Remote work in Poland: 24 days a year

Remote work in Poland will be performed fully or partially in the place indicated by the employee and approved by the employer. For all employees, there is a limit on the number of days in a year when work can be performed remotely. This limit has been set at 24 days. For some employees (e.g. parents raising children under four years of age), remote work is unlimited as long as it is compatible with their type of work.

To duly implement remote work in Poland, it is crucial to assess the opportunities and challenges for a given employer, prepare internal regulations, review employment contracts and take care of training.

Tax impacts of the new labour rules

In terms of tax impact, employers will be required to:

• provide the materials and tools necessary for remote work; or
• pay cash compensation or a fixed sum for the employee to use their own personal tools.

The provision of tools and materials or the payment of compensation or a fixed sum to the employee by the employer as per the above may not lead to the generation of any additional taxable income for the employee.

However, questions have already been raised about how to calculate the compensation and the fixed sum so that it is tax free. The amount should correspond to the employee’s estimated costs of working remotely. According to the Polish law, major items to be taken into account in such an estimation are standard wear and tear of materials and tools, including technical equipment, their documented market prices, the quantity of materials used for the employer’s purposes, the market prices of the materials, as well as standard consumption of electricity and costs of telecommunication services.

Employers’ organisations have already asked for official guidelines regarding compensation for employees and other aspects of the new law.

Increased mileage rates in Poland

Apart from the changes to the status of remote work in Poland, due to the Infrastructure Minister’s regulation on 22 December 2022 to rules on business trips have been amended in Poland, too. Consequently, after 15 years without changes, the per-kilometre rates were increased on 17 January 2023 to reach the following caps:

• PLN 0.89 (previously PLN 0.5214) for passenger cars with an engine cubic capacity of up to 900 cm3
• PLN 1.15 (previously PLN 0.8358) for passenger cars with an engine cubic capacity of more than 900 cm3
• PLN 0.69 (previously PLN 0.2302) for motorcycles
• PLN 0.42 (previously PLN 0.1382) for mopeds

If an employee in Poland uses a private car during a business trip (in which case, the vehicle mileage record is obligatory), such an allowance is exempt from personal income tax and social security only up to certain limit according to the Polish PIT Act. The limit for a passenger car is as follows:

• For cars with an engine cubic capacity of up to 900 cm3 = PLN 0.89 (previously PLN 0.5214) × number of kilometres
• For cars with an engine cubic capacity above 900 cm3 = PLN 1.15 (previously PLN 0.8358) × number of kilometres

Thus, the tax-free allowances have just increased due to the change in the law.

A respective change has also increased the allowance limits for local travel, calculated as a fixed monthly sum or a sum based on mileage.

If you would like to know more about the new rules on business trips or remote work in Poland, or need any tax advice regarding the country please visit the homepage of WTS&SAJA Sp. z o.o., the exclusive representative of WTS Global for Poland and contact their experts.

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Changes to the rules on reduced daily allowances

Until now, in Lithuania, the agreement on reduced daily allowances had to be established in a collective agreement or employment contract (i.e. an agreement between the employee – or the employees’ representatives – and the employer). Since 1 July 2022, companies without a collective agreement no longer need the consent of employees to reduce their daily allowance.

However, lower daily allowances can only be paid if they are differentiated on the basis of objective criteria laid down in a collective agreement, or, in the absence of such an agreement, in a local regulatory act.

New applicable requirements

Reduced daily allowances must be differentiated on the basis of objective criteria, i.e. it is not enough to state in standard terms that the employee shall be paid at least 50% of the daily allowance established by the Lithuanian government during business trips and to apply different rates of daily allowances to different business trips without any criteria. Objective criteria could include the duration and complexity of the business trip, the specific countries involved, the total of other expenses reimbursed by the employer during the business trip, etc.

The decision to reduce the daily allowance must be provided for in a collective agreement or employer’s internal document (e.g. handbook, internal work rules, business trips policy, etc.) and not in the employment contract.

Before introducing a new internal procedure for reducing the daily allowance, an information and consultation procedure must be carried out. Employees’ representatives shall be made aware of the intention to reduce the daily allowance and given the opportunity to express their views. Failure to comply with the information and consultation procedure may lead to the employer’s decision on reduced daily allowances being overturned by labour dispute bodies. Employees must be familiarised with the new procedure in writing.

Recommendations for employers in Lithuania

If the employment contract stipulates that the employer has the right to reduce the daily allowance, there is no need to amend the contract, but the employer will have to comply with the new regulation. So, even if the employee has already agreed on reduced daily allowances in the employment contract, the reduction will still need to be justified by an internal regulation from the employer (or a collective agreement, if one is in place).

If the employment contract does not stipulate that the employer has the right to reduce the daily allowance, there is no need to amend the employment contract. It is enough to introduce a new regulation and adopt relevant internal procedures or policies (or to conclude/amend a collective agreement, if one is in place). Of course, it is important not to skip the information and consultation procedures, and to duly inform employees of the newly adopted procedure in writing.

Amendments to labour law in Lithuania 

The amendments to the Lithuanian Employment Law introduce new financial incentives for employees and employers. The aim is to help attract highly qualified specialists from abroad, as well as to bring back to Lithuania expatriates whose professions are on the national shortage list. The amendments also provide for special conditions for Ukrainian citizens working in Lithuania.

Allowances for foreign employees and their employers

Two new benefits will be available: an entry allowance for the employee and an allowance for the employer who recruited the employee. The employee can either be a Lithuanian who has lived and worked as an émigré before, or a foreign national. It is important that he or she has not been considered a permanent resident of Lithuania for the previous five years.

To qualify for the entry allowance, the person will need to meet certain requirements, such as being employed under an open-ended employment contract to carry out work on the territory of the Republic of Lithuania, and an average salary of at least 4.1 minimum monthly wages (EUR 2,993 gross).

The entry allowance will be equivalent to 4.1 minimum monthly wages (EUR 2,993 gross) and will be paid by the Employment Service, to which the employee can apply no earlier than six months after starting to work in Lithuania. The purpose of the allowance is to reimburse the costs of the employee’s relocation to Lithuania.

Employers who recruit an employee, complying with the aforementioned conditions, will also be entitled to benefits. However, the benefits will not be granted if the relocated employee had already worked for the same employer or another company in the same group during the previous five calendar years. In other words, this incentive will not apply to the relocation of employees from one group company (outside Lithuania) to another company in the same group (in Lithuania).

The total benefits for the employer will be equal to the average gross monthly salary of the person employed, up to a maximum of 7.2 minimum monthly wages (EUR 5,256 gross). The benefits will be paid by the Employment Service, to which employers can apply no earlier than 12 months after the employee starts working in Lithuania.

Preferential conditions for Ukrainian nationals

The new benefits will be easier to obtain for Ukrainian nationals who are employed in Lithuania and have left Ukraine because of Russian military aggression.

They are exempted from the requirement to work in an occupation included in the list of high-value-added occupations that are in short supply in Lithuania. An open-ended employment contract for any job function is therefore sufficient. There is also a lower salary threshold: a gross salary of EUR 1,752 is sufficient, instead of the EUR 2,993 applied for nationals of other countries. However, if the average salary paid by the employer to its other employees is higher than EUR 1,752, the employer must pay the same to the Ukrainian nationals as well. In addition, Ukrainian nationals can apply for an entry allowance earlier than is the case for others, i.e. after three months, instead of six months from the start of employment in Lithuania.

It can be concluded that the entry allowance for Ukrainian nationals is primarily a form of support in solidarity with Ukrainians who had to leave their homes due to the war and is intended to encourage them to enter the labour market.

Please note that if an employer employs a Ukrainian national under the aforementioned preferential conditions, they will not be able to apply for the employer’s allowance for recruiting a foreign employee.

Click here if you want to read the original article about the changes to the rules on daily allowances and the Lithuanian Employment Law on the homepage of Sorainen, the exclusive partner of WTS Global in Lithuania!

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Central elements of the amendment are the adaption of the Anti-Wage and Social Dumping Act to the EU Posted Worker Directive, the revision of the administrative penalties, the extension of the catalogue of exceptions, as well as the restructuring of the security performance.

Through the amendment, Austria implemented the changed regulations of the EU Posted Worker Directive and the regulations of the European Court of Justice concerning the posting of workers.

Amendment of the concept of posting to the Anti-Wage and Social Dumping Act 

The Austrian Anti-Wage and Social Dumping Act previously provided for a very far-reaching concept of posting, whereby the EU Posted Worker Directive only includes postings carried out based on a service agreement, cross-border hiring outs (personnel leasing), postings within the concern.

The law now reflects the same regulations as the EU Directive, thus posting in the employer´s interest without any service agreement no longer fall under the scope of the Anti-Wage and Social Dumping Act.

Extension of the exception catalogue 

For some short-term activities such as attending on a business meeting, a seminar, a lecture or participating on a congress, on a cultural event or on a trade fair, (except for delivery, construction, and dismantling) the Anti-Wage and Social Dumping Act is, as before, not applicable, if no services are provided during these activities.

Newly added significant exceptions to the Anti-Wage and Social Dumping Act are in Austria insured high earners as well as seconded employees who provably receive (at least two months before and during posting) a monthly salary of at least EUR 6,660 gross (for 2021), regardless of the duration of the posting.

Activities that are essential for the commissioning of the delivered goods or the delivery and collection of products are also exempt from the regulations of the amended law.

A further exception clause was added in § 7, whereby employees who are posted for training purposes are excluded from the scope of the law, provided that the training is part of a training program of the employer or the Austrian company, the employee does not owe any work performance and the employees are only trained as long as it is necessary to acquire the knowledge.

Differentiation between short-term and long-term assignments

With a very few exceptions there has been no differentiation in term of how long a posting takes in Austria according to the Anti-Wage and Social Dumping Act so far.

The amending directive also contains separate regulations for long-term postings, which have now been transposed into national law. It now stipulates, that in the case of postings and assignments for a longer period than 12 months (or 18 months) the Austrian terms and conditions of employment applies (both law, ordinance and collective agreement), insofar as these standards are more favourable than the corresponding standards of the posting country.

Changes in the penalty system 

Another key point of the amendment to the Anti-Wage and Social Dumping Act was the adaption of the penalty range, since according to the European Court of Justice the previous regulations were disproportionate and illegal. In its decision the European Court of Justice called for a penalty limit without a minimum level penalty, as well as the omission of penalty accumulation. The new regulation led to the abolishment of the accumulated (per employee) penalties, whereby it applies for any offense with minimum wage and notification requirements.

The following penalty fees are applicable regardless of how many employees are affected:

• Violation in connection with the reporting and maintenance obligation when posting or cross- border hiring out: fine up to EUR 20,000.
• Fraudulent activity during authority control (documents delayed submission, denied access to documents or information): fine up to EUR 40,000.
• Failing to provide wage related documents: fine up to EUR 20,000, in the event of second offence: fine up to EUR 40,000.
• Underpayment based on Austrian law and collective agreements: depend on the amount of withheld remuneration: fine up to EUR 400,000. The number of employees affected is irrelevant. A full cooperation of the employer is penalty-reducing.

Posting documents simplification

Important simplification is the use of English language in all wage-related documents, as well as social security insurance evidence, because previously only the employment contract in English language were accepted.

The following list of documents must be kept available in Austria, where the posted worker is employed:

• A1 social security document (or comparable documents if the A1 form is still not available)
• Copy of the notification document (ZKO3 or ZKO4)
• Employment contract
• Payslip / Wage records
• Proof of the monthly payment
• Working time records
• Documents relating to pay categorisation (if this information cannot be found in the employment contract)

In addition, there are simplifications in the reporting obligations. Now it is possible to make a single notification for a period of six months (before the maximum period was three months called “Rahmenmeldung”) if there are repeated cases of posting of workers to the same client / the same project.  In the case of service contracts of the same type concluded with several clients, the notifications may be combined within one collective report in the case of continuous performance within one week in Austria (“Sammelmeldung”).

Overview of the amendment in the catalogue of exceptions

If you would like to know more about the details of the changes to the Austrian Anti-Wage and Social Dumping Act, please visit the homepage of ICON Wirtschaftstreuhand GmbH, partner firm of WTS Global in Austria!

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Remote work, paid leave, unpaid leave

Employers whose activities have not been suspended during the emergency epidemic situation are entitled to introduce unilaterally home-office work or telework, without the consent of the employees or part-time work for all or part of the company. Additionally, the employers may grant up to one half of the paid annual leave to an employee without their consent.

If work has been suspended by order of the employer or by virtue of a state body act, the law provides several possibilities. The employer may unilaterally, without the consent of the employees, grant them their paid annual leave. The employer is not entitled to grant unpaid leave without the consent of the employee. However, the employer is obliged to grant the requested paid or unpaid leave to several categories of employees (incl. pregnant employees and employees at an advanced stage of IVF treatment, mothers or adoptive mothers of a child up to 12 years of age or of a disabled child, regardless of their age, etc.)

After 1 January 2021, the unpaid leave for a period of up to 60 days will be acknowledged in the labour legislation in Bulgaria as work experience. During 2021, up to 60 of those days will be acknowledged as social security periods.

Additional amendments in the area of labour legislation in Bulgaria

At the end of 2020, the National Assembly adopted several additional amendments in the area of labour legislation in Bulgaria which are aimed at primarily guaranteeing the rights and interests of employees and employers in this rapidly changing environment. The first relevant amendment concerns employees who have been in close contact with a confirmed case of COVID-19. The law provides that they shall switch to telework or the home office if the nature of the work allows this to be the case. Secondly, through collective bargaining, trade unions and employers at branch and sectoral level may negotiate a longer period of overtime, but not more than 300 hours in a calendar year. At the same time, the restriction set in the Labour Code for overtime work up to 150 hours per year, when no collective labour agreement has been concluded, is maintained.

Lastly, the legislator clearly regulated that the Bulgarian Labour Code is the applicable law for employment relationships with an international element between an employer and an employee whose place of work is in Bulgaria or abroad, unless otherwise agreed in the employment contract or provided for in the labour legislation in Bulgaria or in an international contract, which is in force for Bulgaria. The aim is to ensure equality for employees, as well as the opportunity to enjoy the protection of labour legislation, irrespective of their citizenship.

If you would like to know more about the labour legislation in Bulgaria, please visit the homepage of Delchev & Partners Law Firm, the exclusive representative of WTS Global in Bulgaria.

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The reform includes significant changes to the country’s personal income tax system. With the changes the Lithuanian government aims to reduce overall tax burden on labour and make the social security contribution system more transparent.

Main changes

The four most important changes brought by the reform are as follows:

• progressive personal income tax is introduced;
• social security contributions by the employer will be merged with those by the employee, while the tax burden will be transferred to the employee;
• rates of social security contributions have been recalculated;
• a ceiling is introduced on social security contributions.

After merging contributions paid by employer and employee, total employment costs and net salary should basically remain unchanged:

EXAMPLE:

Employees earning a salary exceeding the ceiling on social security contributions (in 2019 the ceiling is 120 statistic average wages) will have bigger benefits. When an employee’s salary exceeds the ceiling, social security contributions will no longer apply to the excess. However, the excess will be taxed at a higher rate of personal income tax (i.e. 27%). Taking into consideration that the ceiling on mandatory health insurance contributions will not apply, the portion of salary exceeding the ceiling is taxed at an overall rate of 33.98%.

What employers need to know

The most relevant aspects of the reform for employers are as follows:

• Employers are obliged to recalculate the employee’s gross salary and multiply it by 1.289 by 1 January 2019. The employee’s net salary cannot be reduced due to the recalculation. The recalculation must be executed officially by changing the employment contract. Prior consent by the employee is not required for these employment contract changes. You can find a contract amendment form that we suggest here.
• Employers providing other benefits for their employees (such as employee share options enabling employees to acquire shares in the employer company or group) must take into consideration that the reform might have an impact on taxation of these additional benefits. Companies should assess the possible impact of the reform.

Click here if you want to read the original article on the homepage of Sorainen, the exclusive partner of WTS Global in Lithuania!

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