Costs of hiring employees under a contract for specific work and B2B
Labour costs in Poland are extremely high and are constantly growing. An employment contract, which is the most popular form of employment, definitely preferred by the employees themselves, gives them certain privileges, but is a heavy burden for the employer. For several years, the contract of mandate has also been fully subject to contributions.
Therefore, employers looking for savings try to choose a contract for specific work and B2B cooperation as an alternative. What are the employment costs in these two forms? Or maybe there are even more cost-effective solutions for some positions, such as temporary work or recruitment of employees from abroad?
Employment costs – contract for specific work
Why is a contract for specific work such a beneficial alternative to an employment contract? Unfortunately, the latter form of employment is subject to very high social contributions paid to the Social Insurance Institution (ZUS) every month. Their amount in relation to the gross salary is:
- pension contributions – 9.76%,
- disability pension contributions – 6.5%,
- accident premiums – 1.67%,
- contributions to the labour fund – 2.45%,
- Guaranteed Employee Benefits Fund – 0.1%.
In 2021, the minimum wage is PLN 2800 gross. Adding up the value of these contributions, the employer must contribute about PLN 574 to the state budget every month for hiring an employee. It is worth remembering that the minimum wage is rare, and many well-qualified employees earn even several times more. The amount of contributions also increases in proportion to the higher salary. In most cases, identical encumbrances accompany the contract of mandate resulting from the Civil Code.
That is why some employers strive to hire their employees under a contract for specific work. It is devoid of social contributions, so in this case the only cost borne by the employer is the employee’s gross salary. However, a contract for specific work is not preferred by employees. After all, it does not give them any privileges. In addition, a contract for specific work concerns, as its name suggests, the performance of a specific work, so the employer, at least in theory, has no control over the working time and the quality of services provided by the employee – only the effect counts. A contract for specific work definitely does not fit most positions, especially those related to stable or even temporary employment.
Employment costs – B2B contract
An alternative way to reduce labor costs is B2B cooperation. This form of employment is quite often chosen by specialists. The employee then sets up his own business, and at the end of the month issues an invoice to the company for the services provided. In this case, the VAT invoice issued by the employee is the only cost incurred by the employer and can be compared to the remuneration under a contract for specific work.
This form of cooperation is quite willingly chosen by specialists with relatively high earnings, who pay income tax, VAT, as well as contributions, usually in a minimum amount. B2B is a cost-effective alternative for people with higher earnings, as it allows you to settle with the tax office on the basis of a flat tax currently at 19%. From the employer’s point of view, B2B cooperation is a beneficial solution, but employees with relatively low salaries occupying lower positions will certainly not agree to it.
Advantageous alternatives – temporary work and recruitment of employees from abroad
The Polish labour market has changed in recent years. The problem of employers is not only high labour costs, but also low supply of potential employees. Therefore, temporary work is currently an interesting and increasingly popular alternative to fill full-time jobs. This is a very good idea for positions where there is a high turnover by nature. Companies are willing to use the help of a temporary employment agency, with which they settle as part of the invoice, avoiding unnecessary costs. Temporary workers are actually employed by the agency. The company gains immediate access to candidates with the necessary qualifications, does not have to maintain an extensive HR department and waste time on recruitment. Employment costs are included in tax deductible costs.
Recruitment of employees from abroad is becoming an increasingly interesting element of the offer of temporary employment agencies. Why is it worth considering such a solution? Employees from abroad are primarily focused on earnings, so they are perfectly motivated, and Polish salaries are attractive to them. In this way, many jobs can be filled in a short time, avoiding the complex and tedious formalities associated with foreign recruitment.
In the era of a complicated situation on the labor market, as well as growing social contributions, it is really worth looking for alternative solutions that reduce formalities and costs incurred by the entrepreneur, as well as the risk associated with unsuccessful recruitment and high turnover in some positions.
Doświadczony analityk rynku pracy, specjalizuje się w badaniach nad trendami zatrudnienia i zmianami w strukturze zawodowej. Jego artykuły, publikowane w renomowanych czasopismach branżowych, pomagają czytelnikom zrozumieć dynamikę rynku pracy.
