25.11.2023 line employer of record

Total cost of employment under an employment contract. Changes in salaries in 2024

In the coming year, the minimum wage amount for an employment contract will increase; see what else will change.

Total cost of employment under an employment contract.

Changes in polish salaries in 2024

Employment costs are a crucial aspect for both those who run businesses and those making decisions about their careers, i.e., employees. Issues related to employment costs are inherently linked to economics, labor law, and financial matters.

In this article, we aim to educate both employers and employees about key issues related to employment costs. We break down the total cost of employment under an employment contract in 2024 and ask whether it is still the most desirable form of employment in Poland?

Our article aims to unravel the mysteries surrounding employment costs, aiming to assist both employers seeking efficient financial management for their companies and employees desiring a better understanding of the expenses associated with their employment.

The primary expense that an employer must cover when hiring an employee under an employment contract is, of course, the individual’s salary. However, this is not the sole cost associated with this process. In the case of an employment contract, the employer’s cost contributing to the company’s income-generating expenses includes:

  • Gross salary,
  • ZUS (Social Insurance Institution) contributions funded by the employer,
  • Contributions to the Employee Capital Plans (PPK), also funded by the employer.

Gross Employee Salary

As mentioned before, the fundamental cost of the salary is the gross salary amount, which consists of:

Social contributions that the employee must pay. An individual employed under an employment contract is mandatory covered by social insurance and health insurance, and these contributions are deducted from the employee’s salary. Below are the detailed social insurance rates for 2024:

Type of insuranceContributions covered by the employee
Pensions9,76%
Annuity1,50%
Sickness2,45%
Health9%
  • Advance payment on income tax is calculated based on the tax scale and amounts to 12% or 32%. It’s worth adding that some employees may be eligible for tax exemptions, meaning their net income is higher because the employer is not obligated to remit that portion to the tax office.
  • If the employee chooses to participate in the Employee Capital Plans Program (PPK), the employer must also consider contributions for this purpose. Their amounts are as follows:
Type of paymentPayments covered by the Employee
Basic2%
Additional2%
  • Net salary is the amount that the employee ultimately receives after considering all deductions mentioned in points 1-3. It’s also worth noting that employers do not have the flexibility to determine the minimum employee salary. Regulations precisely define the salary that must be guaranteed to individuals employed under an employment contract.

In 2023, the minimum wage was:

  • from January to June 2023, it increased to 3,490.00 PLN,
  • from July to December, it was 3,600.00 PLN.

For part-time employees, the minimum wage is determined proportionally to the full-time equivalent.

Social Security Contributions funded by the employer

In addition to the contributions deducted from the employee’s salary, the total cost of employment also includes contributions funded by the employer. Here is a table presenting all mandatory contributions that the employer must remit to the Social Insurance Institution (ZUS):

Type of insuranceContributions covered by the Employer
Pension9,76%
Disability6,50%
Accident1,67%
Labor Fund2,45%
Guaranteed Employee Benefits Fund (FGŚP)0,1%

The comparison shows that the employer bears an additional burden exceeding 20% of the employee’s gross salary.

However, it’s worth noting that there are certain exceptions that exempt the employer from the obligation to pay contributions to the Labor Fund (FP) and the Guaranteed Employee Benefits Fund (FGŚP).

This applies, among others:

  • women who have reached 55 years of age and men who have reached 60 years of age,
  • individuals returning from maternity, parental, and childcare leave. Exemption from these fees is granted for 36 months from the first month after returning from such leave,
  • employees who have reached 50 years of age and were registered as unemployed at the county labor office (PUP) for 30 days before employment. In such a case, the exemption is granted for a period of 12 months from the first month after signing the employment contract,
  • employees directed to work by the PUP who have not reached 30 years of age. The exemption is granted for 12 months from the first month after the employment contract is signed.

Employee Capital Plans (PPK)

Individuals covered by pension and disability insurance, aged 18 to 55, are automatically enrolled in the Employee Capital Plans (PPK). It is worth noting that the employer has no control over when additional costs related to participation in this program will be incurred. Only employees who choose to opt out of participating in PPK will contribute to maintaining employment costs at an unchanged level.

Employees have the option to choose, by submitting a written resignation expressing a lack of interest in joining the savings program for future retirement known as the Employee Capital Plans (PPK).

It is important to note that the employer must be aware that contributions to PPK are funded both by the employee and the employer. The amount of these contributions from the employer is specified in the table below:

Type of contributionContributions covered by the Employer
Basic1,5%
Additional2,5%

Total Cost of Employment in 2024

The minimum wage in 2024 will double and amount to PLN 4,242.00 gross from January 1, 2024, and PLN 4,300.00 gross from July 1, 2024. As a result, an increase in the minimum costs of employing a worker on an employment contract can be expected. If a company employs a full-time employee, the total cost of employment in 2024 will be as presented in the table below:

RateThe minimum wage from January to June 2024.The minimum wage from July to December 2024.
Gross salary:4 242 zł4 300 zł
Pension contribution9,76%414,02 zł419,68 zł
Disability pension contribution6,50%275,73 zł279,50 zł
Accident insurance contribution1,67%70,84 zł71,81 zł
Labor Fund contribution2,45%103,93 zł105,35 zł
Guaranteed Employee Benefits Fund (FGŚP) contribution0,1%4,24 zł4,30 zł
Basic contribution to the Employee Capital Plans (PPK)1,5%63,63 zł64,50 zł
Total21,98%5 174,39 zł5 245,14 zł

For comparison, the minimum wage for work in 2023 was 3,600.00 gross. The cost of employing a worker in 2023 is presented in the table below.

RateThe minimum wage from January to June 2023 was 3,490.00 gross.The minimum wage from July to December 2023 was 3,600.00 gross.
Gross salary:3 490 zł3 600 zł
Pension contribution9,76%340,62 zł351,36 zł
Disability pension contribution6,50%226,85 zł234,00 zł
Accident insurance contribution1,67%58,28 zł60,12 zł
Labor Fund contribution2,45%85,51 zł88,20 zł
Guaranteed Employee Benefits Fund (FGŚP) contribution0,1%3,49 zł3,60 zł
Basic contribution to the Employee Capital Plans (PPK)1,5%52,35 zł54,00 zł
Total21,98%4 257,10 zł4 391,28 zł

Other costs related to employing a worker

However, it is important to remember that although employee wages constitute the largest expense, other significant aspects should not be overlooked, such as:

  • the necessity of financing medical examinations and training in occupational safety and health,
  • training the employee for the job and introducing them to the company’s structure,
  • investing in the employee’s professional development,

Preparing the workplace and providing the necessary tools for performing job duties,

The obligation to ensure safe and hygienic working conditions,

Additional costs associated with employee absences, such as vacation pay or sick leave, as well as the need to replace the employee with others,

For foreign workers, there are also costs associated with obtaining the necessary work permits.

Depending on the industry, the cost of employment may also include expenses for work clothing, providing employee meals, as well as various benefits and incentive programs.

Total cost of employing a worker with Bizky

By settling with Bizky, the employer gains the ability to settle the work of their employees without issuing any direct contracts in the company. Thus, there is no obligation to settle taxes and report to ZUS – Bizky takes care of that. Employers save on employment costs and the work of their payroll team, receiving one VAT invoice for all employees.

On the other hand, employees benefit from the possibility of higher earnings, without the need to run a business, and they save on ZUS contributions.

The Bizky model involves the complete transfer of responsibilities related to employment to us. Employees processed by Bizky can receive remuneration based on a work contract, specific-task agreement, or an employment contract. Additionally, every employee hired through Bizky can enjoy benefits such as private health insurance, pension insurance, and sports cards.

By employing with Bizky, companies could hire globally, in many countries worldwide, using our Employer of Record (EOR) service.

The cost of employing a worker through Bizky depends on the chosen cooperation model.

Take advantage of the opportunity to employ employees in Poland thanks to Bizky Employer of records

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