On January 1, 2017 an amendment to the Act on minimum pay for work (the "Act") will come into force. The changes will affect rules for hiring workers on contracts of mandate (Polish: umowa zlecenie) and service contracts (Polish: umowa o świadczenie usług), including the self-employed (B2B).
New provisions of law
- PLN 13 gross is the minimum hourly rate.
- Fixed fee remuneration for work under mandate or service contracts shall amount to at least PLN 13 gross as converted into an hourly rate.
- Remuneration shall be paid at least once a month with regard to mandate and service contracts concluded for a period exceeding 1 month.
- Obligation to confirm the number of hours of mandate or service work provided.
- Obligation to store relevant documentation for 3 years.
- The Act will not apply to contracts for a specific task (Polish: umowa o dzieło) or mandate/ service contracts where commission is the only remuneration.
Practical consequences
This table sets out possible practical problems you might face when applying the Act.
| Issue | To do | To avoid |
|---|---|---|
| The Act vs current contracts | The Act applies to all contracts in force on January 1, 2016 and all new contracts thereafter. The principal / service recipient ("Principal") should review the existing contracts for compliance. Amendments to contracts (e.g. by an annex signed by both parties) may become obligatory. | Failure to review contracts for compliance may lead to unlawful underpayment. If so, the mandatory / service provider ("Worker") may claim a supplementary payment to bring his/her remuneration up to the minimum hourly rate ("Supplement"). |
| Confirmation of number of hours of mandate / service provision | An accurate record must be kept of hours of mandate / service provision worked. The record: 1. may be kept in written, electronic or documentary form 2. should state the total number of hours spent on mandate / services provision in the period and 3. should be made at least once a month. | In case of failure to establish rules on confirmation of number of hours of mandate / service provision, the Worker shall provide a statement of hours to the Principal prior to the remuneration date. In any dispute, the burden of proof will be on the Principal to disprove overstated hours. |
| Overstating hours of mandate / service provision by the Worker | If possible, the parties should agree in the contract that Activity X will be completed within Time Y. This will mitigate the risk of overstating the number of hours. A relevant procedure should cover the situation where special circumstances require longer hours than agreed. The procedure may include specific consent from the Principal for extra hours. | Lack of time limits may lead the Worker to overstate the number of hours in order to obtain the Supplement. |
| Monthly remuneration and pay schedule | The Act provides that if the contract is concluded for a period exceeding 1 month, the remuneration reflecting the minimum hourly rate must be paid at least once a month. If the hourly rate is higher than PLN 13 gross, it seems that the difference exceeding the minimum hourly rate may be paid, e.g. after completion of the mandate / services. | Failure to pay remuneration at or above the minimum hourly rate may be subject to a fine of PLN 1,000 – PLN 30,000 (approx. EUR 225 – EUR 6,770). |
| Documentation storage | The Principal is obliged to store the documents providing for the manner of confirmation of the number of hours of mandate / service provision and documents of confirmation for 3 years after the remuneration became payable. |
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
