Payroll in Poland: A Complete Guide for US Businesses

Poland has become one of Central Europe’s most attractive business destinations thanks to its skilled workforce, competitive costs and EU market access. But to succeed in this environment, foreign and domestic companies must get one thing right from the start: payroll.

With mandatory contracts, strict reporting rules, progressive income tax rates and extensive social security contributions, payroll in Poland is anything but casual. This guide breaks down exactly how payroll works, what employers are legally required to do and how to reduce risk to safely hire locally or manage staff abroad. We'll also talk about how BatchTransfer can help your team do international payroll.

The Legal Foundation of Payroll in Poland

In Poland, payroll begins with a written employment contract that’s not optional. The Polish Labour Code¹ requires it before the employee starts work. Contracts must outline the job role, salary, work hours, start date and legal entitlements. Employers can choose between fixed-term and indefinite agreements, but fixed-term roles must convert to permanent after 33 months or three consecutive contracts.

Employers are obligated to run payroll monthly and issue payments by the 10th of the following month. Wages are typically paid in Polish złoty (PLN), although foreign currencies may be agreed upon. Payslips must be issued each month and detail income tax, health insurance contributions and all employer contributions.

Polish Minimum Wage and Wage Structure

The minimum wage in Poland is set by the government and updated annually. As of 2025, it stands at PLN 4,666 gross per month.² Hourly minimums also apply and are strictly enforced for part-time staff and contractors. Bonuses and benefits don’t always count toward the minimum wage, so employers should review the official definitions carefully.

A standard workweek is 40 hours, with overtime allowed up to a maximum of 48 hours, including extra time. Overtime is compensated at 150% of base pay for weekdays and 200% for work on Sundays, holidays or at night.

Income Tax and Social Security Contributions in Poland

Personal income tax in Poland is structured as a progressive two-tier system. Individuals pay:

• 12% on annual income up to PLN 120,000, and
• 32% on income exceeding that threshold

A universal tax-free allowance of PLN 30,000 applies to all residents, reducing the taxable base. The tax year runs from January 1 to December 31, and employers must calculate, withhold and remit tax advances monthly on behalf of their employees.

All tax filings and payments must be made electronically to the tax office (Krajowa Administracja Skarbowa, or KAS).³ Employers are also responsible for providing each employee with a PIT-11 tax form annually by the end of February. This form summarises total income, tax withheld and social contributions for the previous calendar year.

In addition to income tax, Poland enforces mandatory social security contributions, which are divided between the employee and the employer. These contributions fund state-run programs managed by the Social Insurance Institution (Zakład Ubezpieczeń Społecznych or ZUS).⁴

Employee contributions total approximately 13.71% of gross salary and include:

• Pension insurance: 9.76%
• Disability insurance: 1.5%
• Sickness insurance: 2.45%
• Health insurance contributions: 9% (deducted from net salary but partially deducted from tax liability; non-refundable)

Employer contributions include:

• Pension insurance: 9.76%
• Disability insurance: 6.5%
• Accident insurance: around 1.76% (based on industry risk classification)
• Labour Fund (Fundusz Pracy): 2.45%
• Guaranteed Employee Benefits Fund (Fundusz Gwarantowanych Świadczeń Pracowniczych): 0.1%
• Employee Capital Plans (PPK): 1.5% to 4%⁵

Both employee and employer contributions are calculated monthly based on the employee’s gross wage and reported to ZUS by the 15th of the following month. Contributions are remitted using a dedicated ZUS transfer form, and late or incorrect payments can lead to interest charges, inspections and administrative penalties.

Poland also imposes an annual cap on pension and disability contributions. In 2025, this cap is expected to be PLN 234,720. Once an employee’s earnings exceed this amount, no further pension or disability contributions are required for the remainder of the year.

Employers must ensure proper classification of employment types to avoid miscalculations. Any misreporting of taxable income or social security contributions can trigger audits by both KAS and ZUS, leading to financial liabilities and reputational risk.

Statutory Benefits and Leave in the Polish Payroll System

Employee entitlements in Poland are governed by the Labour Code and must be reflected in payroll calculations. These statutory benefits apply to all employees under a valid employment contract, regardless of nationality or contract duration.

Annual Leave

Annual leave is based on cumulative work experience, not just time with a single employer. Employees are entitled to:

• 20 days of paid leave per year if their total employment history is less than 10 years
• 26 days per year if they have at least 10 years of cumulative service

University education counts toward the total years of employment for leave calculation purposes. Employers must track this entitlement and manage usage in compliance with internal policies and state reporting requirements.

Public Holidays

In addition to annual leave, Poland recognizes 13 public holidays each year. These are fully paid non-working days. If a public holiday falls on a weekend and the company operates a five-day workweek, the employee is not entitled to a substitute day off unless specified in a collective agreement or internal regulation.

Sick Leave

Sick leave rules are clearly defined. The employer is responsible for paying:

• 80% of the employee’s average salary for the first 33 calendar days of sickness per year
• For employees aged 50 or older, this employer-paid period is limited to 14 days

From day 34 (or 15, depending on age), Zakład Ubezpieczeń Społecznych (ZUS), Poland’s social insurance authority, assumes payment responsibility for up to 182 days. The rate remains at 80%, unless the illness is work-related or involves pregnancy, in which case the rate may rise to 100%.

All sick leave must be certified by a medical professional and registered in the national e-ZLA (electronic sick note) system, which automatically informs both ZUS and the employer.

Maternity and Paternity Leave

Maternity leave is guaranteed for all female employees who are giving birth. The standard entitlement is:

• 20 weeks for a single birth
• 31 weeks for twins
• Up to 37 weeks for multiple births beyond twins⁶

This leave is mandatory for the first 14 weeks and may begin up to six weeks before the expected due date. Maternity benefits are paid by ZUS and amount to 100% of the employee’s average base salary from the past 12 months.

Paternity leave in Poland allows fathers to take up to two weeks off, either as one continuous period or split into two separate one-week blocks. This leave must be used before the child turns 12 months old, is non-transferable and is fully paid by ZUS.

Paternal Leave

Parental leave begins after maternity or paternity leave and can be shared between both parents. The total duration is 41 weeks following the birth of a single child, or 43 weeks in the case of multiple births. Parents may take leave consecutively or simultaneously, depending on their chosen arrangement.

Parents can take this leave simultaneously or consecutively. ZUS pays parental leave benefits at either:

• 100% for the first 26 weeks, followed by 60% for the remainder, or
• 81.5% over the full period if the parent chooses a single-rate benefit from the beginning

Parental and maternity benefits are subject to the same social security contribution rules, but are exempt from income tax.

All leave entitlements must be documented in the payroll system and reflected in monthly calculations. Employers are responsible for correct classification and reporting to both ZUS and the tax office, and errors may lead to back payments or penalties.

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Pay Employees With BatchTransfer

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BatchTransfer’s core strengths for payroll:

What sets BatchTransfer apart is its commitment to providing the mid-market rate for currency conversions. This means that businesses get a fair and transparent deal when making international payments.

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Working with Local Payroll Providers and EOR Solutions

To run payroll in Poland as a foreign company, you need to navigate registrations with both the tax office and ZUS. For businesses without a local entity, local payroll providers or an Employer of Record (EOR)⁷ can handle the process end-to-end. EOR services legally employ workers on your behalf, ensuring full compliance with tax and labour regulations.

This setup allows businesses to hire and pay workers without setting up a Polish branch, simplifying onboarding, tax filings and contract issuance.

Termination Procedures

The applicable notice period for termination depends on the employee’s length of continuous service with the company. For contracts of indefinite duration, the standard notice periods are two weeks for employees with less than six months of service, one month for those employed between six months and three years, and three months for employees who have worked longer than three years.

Termination must be documented in writing and include the legal grounds for dismissal if initiated by the employer. In the case of fixed-term contracts, early termination is only permitted if explicitly allowed in the employment agreement or under specific legal conditions, such as gross misconduct.

Severance Pay

When a company employing at least 20 people carries out collective redundancies, severance pay becomes mandatory. The amount is determined solely by the employee’s length of service: one month’s gross salary is due for under two years of employment, two months’ pay for two to eight years and three months’ pay for more than eight years. The severance payment is calculated based on the average monthly earnings from the past three months of employment and is subject to income tax but exempt from social security contributions.

Severance pay is not required in the case of individual terminations unless otherwise agreed contractually or mandated by a collective bargaining agreement. All terminating employees, regardless of reason, must receive final payroll settlements that include compensation for any unused vacation days, with applicable deductions for income tax, health insurance contributions and other statutory withholdings. Employers are required to issue a final payslip and make all relevant submissions to the tax office and ZUS within the same reporting cycle.

Compliance Best Practices for Polish Payroll

Poland ranks high on the Global Payroll Complexity Index due to strict regulations, frequent legal updates and detailed reporting requirements. To stay compliant, employers must actively monitor changes to the minimum wage, income tax thresholds and social security contributions, which are typically updated annually.

Working with experienced local payroll providers or using Polish-compliant HR software can reduce administrative burden and ensure accuracy. These tools help automate tax calculations, generate correct payslips, and maintain required employee records.

Contracts must be properly drafted and signed before employment begins, and all payroll filings must be submitted to the tax office and ZUS on time. Employers should also begin preparing for the KSeF (National e-Invoicing System), which becomes mandatory in February 2026.⁸

Automation is key to avoiding penalties. Digital payroll systems help maintain compliance by tracking legal changes, reducing errors and generating a verifiable audit trail.

Final Thoughts

Payroll in Poland is governed by a tightly regulated framework that prioritises legal precision, employee protection and meticulous reporting. Employers must be prepared to manage a wide range of statutory obligations, from calculating personal income tax and remitting social security contributions to issuing compliant payslips and observing strict rules around notice periods and severance pay.

For companies entering the Polish market, the learning curve can be steep. Mistakes in classification, late filings with the tax office or incorrect contribution payments to ZUS can trigger penalties or disrupt operations. That’s why many businesses choose to partner with experienced local payroll providers or Employer of Record services, especially during the initial stages of market entry or expansion.

With the right systems, expert support and up-to-date knowledge of Polish labour law, businesses can operate efficiently and confidently in one of Europe’s most dynamic and competitive economies.

FAQs About Payroll in Poland

What Is the Minimum Wage in Poland in 2025?

The minimum wage is set at PLN 4,666 gross per month.² Hourly rates also apply, which are relevant for part-time employees and freelance contracts. Employers must ensure full compliance by verifying that the total gross pay meets or exceeds these thresholds.

Are Health Insurance Contributions Mandatory in Poland?

Yes. Health insurance contributions are a compulsory part of social security contributions. Employees contribute approximately 9%, withheld directly from gross wages. Employers are responsible for withholding, reporting and remitting these contributions to ZUS.

What Are the Key Employer Contributions in Poland?

Employer contributions cover several statutory funds: pension and disability insurance, accident insurance (rate varies by industry), the Labour Fund and the Guaranteed Employee Benefits Fund. These typically amount to 20.5% to 22.1% of an employee’s gross salary and must be reported monthly to ZUS.

Can a Company Pay Employees in Foreign Currency?

Yes, provided both the employer and employee agree in writing. While most salaries in Poland are paid in PLN, it's legally acceptable to pay in another currency, especially in cross-border employment arrangements. Local payroll systems must still report amounts in PLN.

What Happens If Payroll Filings Are Late?

Delays or errors in payroll filings can lead to penalties, interest charges or audits by the tax office (KAS) or ZUS. Employers may also face reputational risks or temporary suspension of tax clearance certificates needed for tenders or funding applications.

Is Severance Pay Always Required in Poland?

No. Severance pay is only mandatory in the case of collective redundancies involving employers with 20 or more employees. Outside of that, severance is only due if agreed contractually or required by a collective labour agreement.

Do Foreign Employers Need a Local Entity to Run Payroll in Poland?

Not necessarily. Foreign companies can hire and pay employees in Poland using a local payroll provider or an Employer of Record (EOR) service. These third-party partners handle contracts, income tax withholding, social security contributions and compliance with Polish labour law, eliminating the need to establish a local entity.

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Sources:

1. Basic Information on Labour Law – Gov.pl
2. Minimum Wage in Poland – Gov.pl
3. National Revenue Administration – Gov.pl
4. Social Insurance Institution (ZUS)
5. Payslip: Payroll Guide – Poland
6. Parenthood-Related Rights – Your Europe via Gov.pl
7. Doing Business in Poland – Bizky
8. National e-Invoicing System (KSeF) – Ministry of Finance