Social contributions in Poland

 Social contributions in Poland includes pension insurance, disability pension, sickness and maternity insurance, and accidents insurance at work and occupational diseases (so-called accident insurance). In addition, there is medical insurance, which guarantees medical care under the National Health Fund, that is, provides access to public health care in clinics and hospitals. In this article will try to explain the rules of social insurance in Poland, that is, when insurance is compulsory, when voluntary, and when a person is not subject to all insurance (neither voluntarily nor compulsory). It all depends on the type of insurance.

 The main method of employment is an employment contract. In this case, the employee is subject to compulsory insurance of all types and compulsory contributions for pension insurance, disability pension, sickness and accidents. The contributions are expressed as an interest rate and are: for pension insurance - 19.52% of gross income, disability pension - 8% of gross income, for sickness insurance - 2.45% of gross income, for accident insurance cases - the contribution rate varies. In addition, there is a compulsory payment of medical insurance, and is 9% of gross income minus the amount of insurance contributions.

In the employment contract, only pension, disability, accident and medical contributions are compulsory, but sickness insurance is voluntary. Refusing this type of insurance, you need to be aware of risk. If the person is temporarily disabled due to illness or maternity leave, then will not receive any benefits for this period.

An entrepreneur who is a natural person are also required to pay pension, disability pension and accident contributions. Sickness insurance is voluntary. In 2020, the minimum contribution basis for an entrepreneur who is a natural person is 3,136.20 PLN, which is 60% of the projected average monthly salary. This amount is used to calculate different types of contributions. They are expressed as an interest rate: pension contribution - 19.52% (contribution: 612.19 PLN), disability pension - 8% (250.90 PLN), sickness insurance - 2, 45% (76.84 PLN), contributions to the Labor Fund and the Solidarity Fund - 2.45% (76.84 PLN), accident insurance - 1.67% (52.37 PLN). The medical insurance is 9% of the amount 4026.01 PLN (which corresponds to 75% of the average wage in the company in the fourth quarter of 2019), i.e. 362.34 PLN. The amount of monthly contributions for individual business activity is 1,431.48 PLN or 1,354.64 PLN, if do not use voluntary sickness insurance.

It is worth mentioning the “start privilege”, i.e. 6 months without social security contributions for entrepreneurs who run a business for the first time or start it again after at least 60 months after the date of suspension or closure of the previous business. Entrepreneurs who are natural persons or are partners of civil partnerships, can use of the start privilege. The condition is not performing it on behalf of a former employer for whom until the start of business in the current or in the previous calendar year under employment relations or cooperative employment relations falling within the scope of his entrepreneurial activity. The privilege applies to pension insurance, disability pension and accident insurance, the Labor Fund and the Solidarity Fund. It does not apply to medical insurance, therefore it is obligatory to register for medical insurance and pay contributions. In addition to the “start privilege”, can also benefit from paying premiums in a reduced amount for 24 months.

Social insurance also covers a member of a single-person limited liability company and partners of a general partnership, limited partnership or limited liability partnership. If the partner has a different title to be covered by social insurance (e.g. an employment contract), then must register only for medical insurance. The amount of contributions is the same as for individual business activity. Unfortunately, partners do not have the right to take advantage of the “start privilege” for the first 6 months or reduced premiums for 24 months.

If the limited liability company has at least two partners, none of them is required to pay contributions. However, according to ZUS (Social Security Institute) in some situations, employers circumvent the law to avoid paying contributions. When, for example, one of the partners has 99% of the shares, while the other has only 1%, therefore the presence of the other partner in the company is only symbolic and practically does not affect the activities of the company.  

There are many exemptions from compulsory insurance. For example, persons who have a employment contract do not need social insurance if these persons are pupils or students up to 26 years old. Another exception is when someone is employed full-time under an employment contract and completes additional orders under a mandate contract or runs own business. Does he have to pay contributions for different types of activities? No, because then there is a confluence of insurance titles. This means that if a you are an employee and have at least the minimum wage set in contract (currently 2600 PLN gross), you are compulsorily covered by insurance only the employment relationship. Then, a mandate contract (with a person who is not your employer) or on the basis of running a business, can insure yourself voluntarily. However, that are not exempt from paying medical insurance.

A contract of specific work is a completely separate type of contract. A contract for specific work concluded with an entity other than the employer is not subject to the social security. This contract is concluded between the customer and the contractor to perform a specific work, for example: writing an article, painting a picture or creating a mobile application. An employment contract refers to the provision of work at a place designated by the employer and under his supervision. The contract of specific work, the contractor receives payment only for the result of work, and can perform all actions independently. From January 1, 2021, it will be obligatory to inform Social Insurance Institution about the conclusion of a contract of specific work. Such a contract does not entail the payment of insurance contributions, and the change in the rules will make it easier to check whether this contract was chosen to avoid paying contributions.

The social security system in Poland is heterogeneous, and there are many rules related to insurance and exceptions of these rules. It is needed to make sure who is required to pay contributions to the ZUS. If you have any additional questions, please contact us!