Poland: New rules limit number of employees entitled to company social fund benefits

Under new regulations in force from 1 January 2017, the threshold for the establishment of a company social fund (ZFŚS) is 50 employees (it was previously 20). Such a move drastically reduces the number of employees eligible for such a form of occupational welfare. Employers welcomed the revision while trade unions were critical.


Occupational welfare in Poland is not generous. The main pillar of occupational welfare, in terms of the incidence and number of employees covered, is the ‘company social funds’ (zakładowe fundusze świadczeń socjalnych, ZFŚS). ZFŚS are special funds dedicated to providing for social purposes, derived from annual employer contributions and stored in a separate bank account. The funds are operated according to internal rules, called the ZFŚS regulation.

Legal context

Under the Company Social Fund Act, money accumulated in a ZFŚS can be allocated to three objectives.

The first covers the social expenses of eligible persons, for example:

  • leisure – mainly holidays (including for children) or a cash equivalent for employees who do not take a holiday;
  • cultural and educational activities, for example, payment for theatre, opera, concert or cinema tickets or covering the costs of cultural events in the workplace;
  • sports and recreation activities – organising sports events for employees and their families or financing sports equipment;
  • financial and material aid, including a one-time allowance to employees in financial need;
  • housing loans for the maintenance and purchase of flats or houses.

The other two are:

  • co-financing the costs of workplace social facilities – for example, furnishing workplace gyms or recreational areas;
  • covering the costs of establishing and operating childcare facilities at the pre-school level of education (nurseries and kindergartens).

Only specific categories of employers are obliged to establish ZFŚS. Establishing a ZFŚS is compulsory for:

  • employers with at least 50 employees (full-time equivalent) on the payroll, as of 1 January in a given year;
  • employers that hold the legal status of national budgetary units or local budgetary units (public entities which are neither enterprises nor parts of the administration), regardless of how many people they employ.

Employers who do not meet either of these conditions may decide whether or not to establish a ZFŚS. In financial terms, the ZFŚS relies on employer contributions. The contribution per employee amounts to 37.5% of the average gross monthly wage in the national economy. The point of reference is the figure from the previous year; however, in practice, the reference figure used for calculations had been effectively frozen since 2012.

Recent changes

Until recently, the establishment of a ZFŚS was mandatory for employers with at least 20 employees. This left all microenterprises (which account for nearly 96% of all companies in Poland and employ almost 40% of the workforce) and many small companies (with 10–19 staff) unbound by the legal regulation. Thus around half of all employees in Poland did not have access to this form of occupational welfare, even before the end of 2016.

Furthermore, there were legal ways out for employers wishing to avoid the burden of ZFŚS and these are still in place, as the revision of the Company Social Fund Act left them untouched. For example, in non-unionised workplaces, the employer can eliminate the possibility of a ZFŚS through a special clause included in the ‘pay regulation’ (an internal workplace regulation). Unionised workplaces may also be exempted from a ZFŚS through a special clause in the collective agreement or, in the absence of a collective agreement, with the consent of workplace-level trade unions. If there is a ZFŚS and no trade unions, the employer must secure the consent of the ‘employee representative appointed in a way usual for the employer’ (a figure employed widely in labour law regulations in Poland but never specifically defined, which leaves considerable room for interpretation). 

Under new regulations (from 1 January 2017), the threshold for establishment of a ZFŚS is significantly higher, at 50 employees. Employers with fewer than 50 employees can choose to create a ZFŚS, and in unionised workplaces with at least 20 and fewer than 50 employees, unions can demand the establishment of a fund.

The new legislation reduces the number of employees eligible for this form of welfare. According to the government, in the background note to the draft legislation submitted to the parliament in late 2016, the proposed changes were argued for as follows:

Increasing volume of employment above 19 employees entails an obligation to create company social funds for an employer. As a result, business is afraid of expanding workforce on the basis of employment contracts, impeding their own development either by choosing civil law contracts or falsely splitting the company into smaller units. According to a survey conducted […] in May 2016 within the Panel of Polish Enterprises of PARP on the group of 388 respondents (representing the business community […] 41.2% of entrepreneurs indicated elimination of the obligation to establish a company social fund as a change that can best improve functioning of their business.

From the employee perspective, the changes in the law are somewhat compensated by the fact that the reference figure used for calculating the amount of a write-off per employee was raised by 91 PLN (roughly €20), though this still does not fully recompense for the gap (an increase of 275 PLN or about €65 would).

Among the national level social partners, only the employer confederation Lewiatan submitted its own formal opinion on the draft (PDF) during the legislative process, reviewing it in a positive way. Among trade unions, the All-Poland Alliance of Trade Unions (OPZZ) was explicitly against the idea.


The government’s move damaged its pro-employee reputation. It is difficult to say whether this is incidental or a sign that governmental policy is shifting toward a pro-business course at the expense of labour. The latter interpretation is supported by public declarations made by the influential Minister of Development and Deputy Prime Minister Mateusz Morawiecki, as well as by several events. For example, there has been slow progress on the ‘no trading on Sundays’ proposal promoted vigorously by the Independent and Self-Governing Trade Union Solidarity (NSZZ Solidarność) (seen as a close ally to the ruling camp) and a stalemate over proposed amendments to the Trade Unions Act aimed at eliminating unconstitutional clauses that limit the right to association.

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