Greater labour costs on civil law agreements

Parliament is working on changes concerning contribution of commission contracts, which may result in increase of labour costs borne by employers. If civil law agreements are less attractive to companies, either the number of vacancies will increase, or – grey economy.

Currently, commission contracts are contributed, which means that – if they constitute the only insurance title – the contributions to retirement annuity, pension, accident (in some cases) and health insurance must be paid. If an employee has in one company a minimum wage contract which is contributed, and in other company he reports in a statement that he is insured, then a part of contributions does not have to be paid. Joanna Tyrowicz, economist of Warsaw University and National Bank of Poland defines this practice as so called triangle, the prevention of which is the main aim of planned changes by Parliament.

 

The amendment is supposed to consider first and foremost the amount of remuneration, of which the contributions will be paid. Currently, if an employee is hired on few commission contracts, the contributions will be paid only to one of them – most frequently that one which is signed on lower amount, and only the health contribution is paid to the rest of them. The amendment to an act is supposed to introduce a regulation, the aim of which is to pay a pension and retirement contribution to minimal remuneration amount, that is 1 680 zlotys gross. The contributions would be paid only to one contract, or few, which would form at least a minimum remuneration altogether.

 

Consequences will be taken by employees

 

Joanna Tyrowicz believes that introduced solutions will contribute to the increase of labour costs and thus – they will generate an unemployment rate in Poland, especially among people with low qualifications. Just as today employers are not interested in hiring them on an employment contract, so in the future it will not be profitable to them to sign commission contracts. Therefore, the resignation from civil law contracts may have an impact on the increase of illegal employment. Employees do not really have a choice. Perhaps the only option for them will be a “grey economy" – thinks Joanna Tyrowicz.

 

We should add that ultimately the government wants to extend the range of contributions to revenues from works contracts. Till 2017, those changes will be experienced by nearly 2 billion of Poles, three quarters of which are hired on commission contracts, and 25 per cent on works contracts.


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