Minimum wage – features and perspectives

By Izabela Szczygielska, Advocate, Counsel, WKB Wierciński, Kwieciński, Baehr The procedures for setting the minimum wage vary from country to country. Some countries do not provide a minimum wage for all employees. For example, in Germany, the minimum wage for specific sectors is laid down by collective agreements. In this context, it is worth noting that employees seconded to work abroad (within the EU) are entitled to receive the minimum wage in the country to which they are sent. In Poland, the statutory national minimum wage is set annually. In 2016, it is PLN 1,850 (gross) per month. The right of employees to receive a minimum wage derives from the Polish Constitution, which stipulates that the minimum rate of remuneration for work, and the procedure by which it is determined, are to be defined by statute. The right also stems from international and European law and has its roots in economic human rights. The minimum wage is the gross remuneration, and it does not include remuneration for overtime, retirement severance pay and/or jubilee awards. However, the minimum wage is not comprised solely of base salary. For example, it may include entitlements such as a functional allowance or seniority bonus. Currently, in the first year of work, an employee can be paid 80 percent of the statutory minimum wage. The statutory minimum wage in Poland is determined annually by the Social Dialogue Committee, which comprises representatives of three groups of stakeholders: employees, employers and the government. The annual adjustment of the minimum wage not only affects monthly remuneration, but the process also sees adjustments to matters such as sickness benefits, severance payments, amounts exempt from deductions, and bonuses for night work. Under Polish law, if an employee is not granted remuneration at least equal to the statutory minimum wage, he may claim compensation [for the difference], and the employer may also be punished with a fine of between PLN 1,000-30,000. In Poland, the rules regarding minimum wage are only applicable to employees i.e. individuals employed under employment contracts (governed by the Labor Code). As a consequence, individuals hired under other types of contracts (i.e. civil law contracts, such as contracts of mandate or service) are not entitled to the statutory minimum wage. This is significant in the context of the current situation on the Polish market, where such civil law contracts have become an increasingly popular type of employment. In light of this, there has been major discussion about the hourly rates for individuals engaged under contracts of mandate and service. Recently, the new government proposed the introduction of a minimum rate for such contractual workers, amounting to PLN 12 per hour. This is almost equal to the minimum wage per hour for an employee. Nevertheless, the implementation of such a minimum rate would not eliminate many of the other differences between the pay conditions of individuals engaged under civil law contracts and employees (such as remuneration for annual leave, bonuses for overtime work, etc.). It still remains to be seen whether this is just an isolated initiative, or if it heralds a political willingness to close other existing gaps between different types of engagement.