Episode 16: Payroll in Poland

Luisa Rollenhagen [00:07]:

Hello, and welcome to another episode of Payroll Around the World! I’m your host Luisa Rollenhagen. 

This audio series is your in-depth guide to exploring the intricacies of global payroll. Each episode spotlights a specific country and features interviews with ADP experts on the ground, as well as locals who share their perspectives on work and pay in their homeland. 

After all, payroll can’t truly be global if it isn’t local as well. 

Today, we’re going to Poland. The country is one of Europe’s fastest-growing economies and a regional powerhouse in sectors like manufacturing and shared services. Poland has made a name for itself on the global market thanks to a highly educated workforce and high foreign direct investment. After joining the European Union in 2004, Poland embarked on a new era of expansion, with access to EU funds supporting its growth and development.  

Josef Kozler [01:13]: 

Poland is a European tiger in the economy. Poland is a country which is growing very fast. 

Luisa Rollenhagen [01:18]: But for companies expanding into Poland, payroll is anything but straightforward. Any administrative processes in Poland—including payroll—are in a constant tug-of-war between modern, digital-forward methods and traditional bureaucracy. Poland’s labor code, a tapestry of communist-era laws reshaped by current EU legislation, can often be difficult to decipher for multinationals coming from abroad.  

A reflection of this is the propensity to still keep many HR documents in paper form, as well as the strict regulations around storing them.  

Tomasz Czerkies [01:54]: 

All of the documents should be stored in a paper form, it creates really, really a complex regulation. And if I add, which could be surprising, that such personnel files should be archiving within 50 years after the end of, after the termination of the employment. So it can be a kind of huge expectations from that point of view. 

Luisa Rollenhagen [02:20]: Adding to this complexity is the fact that digitization processes need to comply with specific formatting requirements. While many HR and payroll systems are fully digital in other countries, Poland still deals with hybrid models—some files digital, some still on paper. 

Jarek [02:38]: 

We use a lot of paper still. Of course we need to use it as the court’s proceedings oblige us. But I also have the feeling that we are using too much paper in our internal procedures, in our internal processes and this is the thing that I need to change. 

Luisa Rollenhagen [02:57]: To help us make sense of the Polish payroll landscape and find out what exactly multinationals need to know in order to harness the potential of this European economy, we’re joined today by ADP experts Josef and Tomasz.  

Hi Josef and Tomasz, welcome! 

Josef Kozler [03:13]: 

So my name is Josef Kozler. I’m senior operational director by ADP Poland. In this role I am since 2019. By ADP I’m already since 2008 in different roles. And my responsibility area is payroll and HR for local and international Polish clients. 

Tomasz Czerkies [03:33]: 

My name is Tomasz Czerkies. I’m compliance manager in ADP since 2007. My responsibilities are concentrating on a labor law, tax law, social insurance law, or any other laws connected directly with the relation between employer and employees and preparing the proper service for our clients. 

Luisa Rollenhagen [03:54]: Thank you so much for joining us today. I’m looking forward to exploring Poland’s complexities in more detail. 

In order to get us started, I was wondering if you could give us an overview of Poland’s current economy and labor landscape? 

Josef Kozler [04:07]: 

Poland is a European tiger in the economy. Poland is country which is growing very fast. Poland is country where is lot of opportunities for companies from abroad and from the internal ones as well. Poland, this country which has very skilled workforce but it brings some negative aspects as well. Very high salary grow in last year’s very low unemployment, which means war for talent in the labor market and that’s very important to know in the advance if you are coming to Poland, there will be really fight to get the good people for good money and especially in big cities in some cities where are share service centers. This war for talent is very visible. 

Tomasz Czerkies [04:54]: 

Additionally, I would like to stress that Poland is the part of European Union, therefore all of the legislation which is binding in European Union is also binding in Poland. Therefore for example, with kind of international companies would like to start doing business in Poland, the legislation, especially in the relation between employer and employees, will be more or less the same, especially when we are thinking about the most important pillars. So it’ll be exactly the same legislation that you have and you can expect in Germany and Czech Republic, in France. So in my opinion this is really a good advantage for considering starting a business in Poland. 

Luisa Rollenhagen [05:38]: That’s a good point. So given that Poland is part of the EU, what sets its payroll apart from that of other member states? 

Josef Kozler [05:46]: 

So Polish payroll is very difficult one, I think it is the most difficult payroll in Europe. I think the more complex is only France and Germany, and what will surprise somebody from abroad to coming to Poland will be a lot of paper and lot of paper documents because in Poland, it’s a part of the payroll. A large part of the payroll is a service called personnel administration. So there are the processes which are connected with documents and contracts and in Poland historically this all is working in paper form and that will be surprise for a lot of people from abroad to see that and maybe Tomasz can say a little bit more details to that. 

Tomasz Czerkies [06:27]: 

Yeah, thank you Josef. Firstly, our payroll calculations are really complex with a lot of rules and such rules are changeable in the time. And the most important things when we are thinking about payroll calculation is retro-calculation. So we have a lot of situations where we need to calculate again payroll in the past. And this part of the payroll is really complex with very complex rules, not predictable and obtaining some obstacles. 

Also a very important part of relation between employer and employee is personnel administration. And the personnel administration is the complex and the group of the rules which creates the relation in the documentation form.  

So from the beginning it’ll be the employment agreement, a medical certificate and other documentation which should be created within the cooperation between employer and employees. And moreover, such documentation should be stored in a proper form, in one file divided into five parts chronologically, divided. And moreover, with the index of all of the documents. If we add that till now all of the documents should be stored in a paper form, it creates really, really a complex regulation. And if I add, which could be surprising that such personal files should be archived within 50 years after the termination of the employment. So it can be a kind of huge expectation from that point of view. 

Additionally, our labor law inspectorate is rather restrictive as well as our tax office, as well as our social insurance institution. And from this perspective, I would like to stress that for example, the maximum fines for breaching labor law is 45,000 zlotys. So more than 10,000 euros, more or less. And because in ADP Poland we have each month more than 200,000 pay slips. So I can say that our systems as well as our systems for personnel administration are auditing each month by such labor law inspectorate. Luckily for us and due to also our excellent service, our systems, our service is without important gaps and therefore our clients are protected from such imposing penalties or fines. 

Luisa Rollenhagen [09:15]: We’ll dive into the personnel administration in just a minute, but could you explain why there are so many retroactive calculations that need to be made? 

Tomasz Czerkies [09:23] 

A lot of factors, the most often factor is that for example, the data sent to our systems by the clients is sent not in a proper time because for example, employees also send such data not in a proper time. And after that we have kind of the postponing, because we have a calendar for payroll and calculating the payroll and if some data will be sent after the cut off or after the cut date, then we need to retro-calculate that payroll. This is the first one. The second one, in some cases we have the situation, then there is some situation connected with employees. For example, the employee is under obligation to send a kind of certificate, that certificate wasn’t sent due to the kind of external circumstances. And finally after sending that data or documentation, we again need to retro-calculate the payroll and this creates some stories or some issues connected with that proper payroll calculation because finally, at the end of the year, all of the data should be put into a kind of the annual or yearly information and that information should be sent to tax office as well to the social insurance institution. 

And again all of the data should be in line with a payroll calculations which were performed during the last 12 months. And in some cases of course if that data was not sent in time, it triggers again a kind of retro-calculation or again a kind of double sending of that yearly declaration to the tax office or the social insurance institution. And to be honest, this is not so rare situation. So we rather each month perform a retro-calculation. So this is a kind of normal process for payroll for clients in Poland. 

This is not so easy because the legal framework is not properly fulfilled by provisions. So we have a lack of the proper provisions for such kinds of retro-calculations. Therefore using such retro-calculation we need to obtain some interpretations from tax offices or social insurance institutions. The negative effect of that interpretation is that firstly, that interpretation is not the source of the law. Secondly, such interpretations are changing in time. So what was for example updated five years ago, maybe it is not still up to date. So even after performing the retro-calculation, we need to concentrate on also legal grants for that retro-calculation and checking if, for example, there is maybe some new interpretations or maybe such new interpretations are in a contrary to the last one interpretations, and we need to decide which interpretation is more important. 

Josef Kozler [12:38] 

And what can be surprising from the people from abroad is Polish labor law, which is very connected with payroll and in Poland we have combination of labor law from the 70s with the new modern European labor law, and it brings on one hand very strict rules which are from the past and which are not negotiable and which must be held and there is no option to do it differently. And then there is some modern part of the labor law.  

And of course if somebody from West Europe is coming to Poland, they expect that the labor law will be very similar to Germany or to France or Spain. But in Poland they are coming to some very strict rules from the past which are not understable, which have some historical aspects and historical connections and it’s important to understand that and see the potential risk because the risk can be on cost side as well because for example in Poland there are some, beside the penalties there is a little bit different calculation of overtime.  

Luisa Rollenhagen [13:39]: Okay, so having someone who is able to not only know the law but interpret the law correctly is very important when running payroll in Poland. 

So what would your advice be to a multinational company who has to manage payroll processes in Poland? 

Josef Kozler [13:54] 

So my advice would be if they want run payroll in-house internally, they should have a good partner which is able to let’s say, to submit them the interpretation of the labor law or the changes in labor law because on their own they will be not able, or the better option is to outsource the payroll to external providers which has a very good connection to all these institutions and is able to get in proper way the proper interpretation, bring some guarantee that the interpretation is correct and take the risk. 

Poland is in this very difficult and little bit like a jungle, I would say. 

Tomasz Czerkies [14:39] 

I would like to also stress that such kind of a knowledge or people, advisors, should be really well experienced because if you are reading and going through the labor law and our code of the labor, which is, as Josef mentioned, from 1970s, it is not easy to use such rules in a practical way without knowing the context, the historical interpretations, the newest one interpretations because the whole picture for employment relationship is not only a labor law but moreover, which is also very important such kind of interpretations and court judgments as well. The best example of that in my opinion is time and attendance calculations. So this is really crazy how many interpretations and how such interpretations are not in line with each other, and calculation of time and attendance is really different from a calculation in a different country, despite even the fact that all of the rules are really in line with European Union legislation. 

So when we are thinking about the first pillar, so the first pillar is exactly the same as in the European Union, so we have the same provisions and so on and so on. But if we are going further, for example we have a strict period for time and attendance calculation and it is shorter than 12 months, and it couldn’t be automatically balanced if you have some over hours, and in the next month maybe you are free from the work, it is not so easy and it doesn’t work in exactly such a manner. And therefore of course I can describe in a few next hours, and probably I didn’t fulfill all of the topics connected with time and attendance, but I would like only to stress out a kind of, the example how many important things should be considered into account if you are think about performing payroll or start your business in Poland. Therefore in my opinion the first important fact is experience. 

Luisa Rollenhagen [17:01]: Absolutely. It sounds like this is a country where insider knowledge is really crucial. 

Let’s talk a bit about employer obligations around social security and tax contributions. What can you tell me about those? 

Tomasz Czerkies [17:13]: 

We have a separate calculation for social insurance contribution and separate calculation for tax contribution. But finally both of that calculation will be in the same line and creates net income despite the fact that at the beginning they are calculated completely separately. 

When we are thinking about tax obligations, when we are thinking about social insurance contribution, we have many contributions, pension contributions, disability contribution, accident contribution, sickness contribution, health contributions and some contribution for labor fund and so on. But more or less the general level of such contribution is 30% from gross income of employees. This is the main important rule when we are thinking about the calculation. Of course we have a lot of items, especially a client’s items, a lot of bonuses and each bonus could be calculated in a different way. When we are thinking about tax and social insurance, this is very important. Additionally, I would like to stress that we have a lot of exemptions from social insurance contributions as well as tax contributions.  

After the end of each year, each employer in Poland has the obligation to send a proper yearly declaration, PIT 4, to the tax office and PIT 11 to the tax office. Additionally, he’s under obligation to send PIT 11 to each employee. And of course on that picture we still need to think about a kind of a retro-calculation, because retro-calculation is an unstoppable process with a payroll. So if we have payroll, for 100% sure you will also have retro-calculations. 

Luisa Rollenhagen [19:13]: I just want to interject briefly to explain that PIT stands for personal income tax. Please, continue. 

Josef Kozler [19:20]: 

And maybe a small remark to the contributions, the social security contributions and so on. So the good message is that these contributions in Poland are low in comparison to other countries. The closest country to Poland is for example Czech Republic, and there the contributions are almost 15% higher than in Poland. So it means for people from outside, it’s not important only to check let’s say, the brutto salaries in the economy or the brutto salaries in Poland, but take into consideration the contributions as well. And from this perspective, at least in my opinion, here is Poland like a paradise because it’s really, really low and if you compare it with West European countries it’ll be even more visible that the cost connected with the payroll or with the employment are really very low. 

Luisa Rollenhagen [20:09]:  

So let’s talk about personnel administration in Poland, which was already mentioned earlier. Tomasz, you mentioned that a lot of important documentation pertaining to employees need to be stored by an employer for several years, and oftentimes in paper form. Can you explain this a bit more? 

Tomasz Czerkies [20:27]: 

So personnel administration is connected with our labor code from 1970 and still is in binding power. 

Personnel administration is very important for the retirement entitlements and social insurance institutions. So the first aim for storage of such personnel administration files for 50 years is some obligations towards the social insurance institution. Of course, such personnel administration files are updated by labor inspectorate. But the most important factor is that finally such personnel files are stored due to retirement age and some obligations connected with retirement age and some data which should be sent to social insurance institutions for proper calculating of your retirement. And the most disadvantage of the personnel files is the fact that it should be stored in a paper. Our legislators, a few years ago was considering and finally changing the law, that it was creating the platform for digitalization. 

In the last few years, there were some signals for digitalization of all of the personnel files and moreover, if you, for example, start a new relationship with employees, you can from the beginning start also a digital form of personnel files. And finally actually we have the situation that on the market, we have personnel files in still traditional documents form, paper form, and quite modern electronic form. Of course we also have the mechanisms for changing the form of paper into electronic and we also in ADP, we have a lot of products which are connected with that transfer and changing that paper into electronic. 

Josef Kozler [22:20]: 

Maybe if I can add one sentence here, this transformation, it’s a big cost factor because you can’t have the personnel files for one person in mixed form. You must decide if, for the person A, the form is electronic or paper. And you can imagine if you have a person which is employed with you for 20 years, you have hundreds of documents. 

And you must scan and digitize all these documents and index, and this index, which is given by Polish law, I think it is at least 12 fields, what you must put to each document. So it means scan each document, index each document, electronically sign each paper document, and after that you have the legal electronic form of the paper document. And it is big financial investment, because if some company will decide, okay, from now I would like to have all my historical paper documents in digital form and I want to be fully digital, firstly the company must invest to this scanning and indexation and it’s some kind of barrier, especially for the companies which have a long history in Polish market to do that because here we are simply discussing about hundred thousand or millions of złoty for this step. And of course as Tomasz said, ADP has a solution for that because we are experts, we know what is important for the clients and what are the important steps of this digitalization. We try to make it as easy as possible, as cheap as possible, but with full transparency, it’s a big invest. 

Luisa Rollenhagen [23:57]: So companies can’t mix formats within a single employee file. You either commit to paper or digitize everything—scanning, indexing, and archiving every single document with metadata fields defined by law.  

In this series, we also speak to local employees from all walks of life to get a better understanding of their perspective when it comes to payroll and HR matters. We wanted to know how this effort to digitize personnel files plays out in real life, so we spoke with Jarek, an office manager at a law firm in Warsaw, who’s leading the firm’s transition to a more digital system. 

Jarek [24:36]: 

My name is Jarek. I am an office manager in a Polish law firm. We are a typical litigation firm, so in Poland, especially due to the law, we are using a lot of paper and we provide services to most of the big clients from the finance sector.  

Luisa Rollenhagen [24:53]: Jarek was feeling dissatisfied with the amount of paper his company was using, and wanted to spearhead a transition to optimize administrative processes. 

Jarek [25:02]: 

We use a lot of paper still. Of course we need to use it as the court’s proceedings oblige us. But I also have the feeling that we are using too much paper in our internal procedures, in our internal processes and this is the thing that I need to change, and I’m changing it with our optimization team and in this time we are trying to provide and introduce to our firm a big change for it.  

A lot of people when I’m asking them, Do you really need to print it? They are saying, oh, because I’m used to it, I like the paper, I like to provide my notes to the paper. But for me it’s not so much effective, because if you provide some notes to the paper, you then need to provide them to the computer, to the electronic document before it will be printed even. So this is just wasting the resources. 

Most of the paper is used for the personnel files like work agreement or something like this. Most of the procedures, for example, for the vacations, holidays, working from home procedure, is 100% digitalized. 

Only when the people are leaving the firm, they usually want a signed paper with my signature that they left everything which was to be left in the firm. So they still like the piece of paper when we signed that they are free to go and we will be not chasing them for the computer building card or anything else.  

Luisa Rollenhagen [26:30]: For many employees in Jarek’s company, paper still holds a certain authority that is hard to disconnect from. But he and his team are working on a new workflow project which will be able to handle documents digitally—from onboarding to performance reviews. 

Jarek [26:46]: 

The whole project will be a game changer for our company. We are introducing to our firm the whole workflow and a place to store the electronic documents. Some of the documents are already going to the courts in an electronic way, but we have too much mess in our documents and our projects. 

So basically we will put all the documents in a digital way, we will provide the whole workflow process and we will try to eradicate the paper when it’s not needed. 

Luisa Rollenhagen [27:17]: The fact that some files are still on paper while others are digital created a lot of confusion and inefficiency for Jarek and for his company. 

Jarek [27:25]: 

I think on my perspective as an administrative manager, it’s a problem because you need two separate procedures, different for paper and different for digital. And for digital it’s usually quite easy because even if it’s made in a way that you are sending something via email, it is a part that you don’t need to change. If there’s a group which should have this email, it’s an easy way. In paper, it’s always a problem because in our case we receive lots of mail from the courts, from whole Poland. So those little documents, which are already digitalized, the whole procedure is digitalized. They are always a problem for the whole procedure because there is a totally different way for the court proceedings and for example, for our employees’ documents for example. So we are trying to manage, but it’s always something. 

Luisa Rollenhagen [28:16]: One issue is that paper documents can end up with the wrong person, thereby delaying tasks. Getting the document to the right person, even if it was initially sent incorrectly, is much easier if it’s digital and can just be attached to an email. Jarek’s project aims to correct these inefficiencies. 

Jarek [28:34]: 

That’s why we are trying to also provide the whole digital workflow for our firm. So there will be tasks which will be going to the accurate people, and even though there will be some mistake, because we are just people in the end, so there will be easier way to say ‘ah, hey, this is not mine, I sent it already…’ 

Luisa Rollenhagen [28:54]: For Jarek, the move from paper to digital is only a matter of time, but it was only after the COVID-19 pandemic that mindsets truly shifted in Poland—and elsewhere, it must be said. 

Jarek [29:07]: 

I think after the pandemic a lot of people in Poland changed their view regarding, generally in governments, in firms, in business, that a lot of things might be paperless. And it was a switch I think, because before the pandemic, we always thought that the paper is the paper. And even I remember the situations when I always ask for the hard copy of some document because I always thought that if I have a paper, I have the guarantee that for example the agreement is valid, I can also reach for the paper. Nowadays I do not and I think I’m not the only one. A lot of people are thinking like this. Even the government’s agencies are starting to change this. 

Luisa Rollenhagen [29:50]: I wanted to know how ADP is helping clients tackle the paper-to-digital journey, so I went back to Tomasz and Josef to find out more.  

Tomasz Czerkies [29:58]: 

In a lot of cases, for example, our clients in cooperation with us decide that firstly, they are starting with new employees in a digitalization form from the beginning. So from the beginning they are starting with digitalized personnel files and within next month, they will start with scanning and performing documents into electronic form for all of the other employees. And from our experiences, this is a really reasonable solution because clients therefore have a proper platform and have a proper knowledge and finally he or she will be more familiar with such kind of a digital solution. And after that, the barrier of entrance for digitalization of historical documents is really limited and lower. 

Josef Kozler [30:52]: 

And what’s important here, if they will start in one year with, let’s say with the new employees to be fully digital and maybe in the next three years they decide to digitalize the old one. So during these three years, maybe 20 or 30% of their population is changing because of natural turnover and they have not to digitalize from the paper 100% but only 70 or 60% of the original volumes. 

Luisa Rollenhagen [31:18]: I see, so as employees retire or move on, the volume of files that needs to be digitized decreases because new employees automatically receive digital files. That makes sense. 

Let’s talk about another issue that multinational companies have to deal with in Poland, namely the language barrier. What can you tell me about this? 

Josef Kozler [31:38]: 

It’s very easy. Polish is a must. In cooperation with authorities, without Polish, no option. Yeah, so firstly the majority of the documents are in Polish. The rules are in Polish. Only a few documents are bilingual, Polish and English. But the official language is Polish and that’s it. 

The second topic is language barriers inside your company. So the situation is improving in last years and especially by big cities, you see that a lot of people are using English in very natural form, but you can never expect that all your population in your company will fluently speak English.  

And what’s important, the people with English language skills are more expensive. You must pay some premium, especially in big cities like Warsaw. 

Tomasz Czerkies [32:24]: 

We even have in Poland a kind of the act, Polish Language Act, and due to the provisions of that act, all of the relation and contact with our government bodies and authorities should be performed in Polish language. So this is must. You cannot use for example English and asking social insurance institution for interpretations. It’s impossible. 

Luisa Rollenhagen [32:50]: Got it, so having someone who speaks Polish is essential if you want to do business in Poland.  

We’ve talked about the importance of being able to not only know the laws, but also interpret them. So how often do regulatory changes happen, and what do multinationals need to know in order to keep up? 

Tomasz Czerkies [33:08]: 

It is not predictable. So for example, we do not have a plan of next legal changes or the plan of legislation. And I suppose that exactly in all countries in European Union it is exactly the same. So the most important fact is politicians and therefore on the political grounds, political triggers, politicians trigger a kind of legislation and legislative changes. Only one exemption. European Union legislation, because if we have European Union legislation, such European Union legislation should be properly transferred into our Polish system. Excluding such European Union legislation, such kind of legal changes, especially in labor, tax or social insurance are not planned and therefore the most important role in my opinion and from the perspective also of our clients is to be informed on the very early stage of that legislation. Therefore we in ADP have a kind of monitoring of all the governmental websites as well as other channels of communication, because we are able to monitor and to check in. 

Luisa Rollenhagen [34:25]: So ADP has developed close relationships with tax and labor institutions to stay ahead of changes and help clients understand the legislative landscape in Poland. 

We’re nearing the end of the episode, but before we go, I’d like to ask you one of my favourite questions: What do you personally love about working in payroll in Poland? 

Josef Kozler [34:45]: 

So it’s an everyday change, everyday challenge and we make our clients happy, or the employees happy because if we deliver proper payroll in this very complex environment, it’s fun. So it’s a very challenging industry I would say, but it’s fun if you connect all dots together and if you produce the correct payroll, what better can happen? 

Tomasz Czerkies [35:09]: 

So for me the most important factor is a cooperation with our clients, of the meetings with our clients and concentrating on solving the client’s issue.  

We really have a complex view into the market from the perspective of labor law, tax law and social insurance law. I even have a personal experience that if I have a meeting with tax offices or social insurance offices, our knowledge about such cases and our prediction of possible effects of each solution is really incomparable to the even knowledge of such tax office or social insurance institution. And for me it’s really exciting. 

Luisa Rollenhagen [35:55]: Oh wow, so sometimes you even know more than the authorities themselves. 

Josef Kozler [35:59]: 

And maybe if I can say some final word to that. So we had a few weeks ago a big event in Poland and we invited one of our biggest clients to the event, let’s say, to share with our colleagues from other countries how this client is happy in Poland and how the cooperation looks like. And it’s one of the biggest clients, more than 20 years with ADP. And this client said: ADP never failed in these 20 years. And ADP never said no, we found for everything a solution together as partners. And I was really proud to hear that. So these two sentences I think, show all about our work with our clients and about our engagement in the payroll area.  

Luisa Rollenhagen [36:48]: That’s a wonderful thing to hear, especially from a client, and really reaffirms the value of the work you do.  

Josef and Tomasz, thank you so much for joining us today and sharing your expertise with us! It was really interesting to learn more about the contrasts in Poland’s laws and administrative processes, and to hear firsthand of the valuable work ADP does for its clients in Poland.  

I hope you got a bit more insight into the intricacies of payroll and the labor landscape in Poland today. If this episode has piqued your interest or your company is considering expanding into Poland, please visit pl.adp.com.

You’ve been listening to ADP Payroll around the World, produced by ADP and Storythings.