Key Legal Changes in Poland

Relief for Young Employees and the 26th Birthday

 - How One Day Can Determine Tax Liability

The interpretation issued by the Director of the National Tax Information on July 10, 2025 (reference no. 0113-KDIPT2-3.4011.463.2025.2.AK) confirmed an important principle for businesses: wages paid (transferred) on the employee’s 26th birthday should be treated as income obtained before reaching the age of 26.

As a result, such income may be exempt from income tax under the so-called relief for young employees, up to the annual limit of PLN 85,528.

When wages are transferred to the employee’s bank account, the decisive factor is the moment when the funds leave the employer’s account, not when they are credited to the employee’s account. The mere calculation of wages does not constitute tax-deductible costs under tax regulations. It is the “making the funds available” that determines the right to apply the exemption.

The relief is personal in nature, as it is directed at income taxpayers who have not yet reached the age of 26.

It is also objective in nature, since it covers only certain types of income specified by law, such as wages from employment contracts or civil law contracts (e.g., service contracts). The exemption applies only to the types of income explicitly listed in Article 21(1)(148) of the Personal Income Tax Act.

The relief can be used until the annual income limit of PLN 85,528 is reached, and the tax-free amount of PLN 30,000 per year also applies (i.e., the income threshold below which no tax liability arises).

The taxpayer’s age is counted up to and including the 26th birthday. Under the Tax Ordinance, Article 12 § 4 stipulates that the term “up to the age of 26” means that time limits expressed in years end on the date corresponding to the start date in the final year, or if such a date does not exist in the final year, on the day immediately preceding it. This means the relief also covers income obtained on the 26th birthday itself.

What does this mean in practice for employers and HR departments?

• Precisely plan wage payment dates.
• Verify the employee’s age on the day the income is obtained.
• Monitor the annual income exemption limit.
• Maintain documentation to ensure correct application of the relief.

An incorrect determination of the payment date may lead to income being wrongly exempted or incorrectly taxed. It should be noted that the responsibility for proper tax settlement lies with the employer as the tax remitter.

Higher Penalties for Violations of the Social Security System Act

As of June 1, 2025, new, significantly stricter regulations on the liability of contribution payers have come into force.

This change results from the Act of March 20, 2025, on the Labor Market and Employment Services, which amended Article 98(1) of the Social Security System Act.

The maximum fine for offenses against the provisions of the Social Security System Act has increased from PLN 5,000 to as much as PLN 46,000.

Under the new wording of the provision, any contribution payer or person acting on behalf of the payer who:

• fails to pay social security contributions within the deadlines specified by law,
• fails to submit the required data or submits false data, or provides false explanations in these matters or refuses to provide them,
• obstructs or hinders the conduct of inspections,
• fails to pay social security benefits and allowances financed from the state budget or pays them unduly,
• fails to maintain documentation related to the calculation of contributions and the payment of benefits,
• fails to submit settlement declarations and individual monthly reports within the required deadlines,
• fails to submit documents related to social security and health insurance in the form specified in Article 47a(1) and (2) of the Social Security System Act,

is subject to a fine of up to PLN 46,000.

What does this mean for companies?

• The necessity to pay contributions and submit declarations on time.
• Accuracy and reliability of data submitted to the Social Insurance Institution (ZUS).
• Full documentation of all matters related to social security.
• Proper preparation for inspections – completeness and correct form of documents.

Ensuring compliance with the regulations becomes not only a formality but also a key element of financial risk management for businesses.

PLN 140,000 - A New Tax Threshold?

President Karol Nawrocki has announced plans to submit a proposal to the Sejm to raise the second tax threshold from PLN 120,000 to PLN 140,000.

According to the President, the second tax threshold should be increased from PLN 120,000 to PLN 140,000 so as not to “lump ambitious individuals together with millionaires in the same tax bracket.”

This is yet another element of the “Plan 21”, alongside, among other measures, the zero PIT rate for families with at least two children.

New Regulations for Women After Miscarriage

As of August 6, 2025, the law has changed, removing long-standing barriers that deprived women of access to basic benefits.

Previously, women who suffered a miscarriage—especially before the 16th week of pregnancy—were not entitled to shortened maternity leave or to maternity or funeral benefits if the child’s gender could not be identified.

In practice, this often required expensive genetic testing, which was not always conclusive and was not reimbursed.

Under two regulations issued by the Minister of Family, Labor, and Social Policy on July 21, 2025 (Official Journal, items 968 and 969), as of August 6, 2025, women who have suffered a miscarriage may apply for:

• Maternity allowance for the shortened leave period,
• Funeral allowance,

without the need to present a birth certificate with a stillbirth notation or to specify the child’s gender.

What documents are sufficient?

• A certificate from an obstetrician-gynecologist, a physician in training in this specialty, or a midwife confirming the stillbirth, issued on the basis of medical documentation, regardless of the stage of pregnancy.
• In the case of the funeral allowance – a death certificate as well.

What does this mean for employers?

• Simplification of HR procedures and removal of formal barriers.
• The ability to grant leave and pay benefits quickly and in full compliance with the law.
• Real support for employees during a difficult time in life, positively impacting organizational culture.

Minimum Wage in 2026

The government has published a draft regulation regarding the minimum wage for 2026.

According to the draft, the minimum wage in 2026 will be:

• PLN 4,806 gross – minimum monthly wage,
• PLN 31.40 gross – minimum hourly rate for civil law contracts.

Each year, negotiations on the minimum wage are held within the Social Dialogue Council. Under the Act on Minimum Wage for Work of October 10, 2002, the government submits its proposal to the Council, which has 30 days to reach an agreement.
If no agreement is reached, the obligation to set the minimum wage and hourly rate rests with the Council of Ministers.

What does this mean for businesses?

• Higher employment costs, particularly for SMEs.
• The need to optimize processes, implement automation, and review employment structures.
• A potential increase in prices, as companies may pass costs on to consumers.
• Greater competition for employees – higher wages may boost labor market mobility.
• The minimum wage also affects social security contributions, taxes, and benefits such as allowances and minimum pensions.

The draft regulation is expected to be adopted by September, so autumn will be the time for concrete actions.

Outstanding Vacation Leave – Deadline: September 30

According to Article 152 §1 of the Labor Code, employees are entitled to annual, uninterrupted, paid vacation leave granted in accordance with a leave schedule set by the employer, which does not include the so-called “on-demand” leave.

Under Article 161 of the Labor Code, the employer is obliged to grant vacation leave in the same calendar year in which the employee becomes entitled to it.

Sometimes, circumstances such as prolonged illness may prevent employees from using their vacation leave.

However, if the employee does not use all or part of the vacation leave in a given calendar year, it becomes outstanding vacation leave in the following year.

According to Article 168 of the Labor Code, any outstanding vacation leave that has not been used within the agreed-upon period must be granted no later than September 30 of the following calendar year.

Position of the Chief Labor Inspectorate 

In a statement dated April 7, 2008, the Chief Labor Inspectorate confirmed that Article 168 of the Labor Code does not require the use of outstanding vacation leave that, before January 1 of the given year, was classified as “on-demand” leave. The obligation applies only to regular outstanding vacation leave, i.e., leave not used due to postponement or interruption for reasons specified by law.

What should employers do?

To comply with the provisions of the Labor Code, employers must ensure that any outstanding vacation leave is granted by September 30 of the following year.

Statute of Limitations

Under Article 291 §1 of the Labor Code, claims arising from employment relationships become time-barred after three years from the date the claim becomes due. This also applies to vacation leave claims.
According to Article 2931 of the Labor Code, the statute of limitations for vacation leave claims does not begin or is suspended while the employee is on parental leave.

Pilot Program for Reduced Working Hours

 - A Chance for Innovation, but with a Tax Catch

The Ministry of Family, Labor, and Social Policy has launched a pilot program for reduced working hours, allowing companies to test new models of work organization, including a four-day workweek.
Employers can receive up to PLN 1 million per company and up to PLN 20,000 per employee in funding.

Applications can be submitted electronically from August 14 to September 15, 2025, using the dedicated application generator. Both private and public sector employers are eligible to apply.
 
Conditions for participation:

• The company must have operated for at least 12 months before the application date.
• At least 75% of employees must be employed under an employment contract, appointment, election, nomination, or cooperative employment contract.
• At least 50% of employees must be included in the project.
• Employment levels must be maintained at no less than 90% of the initial level specified in the application.
• Employee salaries covered by the pilot project must be maintained at no less than the level applicable on the start date of the pilot for its entire duration.
• There must be no deterioration in the working conditions or salaries of employees included in the project.

Type of support available for employers:

• The maximum funding per pilot project is PLN 1 million.
• The cost per employee included in the pilot cannot exceed PLN 20,000.

Funding can be allocated to two types of costs:

• Substantive costs – including research, analyses, and expert studies on implementing reduced working hours, employee expectations, project evaluations, training for employees, and subsidies for employee wages during the pilot.
• Administrative costs – including communication, promotion, coordination, recruitment, monitoring, evaluation, and project settlement.

Administrative costs may not exceed 10% of the project’s total value.

Tax Implications: Funding received under the pilot program is taxable income.

According to tax advisor Izabela Leśniewska, funds from the Labor Fund are not exempt from taxation under either the CIT Act or the PIT Act, meaning companies must pay tax on the funding. This has also been confirmed by the National Tax Information.

In addition, businesses taxed under the lump-sum system may be moved into a higher health insurance contribution bracket, resulting in additional costs.

The goal of the pilot program is to encourage diverse approaches and jointly explore the most effective models. Employers can propose custom solutions for reduced working hours, including a four-day workweek, shorter workdays, or longer vacation periods.