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The Polish Deal has been published in the Dziennik Ustaw (Journal of Laws) 2021, item 2105. The introduced changes are causing a stir among employers. Especially those who employ qualified and highly paid specialists are concerned about the reorganisation of salaries in 2022.
New payroll rules
The amendment introduces both positive changes for employees, i.e. a higher tax-free amount (PLN 30,000) or an increase in the tax threshold (to PLN 120,000), and negative ones, e.g. abolition of the possibility to deduct part of the health contribution from income.
Employees earning the minimum wage will benefit most from the reform. Employees earning not more than the national average monthly salary can also expect a benefit. Employees earning between PLN 5,701.00 and PLN 11,141.00 gross per month will be protected from losses by the introduction of the so-called "middle class relief". However, employees earning more than PLN 13,000 gross per month will lose out on the changes.
The new regulations have therefore faced many employers with the challenge of preparing for how the changed regulations will affect their businesses and responding to the new remuneration reality in 2022.
What do employees expect?
The Polish Deal may result in growing wage pressure from employees, who are already reacting negatively to information about possible reductions in their net salaries. And pay raises to ensure a similar net level to the previous year may be a challenge for employers*.
In addition to the effects of the Polish Deal itself, employers have to reckon with the currently rising inflation. This, in turn, may result in a net salary 'levelling off' (to pre-2022 levels) or even a larger salary increase in 2022, which, however, may be barely felt by employees.
We are already observing that employees are taking the initiative themselves by making enquiries to their employers about whether and what financial solutions their employers intend to introduce from the new year.
It is therefore worth keeping an eye on competitors' activities in the context of the solutions they introduce for employees. Employers who do not react to the upcoming changes may be considered by employees as unattractive in the labour market.
* In the case of a salary of approx. 16,500 PLN gross per month, in order to "compensate" the employee for the loss generated by the Polish Deal, the employer will be obliged to increase the cost of remuneration of this one employee by more than 5% per annum (from approx. 234,000 to 245,000 PLN), and in the case of an employee earning approx. 25,000.00 PLN it will already be more than 7% per annum (from aąćpprox. 338,000 to 363,500 PLN).
How do employers respond?
According to our survey, during the conference on the changes contained in the Polish Deal, as many as 42% of respondents indicated that they were planning to revise the 2022 remuneration budget.
The above is confirmed by the discussions we are currently having with clients. Many companies are asking for assistance in finding the most effective solutions to ensure that employees maintain their current net salaries and at the same time ensure that the remuneration budget of a given company will not be overstretched.
We also observe that many employers tend to introduce more flexible forms of cooperation than employment contracts. We are talking here mainly about cooperation on a B2B basis.
Flexible forms of employment are gaining more and more interest among both employers and employees
The motivation of companies to introduce this type of solution has already been strengthened by the pandemic situation in the country. Remote working, communication via electronic media, online meetings with clients and the team - all this has resulted in a certain "loosening" of the hitherto quite traditional model of the employment relationship. Employees are becoming more independent and responsible for their tasks without the constant supervision of their employer. And work is increasingly based on obtaining a specific result - not on measuring the time spent on it.
The emergence of such phenomena is prompting companies to open up to new forms of employment and cooperation. All this is noticed by employees, who, in accordance with the prevailing market trends, address new expectations to their employers. This, combined with the still ongoing "employee market", leads to an increase in the competitiveness on the labour market for companies that make it possible to choose the form of cooperation.
It can be predicted that employers who will be open to forms of employment other than the traditional employment contract may, in 2022, attract the best specialists from the market.
Proper communication
A number of challenges await employers in 2022, regardless of whether or not they choose to be proactive and, for example, introduce gross salary increases or alternative forms of cooperation. In the event of a desire to implement new structures, this process must be planned early and carried out meticulously. When introducing a new employment model, it is first necessary to verify the groups of employees with whom this would be possible (in the case of B2B structures, the activities are mainly characterised by independence and their specialised nature). Furthermore, the message addressed to employees informing about the possibility of using a new model of cooperation should be clear, understandable and sufficiently informative about all consequences of introducing this type of change.
It is also worthwhile to adequately communicate plans to award larger pay rises to employees - to properly highlight the motives behind the company's decision and to ensure that it is well received by employees.
On the other hand, employers who do not implement new employment structures and/or decide not to give pay rises should also communicate to employees the reasons for their decision. There may be many reasons, depending on the individual company's situation, whether economic or cultural (not all companies are ready to change their business model). It is also worth ensuring that the change of regulations is properly communicated - so that employees are aware of how the provisions of the Polish Deal will individually affect their remuneration.
Taking into account the deadline for the adoption of the Polish Deal, possible actions should be taken as soon as possible - there is less than a month left before the new rules of salary settlement come into force.
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