Employers held to account for late payment of wages

The National Labour Inspectorate has found that, in the first half of 2009, the scale of delays in remuneration payments has increased. This is another factor suggesting that the cash flow of Polish employers is lower than in recent years. Employers who are in arrears with paying wages will be charged a fine. Small companies are experiencing particular problems regarding payments, especially in the retail, manufacturing and construction sectors.

Deteriorating business outlook

According to estimates presented by the Ministry of Labour and Social Policy (Ministerstwo Pracy i Polityki Społecznej, MPiPS), the unemployment rate in Poland in July 2009 increased by 0.1 percentage point compared with June. The news is of some concern, as usually the summer months mark a temporary decrease in the unemployment rate due to a higher demand for seasonal labour. This year’s opposite trend is evidence that the Polish economy is in fact – albeit relatively mildly – suffering the effects of the global economic crisis.

The worsening condition of Polish companies is also confirmed by the National Bank of Poland (Narodowy Bank Polski, NBP) survey on the state of the economy. It finds, among other things, that employers are postponing payments to their contracting parties. Based on its survey, comprising 824 economic entities, NBP reported that in June 2009 an average company made payments after 40 days of receipt of invoice. Settling of accounts was mostly deferred by construction and transport companies employing fewer than 50 staff. However, even revenue offices and courts of justice found themselves on the list of debtors in the first half of 2009, as they deferred paying their bills to Polish Mail (Poczta Polska). The scale of the problem is significant, according to the NBP survey findings, as one enterprise in eight is failing to make timely payments of its liabilities.

Workers wait for their wages

The economic recession has also affected the situation of employees. Officers of the National Labour Inspectorate (Państwowa Inspekcja Pracy, PIP) inspected 40,000 companies in the first half of 2009, compared with 35,000 enterprises in the first half of 2008. On the basis of this inspection, PIP observed that, in the course of one year, the scale of legal infringements with respect to wage payments has increased. During the first half of 2009, 46,000 employees did not receive their remuneration; during the same period of 2008, the problem had affected 23,000 workers. Moreover, the amount of the unpaid wages increased from PLN 44 million (€10.8 million as at 24 August 2009) to PLN 680 million (€167 million) year-on-year.

Breaches of the labour law were also more frequent in 2009 than the year before, amounting to 9,200 cases compared with 8,200 in 2008. During the first six months of 2009, an increased number of official complaints were reported to PIP (513 compared with 185 in 2008) regarding lay-offs for reasons unrelated to employees. Such lay-offs occur in the context of company restructuring or the liquidation of workplaces, for example, which imply the payment of severance in accordance with the Act of 13 March 2003 on the particular rules of termination of labour relations for reasons unrelated to employees.

More employers being fined

As a consequence of the violations, PIP officers imposed fines on employers. Their number, following the increased infringements on employee rights during the period in question, rose from 3,931 employers in the first half of 2008 to 4,408 in the first six months of 2009. The only indicator that has diminished in 2009 was the number of cases against employers that were transferred to courts by labour inspectors: 1,091 in the first half of 2009 compared with 1,226 in the first half of 2008.

The data collected by PIP imply that the biggest pay problems occur in small companies employing up to 49 people. In terms of economic sector, the most pay infringements were reported in wholesale and retail trade and repair of goods (one employer in three), manufacturing (23.1% of the inspected companies) and construction (11% of the inspected companies).

Commentary

It seems that deferred compensation payments are one of the derivatives of the problems that employers have to face as a result of the recession. However, trade unions often suggest that employers tend to use a difficult economic situation as a pretext to justify the abuse of labour law. The coming months and years will reveal whether the infringements connected with the untimely payment or non-payment of wages have been a serious consequence of the deteriorating economic climate and whether it will be a long-term element of the Polish business outlook.

Piotr Sula, Institute of Public Affairs (ISP)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment