement within four years from the scheduled termination date.
- The employee is on leave due to maternity, paternity, parental, or other types of leave.
- The employee has been appointed to the works council.
- The employee is protected from termination by a union organization or holds a union officer position.
- The employee is incapacitated due to illness (although this rule may not apply if the employee is on extended sick leave). If an employee believes that their employer has unlawfully terminated their existing employment contract, they have 21 days to file a lawsuit against the employer. The only legitimate method for an employer to terminate an employee is through providing notice. Any other practice, such as compensating the employee in lieu of notice, is not allowed. Employees who have been terminated but still have unused vacation days are entitled to receive compensation for those days. Alternatively, the employer can request the employee to utilize their remaining vacation days during the notice period.

Another right that a terminated employee possesses is the right to receive severance pay. The amount of severance pay varies based on the employee's length of service with the company. The maximum amount of severance pay is typically calculated as the average earnings of employees for a specific period, primarily for those who have worked at the company for a minimum of eight years. Additionally, severance pay should not exceed 15 times the national minimum wage.

Notice period

The length of time required to terminate an employment contract varies depending on the type of contract the employee is working under. For short-term contracts, which are valid for up to 3 months, the notice period is the shortest. If the duration of employment is less than 2 weeks, the notice period is 3 days. For employment exceeding 2 weeks but less than 3 months, the notice period is 1 week. However, if the employment extends to 3 months, the notice period should be 2 weeks. On the other hand, indefinite and fixed-term contracts follow a different set of rules. Employees with less than 6 months of employment are subject to a 2-week notice period. Those employed for at least 6 months have a notice period of one month. Finally, employees who have worked for the company for at least 3 years are entitled to the longest notice period of 3 months. Some exceptions exist where an employment contract can be terminated without notice. These exceptions include situations where the employee:
I. is absent from work continuously for 272 days,
II. seriously breaches their employment duties,
III. loses the necessary license required to perform their duties,
IV. commits a serious crime that makes further employment impossible,
V. refuses to accept a reasonable and prudent change in salary or employment as determined by the employer. If an employee intends to give notice, it is advisable to do so well in advance. However, there are exceptions to this rule as well. If there is a valid reason that fully justifies the employee's abrupt resignation, disregarding the notice period is permissible. For instance, if the employee is compelled to work in hazardous conditions. Similarly, the employer has the right to reduce the 3-month notice period in cases of company bankruptcy or liquidation. Nonetheless, the notice period cannot be reduced by more than one month. In such circumstances, the employee is entitled to compensation, the amount of which is based on their salary. The matter of the notice period can sometimes be subject to debate. As long as both parties separate amicably, the issue is unlikely to arise. However, if there is a need to terminate an employee immediately without observing the notice period, potential problems and formalities can be avoided by delegating these responsibilities to a reliable Employer of Record (EOR) in Poland. An EOR service provider in Poland will ensure compliance with relevant Polish laws and promptly resolve the matter.

Ensuring data protection

While employers have the legal right to process personal information of both employees and job applicants, it is crucial to comply with applicable data protection laws. To ensure the proper and secure handling of personal data, it is necessary to establish internal regulations and procedures to safeguard it. These internal regulations should include a management manual for the computer system used to process personal data and a security policy. For detailed information on safeguarding personal data, you can refer to the Personal Data Protection Act. Employers are permitted to request personal information such as name, surname, parents' names, date of birth, home address, educational background, and employment history from employees or job applicants. Additionally, if requested, employees may need to provide their children's names, dates of birth, and PESEL numbers. Protecting personal data effectively can sometimes present a significant challenge. To reassure employees that their sensitive information will not be misused or accessed by unauthorized parties, it is essential to implement adequate safeguards. However, not every company, especially startups, may have the necessary resources to accomplish this. In such cases, engaging the services of an experienced Polish Employer of Record could be a viable solution. They will possess the knowledge and tools required to protect employee data adequately.

Ownership of intellectual property in employment

Employees often wonder about the rightful ownership of intellectual property they create while carrying out their professional responsibilities. According to Polish law, the answer to this question is clear-cut. The employer holds complete ownership over intellectual property, including trademarks, inventions, and copyrights, along with all associated rights. The circumstances under which the intellectual property was created, such as during employment or in collaboration with others, are irrelevant. However, the employer's entitlement to the intellectual property is limited to instances where it was created as part of the employee's duties. These regulations do not extend to the moral rights of the author, which always remain with the creator, regardless of the situation. Interestingly, if an employer collaborates with an employee to create an invention that falls outside the employee's professional obligations, the employer retains a limited right to use it. However, this exception does not apply to works or trademarks.

The advantages and considerations of remote work

Remote work refers to a situation where an employer hires an employee who can carry out their job duties from a remote location. This arrangement offers several advantages, such as the flexibility for the employee to choose their working hours and even relocate to a different country. One major convenience of remote work is the elimination of daily commutes to a designated office or location. Instead, the employee can select the most suitable place, such as their home or a rented office, to perform their professional responsibilities. Remote work is gaining popularity, and many job seekers are specifically interested in this mode of employment. Consequently, it is important for employers to consider offering remote work options if feasible.

From the employer's perspective, remote work also offers significant benefits. When hiring an employee from another country for remote work, there is often no need to go through the process of obtaining residence or work permits, or legalizing the employee's immigration status. This saves a considerable amount of time, as the usual procedures for legally hiring a foreign employee can take several weeks to months. In urgent situations requiring the employee's presence at the company's headquarters, obtaining a short-term visa is generally sufficient for a brief business trip. Many countries, including Poland, do not require a foreign employer hiring an employee to have a presence or register as a personal income tax payer in the employee's home country or current country of residence. Additionally, there is no obligation to deduct and pay social security contributions from the employee's salary. Nevertheless, there are still specific regulations that must be followed when hiring remote workers. These regulations primarily pertain to the country in which the employee is performing their professional duties, as it determines the applicable employment contract laws. The Rome I Regulation (Regulation (EC) No. 593/2008) addresses this issue, allowing the parties to an employment contract to choose the applicable law but ensuring that the employee's rights are not compromised. For example, even if the parties choose the law of the country where the employer is based, they are still required to adhere to the laws of the country where the employee works. It is essential to be familiar with the relevant regulations, including the Polish Labor Code, when employing Polish workers, among other things.

In Polish law, the remote work model is categorized as "telework". If an employer decides to hire an employee who will work remotely, they assume additional responsibilities related to contractual agreements and occupational health and safety. Furthermore, if an employee residing in a different country than the employer's registered office wishes to file a dispute, Polish law allows them to bring the case to Poland. The Code of Civil Procedure, specifically Article 1103 4 §1, addresses this matter in detail. Employer of Record (EOR) services offer an appealing alternative to temporary work or direct employment for remote work arrangements. These services are increasingly popular in Poland, providing employers with a wide range of highly qualified entities to collaborate with. Employer of Record is a well-regarded solution globally, particularly in the US and the UK. It is commonly used to facilitate remote work opportunities and mitigate risks associated with hiring foreign remote workers. According to current Polish law, the Polish Employer of Record assumes complete responsibility for the hired employee, thereby ensuring the completion of all necessary legal formalities related to their employment.

Protection against discrimination and harassment

Employees enjoy safeguards against discrimination and harassment in the workplace, as mandated by the Labor Code. In Poland, the law distinguishes between direct and indirect forms of discrimination, which can be based on factors such as gender, age, political opinion, religion and belief, sexual orientation, disability, nationality, ethnic origin, trade union membership, and employment type. It is obligatory for employers in Poland to treat all employees with fairness and equality. This encompasses various aspects, including employment terms and conditions (such as compensation and other benefits), hiring and termination, access to training for professional development, salary increases, and promotions. In the event that an employee encounters discrimination or harassment despite these regulations, they have the opportunity to seek compensation. The compensation amount must be at least equal to the minimum salary received by the employee for their professional responsibilities. If such an incident is reported to the authorities, it is in the employer's best interest to provide evidence demonstrating the absence of any discrimination, harassment, or alleged incidents.

Pros and cons of temporary and agency workers

Engaging workers, particularly foreign workers, through an employment agency initially appears to be a favorable choice. This approach resolves the challenges of obtaining work permits for foreign individuals in a specific country and alleviates the employer's burden of complying with numerous formalities and obligations dictated by Polish labor laws. By entrusting the entire employment process to the agency, most tasks that would typically be handled directly by the employer are assumed by the agency. However, certain responsibilities cannot be entirely transferred to the employment agency. The employer remains responsible for ensuring the health and safety of employees during their work and meeting the requirements for providing annual leave. According to current Polish legislation, agency and temporary workers are entitled to most of the same rights and benefits as permanent employees, with the exception being their inability to secure indefinite employment contracts. Unfortunately, temporary workers are not protected from termination in the event of a female employee becoming pregnant. The law specifies that the maximum duration of employment for a temporary worker is 18 months within a 36-month period, regardless of the number of employment agencies involved. Hiring temporary and agency workers can be a suitable solution for short-term staffing needs, but it presents several drawbacks when compared to permanent employees. Employers utilizing temporary labor through an employment agency must ensure they have adequate intellectual property protection. Developing a thorough contract that clearly defines the transfer of all intellectual value created by temporary workers to the employer is crucial. Recognizing the complexities associated with temporary work, employers are exploring alternatives. Outsourcing is one option being considered; however, it carries significant risks when hiring individuals from other countries. Currently, the most advantageous solution is engaging employees through a Polish Employer of Record (EOR). With an EOR service provider, employers can hire both temporary workers and establish permanent relationships without having to worry about any hiring formalities, as the service provider handles all such matters. This allows employers to focus on managing their employees and fulfilling their labor obligations. The Polish Employer of Record not only offers hiring flexibility but also provides employers with a considerable degree of freedom in their actions. This approach saves time and minimizes the risks of errors often associated with hiring foreign workers.

Differences between hiring permanent employees and working with independent contractors

There are significant differences between hiring permanent employees and working with independent contractors. The main distinction lies in the protection provided to employees under the Labor Code. The Labor Code covers important aspects of employment, such as the rights and obligations of both parties, occupational health and safety, working hours, wages, vacations, notice periods, and termination. On the other hand, independent contractors are not subject to the same laws as employees, and their rights and obligations are primarily defined in the Polish Civil Code. Employers have more flexibility in determining the terms of the contract with contractors and the specific provisions that will apply during their collaboration. When hiring an employee, employers have certain obligations, including providing accident insurance and managing employee funds. Employers are also responsible for any mistakes or damages caused by employees while performing their duties, which is regulated by the Labor Code. However, when working with independent contractors, the contractor bears full legal and financial responsibility for any mistakes or damages, unless the contract states otherwise. Independent contractors are not covered by labor funds or accident insurance.

Employing permanent staff also involves paying various benefits, with taxation and details depending on the employee's classification and contract type. Employers are responsible for correctly calculating and paying income tax and contributions to the Social Security Administration (ZUS) on behalf of employees. This entitles employees to benefits such as health insurance, sick pay, retirement plans, pension, the Guaranteed Employee Benefits Fund, and the Labor Fund. In contrast, when working with contractors, the employer is relieved of these obligations as the contractor is responsible for their own income tax and mandatory social insurance payments, including health, pension, and disability insurance. It should be noted that sickness insurance is voluntary for service providers, but accident insurance is mandatory.

Most information regarding employee benefits can be found in the Labor Code and other laws. Additional entitlements may arise from internal sources of labor law, such as collective bargaining agreements, labor and wage regulations, and the employment contract. Independent contractors do not enjoy the same rights as permanent employees in these areas. Unfortunately, labor law provisions do not extend to contractors, meaning they are not covered by regulations regarding permissible overtime, working time standards, maternity leave, annual leave, and work on Sundays and holidays.

Working with an independent contractor may appear advantageous, but this is not always the case in practice. When collaborating with a contractor, there is generally less control over their work progress and ensuring satisfactory results compared to a hired employee. However, many companies choose to outsource certain tasks to independent contractors to avoid hiring employees in foreign countries where they have no presence. In Poland, this is not necessarily a requirement, as there are numerous highly qualified Polish Employer of Record entities available, enabling the hiring of Polish employees without establishing a Polish entity. This approach not only saves money but also offers a more beneficial solution for companies compared to hiring independent contractors.

Setting up a business entity in Poland

Some international companies are contemplating whether it is worthwhile to establish a new business entity in Poland. While it is a favorable decision if Poland aligns with the company's long-term strategy, it is not obligatory to hire Polish staff. Prior to finalizing the choice of registering a business in Poland, it is crucial to become acquainted with all the procedures and requirements involved. Establishing a company in Poland is not a straightforward task and can be quite time-consuming, which may discourage numerous foreign investors. Nevertheless, for those determined to proceed, several potential business structures are available in Poland: 1. Limited liability company (LLC): This is the most commonly chosen business structure by foreign companies establishing a new business entity in Poland. An LLC must have at least one shareholder.
2. General partnership: This is a suitable option for relatively small companies. A minimum of two partners is required to establish a general partnership, and there are no specific capital requirements. It is important to note that both partners are legally responsible for all liabilities, and their personal assets are not safeguarded in case of company debt.
3. Limited joint-stock partnership: Establishing a limited joint-stock partnership necessitates a minimum share capital of PLN 50,000, which restricts its viability for most small businesses. This type of company requires an active partner (auditor) as well as a passive partner.
4. Joint stock company: The joint stock company is the preferred business form chosen by large multinational corporations and organizations. Establishing a joint-stock company requires a minimum share capital of PLN 100,000. Furthermore, a joint-stock company can be listed on the Stock Exchange.

Limited Liability Company

The limited liability company is the most popular option for foreign investors, so it's worth examining it more closely. Before proceeding with the establishment of a limited liability company, it's recommended to familiarize yourself with subsidiary compatibility and the tax structure. To register a Polish limited liability company, the following documents need to be prepared:
- Articles of association
- The articles of association translated into Polish, which must be done by a certified translator
- REGON number and tax identification number Additionally, a minimum capital contribution of PLN 5,000 should be prepared, which can be paid in cash or through a wire transfer before registering the company. Later, VAT registration is also required. Regarding management, at least one person is necessary on the board for a limited liability company. However, if the company's capital exceeds PLN 500,000 and there are more than 25 shareholders, a supervisory board of at least three people is required.

As you can see, establishing a company in Poland can be quite complex and may take several months, particularly for foreign investors who wish to enter the market promptly and start employing Polish workers. Fortunately, the Polish Employer of Record (EOR) offers an alternative. By utilizing the services of an EOR entity in Poland, you can immediately proceed with your business expansion plans without dealing with extensive formalities. Working with an EOR in Poland provides a significant advantage over establishing a new business entity, as it reduces the client company's liability and mitigates the risk of legal complications in the event of an unintentional mistake. EOR services are increasingly popular among foreign investors seeking to expand their business in Poland and are held in high regard.

Limitations on managers and directors

In Poland, there are no prescribed age restrictions for individuals serving as directors or managers of a company. However, Polish law prohibits the employment of individuals below the age of 16, which applies to all positions within the labor market, including senior roles. If an employer wishes to hire someone between the ages of 16 and 18, they must fulfill specific requirements outlined by the law for the employment of minors. Furthermore, Polish law does not impose any restrictions based on nationality for managers or directors of a company. The citizenship of a person in a managerial position, whether Polish or of another nationality, is inconsequential. However, individuals aspiring for director or managerial positions, irrespective of their citizenship, are subject to the same regulations as foreign employees applying for regular positions. This means that obtaining a work permit is still mandatory for legal employment in Poland under a Polish employer. Citizens of the European Union and certain other countries (Switzerland, Norway, Ireland, and Liechtenstein) are exempt from this requirement and can work freely in Poland. Generally, Polish law permits a foreigner without a work permit to serve on the board of directors, provided they stay in Poland for less than six months within a consecutive 12-month period. If a director or manager needs to stay in the country for a longer duration, they must apply for a permit.

Challenges in expanding business operations to Poland

When considering the possibility of starting a new business venture in Poland, foreign investors must take into account several important factors. Firstly, they need to assess the legality and profitability of conducting a specific type of business in Poland. Secondly, it is recommended to determine the ideal location for establishing the company, considering that prices for services and products may vary across different regions in Poland. Furthermore, investors must familiarize themselves with the regulations governing their particular business activities in Poland. Additionally, a thorough understanding of the relevant industry and business factors is crucial. It's important to note that Poland has a highly stringent labor code, which has proven challenging for many foreign companies operating there. These complexities can easily confuse individuals with no prior experience in the Polish market. The decision to establish a new business entity should be taken seriously, and if there are any doubts, it can be postponed until clarity is achieved. To temporarily hire Polish employees, one can utilize the services of an Employer of Record (EOR) in Poland. This provides the company with operational flexibility. The Polish EOR service provider also enables permanent employment contracts, allowing for long-term commitments.

Advantages of collaborating with a polish Employer of record

Avoiding entity registration hassle

The primary reason why foreign companies opt for the services of a Polish Employer of Record (EOR) is the convenience it offers in bypassing the requirement of registering a new entity in Poland. Even if establishing a new business in the country is part of the foreign investor's plans, the registration process can be highly time-consuming, often lasting for several months. Such delays can significantly impact the company's broader global expansion strategies. Furthermore, creating a new business entity in Poland can be financially demanding, necessitating substantial resources upfront, which may not be feasible for small or startup enterprises. By collaborating with an Employer of Record in Poland, businesses can commence operations in the Polish market promptly and hire Polish employees without the need for establishing a new business.

Delegating responsibilities

Merely establishing a fresh business organization in Poland is only the surface-level aspect of handling various formalities. Even if an overseas investor initially approaches the notion of expanding into a new market with optimism and hope, their enthusiasm can rapidly fade due to a highly frustrating bureaucracy that is not only burdensome but also time-consuming. A solution to avoid this issue is to assign these tasks to another entity. This service provider should not only be reliable, meticulously handle the formalities, and possess a thorough understanding of the local market's realities but also have ample experience. In this regard, it is beneficial to rely on the Polish Employer of Record, which excels at relieving us of these responsibilities like no other.

Ensuring adherence to relevant laws

Compliance with the laws applicable in Poland is of utmost importance. There are specific regulations that employers must strictly follow when employing Polish workers. It doesn't matter if the employer is of Polish origin or a foreign investor; they are obligated to provide suitable working conditions for Polish employees. Failing to do so can result in severe consequences for the entire company. The primary legal framework governing the relationship between employees and employers is the Labor Code. It is advisable to familiarize oneself with this code and ensure that planned actions align with its provisions before entering the Polish market. If an employer is uncertain about the conditions under which employees can work in Poland, the Labor Code should be consulted. Polish law undergoes regular modifications, introducing new regulations and repealing old ones. Consequently, it is essential to stay vigilant and keep track of these changes. However, navigating Polish law and understanding the introduced modifications can be challenging due to its complexity. Nonetheless, employers are still responsible for complying with current regulations. To mitigate the risk of noncompliance, it is recommended to seek assistance from an Employer of Record. The Polish EOR entity is responsible for staying up to date with any regulatory changes in Polish law and can help address concerns related to legal compliance. Engaging with an Employer of Record in Poland ensures meticulous monitoring of your company's activities for adherence to regulations.

Conserving resources

Establishing a new business entity in a different country, such as Poland, involves not only a challenging registration process and the need to understand complex local laws, but also requires a substantial investment of resources. Not all companies can afford to start a new business if they lack sufficient time or money. The registration process itself entails significant upfront costs, such as share capital, and ongoing expenses must also be considered. Insufficient resources pose a major obstacle that prevents many companies from expanding and tapping into new markets, despite the potential success of their products or services. Previously, overcoming this obstacle was nearly impossible, but today we have several alternatives, including Employer of Record (EOR) services. Collaborating with an EOR in Poland is a great way to save money when entering the Polish market. This opportunity is open to both small startups and large corporations, without any restrictions.

Taking swift measures

Assuming a foreign investor still wishes to establish a company in Poland and possesses the financial resources and knowledge of Polish legislation to do so, it is important to acknowledge that the process of company formation can often be quite lengthy. Under favorable circumstances, provided all the required documents are accurate, the entire procedure can take several months. Nevertheless, numerous situations arise where even the smallest error can lead to significant delays. Unfortunately, there is no method to expedite the process. Dealing with this challenge necessitates a great deal of patience, which may not always be feasible if the company intends to act swiftly and expand rapidly. Some entrepreneurs address this issue by initiating the registration process for their entity in Poland while concurrently commencing their operations in the Polish market through the temporary utilization of a Polish Employer of Record. This approach allows them to initiate the execution of their business strategy almost immediately, alleviating concerns about potential delays.

Emphasize business growth

When it comes to managing a company, entrepreneurs often find themselves lacking the time to dedicate to its development due to the day-to-day tasks. This is a common experience for business owners worldwide, and foreign investors entering the Polish market are frequently taken aback by the extensive paperwork that must be handled regularly. Consequently, the focus on developing the company's strategy is compromised, resulting in falling behind competitors. However, opting for the services of an Employer of Record (EOR) can effectively mitigate this issue. By officially employing the staff in Poland, the Polish EOR assumes all associated responsibilities and manages the necessary formalities. This includes tasks like drafting employment contracts, securing visas and work permits, administering social benefits contributions, handling payroll, filing tax returns, completing social security documents, processing income reports, and more. Such invaluable assistance streamlines business operations and frees up substantial time for focusing on core matters and day-to-day business activities.

Streamlining payroll management

Payroll management is an arduous and time-consuming task that comes with owning a business. It involves handling various aspects such as salary structures, employee working hours, overtime, and vacation days. It requires careful attention to detail and a deep understanding of the process to avoid errors that could lead to employee dissatisfaction or even resignation. Additionally, keeping up with frequent changes in Polish law adds complexity, demanding constant adjustments to ensure compliance. Employers in Poland often rely on Polish Employer of Record services to handle payroll management efficiently. These services utilize advanced tools to streamline the process, ensuring fast and accurate payment of employees in any currency.

Minimizing risks

When venturing into foreign markets, some companies opt to engage independent contractors rather than hiring employees. This choice is typically motivated by the desire to avoid establishing a new business entity in another country and undergoing the entire process of company setup. As mentioned earlier, collaborating with independent contractors entails certain risks. Alongside the aforementioned reasons, it is crucial to acknowledge that sustained collaboration with an independent contractor exposes a company to the risk of misclassification. Many countries' government authorities are particularly averse to situations where companies engage independent contractors instead of hiring employees. Such instances are often viewed as attempts to evade applicable laws and evade paying the necessary contributions for mandated benefits. Poland, for instance, treats this matter similarly. Companies found to practice this approach frequently face substantial financial penalties and endure prolonged scrutiny from regulatory bodies. To avoid this situation, partnering with a Polish Employer of Record can ensure full compliance with legal employment requirements and grant access to all entitlements.

Understanding the market

Entrepreneurs, especially those lacking prior experience in the Polish market, should consider collaborating with an Employer of Record (EOR) in Poland. Without even a basic understanding, it can be exceedingly challenging to make informed decisions that lead to the maximum benefit and success for the company. While it is possible to gradually acquire this knowledge while working on the business, having such expertise from the outset proves more advantageous and allows the company to generate higher profits and attract more customers. The EOR service provider in Poland is well-informed about the prevailing realities for entrepreneurs in the country, enabling them to offer optimal solutions for every situation.

Comparison of EOR and PEO

Many people mistakenly believe that EOR and PEO are essentially the same, but this is far from accurate. While there may be some similarities in the responsibilities and functions of these two services, they operate based on entirely different principles. The most crucial distinction between an EOR and a PEO lies in the fact that, in practice, a PEO acts as an associate of the client company, whereas an EOR serves as the legal employer for employees hired by the client company. Consequently, if one wishes to hire Polish employees using PEO services, establishing a new business entity is still required. On the other hand, by working with an EOR service provider, the EOR assumes the role of the legal employer for the desired job candidates, enabling expansion into the Polish market without the need to register a business. Both EOR and PEO services substantially alleviate the burdens on the client company, taking over various routine tasks and paperwork. However, a significant distinction exists in this regard as well. While an EOR is capable of independently handling most tasks without extensive consultation with the client company, a PEO must maintain constant communication with the contracting entity, as their presence and involvement are vital even for minor decisions. In practice, this means that although a client company delegates its tasks to a PEO, the time saved is minimal due to the necessity of regular and almost daily communication. Conversely, an EOR operates independently, allowing the client company to focus its free time on more important matters. Furthermore, differences are also evident in the contracts signed. When entering into a contract with a PEO, the agreement is between the original company and the employee, whereas an EOR contract involves the employee and the EOR as the two contracting parties.

Conclusion

Undoubtedly, in order to effectively expand businesses and establish a remote team that aligns with modern expectations and the needs of potential clients, it is imperative to thoroughly acquaint oneself with the relevant local laws and the process of hiring employees. This holds true for Poland as well. Prior to introducing services or products to the Polish market, foreign investors must possess a comprehensive understanding of the Polish Labor Code. Polish legislation is highly intricate and complex, rendering independent attempts to comprehend the applicable regulations futile and causing significant delays in the expansion process. Instead of wasting time struggling to grasp confusing provisions, it is more prudent to seek assistance from an entity that possesses the necessary expertise and invaluable experience. The Polish Employer of Record (EOR) diligently ensures that all business operations conducted within the client's company are in compliance with current laws, minimizing the risk of errors in this regard. Opting for the support of an EOR in Poland is one of the wisest decisions an entrepreneur can make for their company, saving both time and money. Employing Polish workers through an EOR entity is remarkably straightforward and relieves the company of mundane tasks. Collaborating with an Employer of Record offers exceptional convenience, as attested by numerous businesses utilizing these services not only in Poland but also worldwide.