The HR and payroll revolution continues. Who will gain and who will lose?
2019 was full of changes in HR and payroll regulations. For employers, the biggest problem was the pace of their introduction imposed by the legislator. Companies had limited time to adapt to the newly established regulations, which increased the burden on internal HR departments. There are no officially confirmed changes for 2020 yet, but the media are already speculating about them, m.in. about full social security contributions for all mandate contracts or early retirement, after 35 years of work.
The most important changes in 2019
An important change was the relief for young taxpayers, i.e. exemption from income tax for people up to 26 years of age. This translates directly into higher earnings for young people, without increasing the burden on enterprises. Combined with the creation of more and more jobs offering flexible time and forms of employment, this gives an opportunity to mobilize the youngest workers, who, compared to Europe, are among the least economically active. With a significant shortage of employees on the labor market, this change may turn out to be a beneficial solution for everyone.
– Our observations show that in recent months young people have actually been more positive and mobilized to take up professional activity, especially students, for whom the gross amount is equal to the net. More and more of them use flexible forms of employment: temporary work, contracts of mandate, which make it easier to combine learning with work and free time, and also allow them to verify the attractiveness of a given position or company – says Anna Jurkiewicz, Regional Outsourcing Manager from the LeasingTeam Professional HR consulting agency.
Beneficial changes for employees, not burdening employers, included the reduction of the income tax rate for the first income threshold (to PLN 85,528 per year) from 18% to 17% and the increase of tax-deductible costs to PLN 250 per month (previously PLN 111.25) and to PLN 300 per month for commuters (previously PLN 139.06). Both changes have increased the amount of employee payments. The only aspect that cast a shadow over the amendment to the Act was the pace of its introduction. Employers had very little time to implement changes, such as updating or purchasing new HR and payroll software.
Another change is the introduction of Employee Capital Plans (PPK), i.e. a systemic accumulation of savings for employees. The legislator has imposed an obligation on workplaces to sign an agreement for the operation of the ECP, and thus to transfer payments to a financial institution to secure pension funds for working citizens. Participation in the ECP is associated with an additional cost for the employer and a lower net payment for the employee. The first one is obliged to make contributions to the ECP min. 1.5% of the employee’s salary, the other – min. 2% of your salary).
– ECPs are associated with a large number of additional payroll and administrative obligations. We observe that even large companies often have problems with this, and in 2020 the same obligation will be imposed on medium-sized companies, in which HR and payroll departments are often not as numerous as in large companies – comments Monika Rutowska, Head of the HR and Payroll Department at LeasingTeam.
Among the new regulations, it is also worth mentioning the protection of remuneration claims. This change applies to contractors. If the remuneration for the commissioned activities is the only source of their income and is cyclical, the principal must apply a limitation of the amount free from deductions, which means a lower profit for the employee.
In 2019, several other changes were also introduced, but they had a much smaller impact on the labor market. The employer has been authorised to require the employee to indicate the bank account number for payment of remuneration, although at the employee’s request he may also receive remuneration in cash. For contracts concluded from 01.01.2019, the requirement of a 10-year storage period for HR and payroll documentation has been established. Changes have been made to the keeping of personal files (parts A, B, C and D). Telework has theoretically become possible for every employee – regardless of the provisions in the regulations of companies, anyone can apply for remote work, but the employer is not obliged to give consent or change the rules of work organization. In the field of occupational health and safety – periodic training for an administrative and office employee is not required if the type of the employer’s predominant activity is in risk category not higher than III, unless the occupational risk assessment shows that it is necessary.
HR and payroll forecasts for 2020
It is impossible to precisely predict what 2020 will bring, but the Polish government has already announced an amendment to selected points of the Labour Code, e.g. in the field of working time or the type of contracts. By 2022, Polish labour law must also adapt to 2 EU directives: on transparent and predictable working conditions (e.g. the rules of employment for a trial period will have to be modified), on reconciling professional and family responsibilities (the obligation to provide at least 2 months of parental leave to be used only for fathers). At the moment, we do not know the exact assumptions of the changes, but based on the general suggestions of the government, it is possible to indicate 2 areas that are likely to be subject to work in the near future.
The most common topic is the issue of more detailed regulation of employment under civil contracts, self-employment or work through platforms such as Uber (in the latter case, the regulations should be created from scratch). In each case, it is largely about sealing payments to the social security system, e.g. it has already been announced that social security contributions will be calculated on each contract of mandate. From the point of view of both employers and employees, this change is not beneficial – it will increase labour costs in enterprises and reduce the current net wages. Therefore, it can be expected that as a result it will discourage companies from using flexible forms of employment, and thus force restructuring and reducing the number of employees.
Another fundamental change in 2020 is to be early retirement, possible at the age of 53 for women and 58 for men. An important element of the earlier use of pension benefits is to be the length of service, which the future pensioner will have to skilfully calculate and submit this information to the Social Insurance Institution. Employers assess this proposal of change very negatively, because it will noticeably limit access to employees on the market, which is already extremely low, and will also significantly reduce the value of benefits paid to pensioners (fewer years of service = lower value of contributions paid = lower benefit).
– It is difficult to predict what 2020 will bring us, but 2019 has shown that the unexpected is to be expected. Entrepreneurs seem to come to similar conclusions. More and more often they ask us about outsourcing HR and payroll services. This is indeed an optimal solution, because the responsibility for tracking changes, their quick introduction, and updating HR tools rests with the service provider. This cannot be overestimated, especially in the face of difficult and unexpected circumstances, which specialized external companies can deal with much more efficiently – comments Monika Rutowska, Head of the HR and Payroll Department at LeasingTeam.
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