Obligation to establish a Company Social Benefits Fund

On August 02, 2023, the President of the Republic of Poland signed a law that increases the deduction to the Company Social Benefits Fund (ZFŚS) from July 1, 2023. The base of the contribution (deducted from the pay) is the average monthly salary in the national economy in the second half of 2021, i.e. the amount of PLN 5104.90.

Obligation to establish a Company Social Benefits Fund

The ZFŚS is used to secure the social needs of eligible employees and is created from funds paid by the employer into a bank account created for this purpose.
A Company Social Benefit Fund must be obligatorily established by organizations in the public finance sector. However, private employers are also subject to this obligation, but under certain conditions:

• employers with at least 50 full-time equivalent employees as of January 1 of a given year;
• employers with at least 20 and less than 50 full-time equivalent employees as of January 1 of a given year, in a situation where a trade union organization has applied for the creation of the ZFŚS.

It is worth noting, however, that for entities outside the state budget sector, there is a possibility to waive the creation of the ZFŚS, despite meeting the above conditions, with the implementation of relevant provisions in the labor regulations or collective agreement.

Calculation of funds for the company social benefits fund and increase in the amount of the deduction

The table below shows the changes in the amount of deduction from pay to the ZFŚS:

*It is possible to increase the deduction when employing people with moderate or significant disabilities, retirees and pensioners. Due to amendments being made during the calendar year, it will be necessary to take into account not only the changing number of employees, but also to increase the amount of deduction during the year. In order to calculate the deduction for the entire year 2023, it is necessary to take into account:

• half (6 months period) of the amount of the annual contribution for the period from January to June 2023;
• half (6 months period) of the amount of the annual contribution for the period from July to December 2023

The amount of the annual deduction is the sum of the two above amounts.

The contribution to the Company Social Benefits Fund is made in two installments. The first one, in the amount of 75% of the equivalent of the input contributions, must be transferred no later than May 31 of a given year. The remaining amount is paid by September 30. In view of the approaching deadline for the second installment to be contributed to the ZFŚS, namely June 30, 2023, the calculation this month should already take into account the equivalent of contributions and increases calculated on two different bases and adjust the total for the payment made in May 2023.

The effect of the increase in the deduction on the amount of vacation pay

The change in the deduction amount will also affect vacation pay, which constitute a 37.50% basic deduction from pay (as of July 2023 – PLN 1914.34).

Vacation pay is paid once a year to any employee who takes a leave of absence of at least 14 consecutive calendar days in a given calendar year. The amount of vacation pay for an employee is determined in proportion to their workload. Vacation pay is paid no later than the last day before the start of vacation leave.

A private employer has the right to set the amount of benefits paid at a level lower than the equivalent of the basic deduction of PLN 1914.34. The regulations only indicate the upper limit of vacation pay.  Under the right conditions, employers have the option to decide not to pay vacation benefits.

This document was prepared for informational purposes only and is of a general nature. Every time before taking actions on the basis of presented information, we recommend obtaining a binding opinion of TPA Poland experts.