Social security contribution for civil law agreements is changing in Poland
19 November 2015
The Polish Parliament decided to amend the rules of social security contribution payments for the following types of civil law agreements, the new legislation will come into force on 1 January 2016:
- service agreement;
- mandate agreement; and
- agency agreement.
Current status for social security
Individuals who are a party to more than one civil law agreement (service agreement, mandate agreement, agency agreement) are obliged to pay social security contributions only for one of such contracts (the first executed contract or another contract chosen by the individual).
In the opinion of governmental institutions, this often leads to situations where the social security contributions are calculated on the basis of wages which are lower than the statutory minimum wage. Therefore, the Polish Parliament decided to amend the Polish law in this respect.
New rules – 1 January 2016
From 1 January 2016, if an individual is a party to more than one civil law agreement, the obligation to pay social security contributions will apply to all of these civil law agreements. However, this rule will not apply to all civil law agreements if the person and the company pay social security contributions for one or more civil law agreements, or other types of activity, under which the total remuneration (basis for payment of social security contributions) is not lower than the statutory minimum wage.
The current amount for the statutory minimum wage is PLN 1,750 (EUR 414) gross. It is likely to increase to PLN 1,850 (EUR 437) gross in 2016.
This change is important for the Polish labour market as civil law agreements are very common in Poland: persons working under mandate agreements may receive lower net remuneration or this change may result in increased costs for companies which hire persons under such civil law contracts.
This article was authored by External consultant Pawel Krzykowski.