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22 July 2020
The COVID-19 pandemic has resulted in certain changes to Polish law which affect selected financial aspects of the employee ownership programmes implemented in Poland by foreign companies. The pertinent changes involve the local labour law regulations which govern salary deductions for the purpose of covering the subscription price of the financial instruments offered to local employees who participate in such programmes.
In terms of local regulations, while salary deductions may be used as a payment option, Polish law requires that a certain minimum amount of remuneration (80% of the statutory minimum net remuneration) must remain free from deductions.
As part of the legislative package recently adopted by Parliament to soften the economic impact of COVID-19 on employees, the amount which must remain free from deductions has been increased if, as a result of the measures adopted to combat COVID-19, an employee's:
In either case, the amount of remuneration which must remain free from deductions has been increased by 25% for each employee's family member who has no income and is economically dependent on the employee.
A 'family member' includes:
For example, if an employee has two children and their spouse loses their job as a result of the COVID-19 measures, the amount of this employee's remuneration that must remain free from deductions will increase by 75%.
These changes may materially limit employers' ability to use salary deductions as a means of paying for the pertinent financial instruments, particularly employers with many low-paid employees (eg, production workers) participating in the programme.
Unfortunately, this legislative change does not answer the crucial question of when a reduction in an employee's pay (or a loss of their family member's income) is the result of measures adopted in Poland to combat the spread of the pandemic, as opposed to, for example, measures adopted to stop a general or sectoral economic slowdown. Looking at the severity of the pandemic's impact on the global economy, employers should adopt a conservative interpretative position that the required causal link exists (triggering the increase in the deduction-free portion of the salary), unless they can demonstrate persuasive arguments to the contrary.
Employers should follow any updates to these changes carefully and take them into account when implementing any outstanding programmes (or new iterations of such programmes) or launching a new employee programme.
For further information on this topic please contact Andrzej W Kawecki or Jan Pierzgalski at Soltysiński Kawecki & Szlęzak by telephone (+48 22 608 7000) or email (firstname.lastname@example.org or email@example.com). The Sołtysiński Kawecki & Szlęzak website can be accessed at www.skslegal.pl.
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