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Friday, October 22, 2021

Polish Order – covering of orders. Calculating the effects – Instytut Emerytalny

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As part of the Polish Deal, there has been an announcement of full premium premiums for contracts of mandate. According to the calculations of the Pension Institute, employees earning extra money under such a contract may lose even several hundred zlotys a month. – Both the client will pay more and the net remuneration for the contractors will be lower – says Oskar Sobolewski from the Pension Institute in an interview with TVN24 Biznes. According to the “Fakt” daily, the project is ready and has a chance to enter into force in early 2022.

During the presentation of the Polish Order on May 15, PiS president Jarosław Kaczyński said: – We will strive to abolish the junk contracts – they will be charged immediately. We strive to create one mechanism, one model of employment contract in a short time.

Finally, the document announcing the Polish Deal included the following announcement: “We will limit the use of civil law contracts, among others thanks to full premiums of commission contracts with the prospect of introducing one employment contract”.

According to the information provided by the “Fakt” daily, work on the bill has already been completed by the Ministry of Family and Social Policy. The change of regulations is likely to come into force from 2022, and the reform is waiting for the green light from Prime Minister Morawiecki. Earlier, newspapers wrote about her “Republic” and “Dziennik Gazeta Prawna”.


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Premiums on orders – calculations

What are the changes? Currently, in the case of several contracts – for example, several mandate contracts or an employment contract plus a mandate contract – contributions are paid up to the minimum wage – up to PLN 2,800 in 2021, and in 2022 – up to PLN 3,010 gross. Above this amount, the contractor is not subject to compulsory insurance for subsequent contracts. After the changes, contributions would have to be paid on all contracts of mandate.

Right after the presentation of the changes – in May 2021 – The Pension Institute has calculated for TVN24 Biznes – how much less after the introduction of the PiS announcement will be paid to those employed under a mandate contract, assuming that contributions are paid for other reasons up to PLN 2,800 – e.g. under an employment contract. The table shows that on an additional contract, an order in the amount of PLN 2,000, the employee will get “on hand” slightly over PLN 130 less, with PLN 5,000 – almost PLN 330 less, and with PLN 10,000 – almost PLN 660 less.

But not only employees will lose from these reforms, according to IE data. The costs of the client will also increase, as with a remuneration of PLN 2,000 from the additional contract, the order will have to incur a total cost of just over PLN 2,400, with a remuneration of PLN 5,000, it will cost over PLN 6,000, and with a remuneration of PLN 10,000 – over PLN 12,000.

Pension Institute

Payment of commission contracts. Expert: This is a big net loss

According to Oskar Sobolewski from the Pension Institute, this reform “is definitely necessary”. – Undoubtedly, the system needs to be tightened in this respect – he assessed. The expert reminded that each pension contribution is a higher pension in the future.

He emphasized, however, that “it is certainly a large net loss for both the contractor and greater costs for the customer,” he said.

– Both the principal will pay more and the net remuneration for contractors will be lower. There is also the question of the health contribution and the lack of middle class relief for contract workers. Here, a few new threads have emerged in the process and these orders will be much less favorable and will be much more expensive if these changes from the Polish Deal come into force – he said.

Sobolewski stated that the change should not be introduced in 2022. – This vacatio legis should be longer. Also possible premium orders for “yes”, but from 2023 – he said.

Polish Order – changes in taxes

Last week The Council of Ministers adopted the bills concerning the tax aspect of the Polish Order. According to the Sejm’s work schedule, their first reading is scheduled for Friday.

The project assumes, among others, increasing the tax-free amount and changes in the health insurance premium – for employees and entrepreneurs.

Main photo source: Margy Crane / Shutterstock

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