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Poland proposes increased social security costs for 2020

Executive summary

It is currently considered highly likely that for 2020 Polish social security contributions will be payable on total earnings rather than subject to an annual cap which is currently 30 times the average monthly salary.

Such a change would lead to a significant increase in the costs of employment where the worker is liable to Polish social security. Employers should take these potential extra costs into consideration when preparing their future budgets.

Key issues

The topic of abolishing what is known as the social security contribution cap has attracted a lot of attention recently. The draft bill introducing this change has now been sent to the Polish Parliament and it includes an effective date of 1 January 2020. If the social security cap is abolished, employers must be prepared for an immediate increase in the costs of employment of up
to 20 percent, and employees who earn more than PLN 12,000 per month will face a significant drop in their net earnings of up to 10 percent.

Next steps

To prepare for the changes, employers should analyse the impact of the additional cost on the company’s finance and on key employees’ motivation. They should also review approaches for mitigating the cost increase where appropriate.

EYG no. 005247-19Gbl

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