Employment Termination: Justified Reason
Termination of employment contract in Poland requires justified reason which shall be objective, true, existing and may be of the following nature:
- employee-related – for example poor performance, frequent absences from work, neglecting obligations, loss of trust due to specific circumstances.
- non-employee related – for example liquidation of job position, reduction of employment level due to economic, business, or organizational issues – in case of employers hiring at least 20 employees, this type of termination is separately regulated by the Act Collective Redundancy. Key consequence of that is the employee shall be entitled to additional severance pay (severance payment) in the amount of 1-3 monthly remuneration, depending on his/her work seniority.
Termination Procedure and Formalities
Regular employment termination in Poland is processed by placing unilateral written termination notice of the employer. It must be signed by wet signature or special qualified e-signature by authorized signatory (as per rules of representation of the Employer). The termination notice must include certain mandatory elements as: information on the right to appeal, justification and reason of termination.
Notice Period in Poland
The employment agreement will expire along with lapse of statutory notice periods which are the following (for permanent employee with indefinite employment contract):
- 2 weeks’ notice – seniority of less than 6 months
- 1 month notice – seniority of more than 6 months
- 3 months’ notice – seniority of more than 3 years
Exceptionally – notice periods may be extended by contractual stipulations. According to Polish Employment Law 1- and 3-months’ notice periods – starts to run from the beginning of next month. That is why in practice usually terminations in Poland are planned at the end of the calendar month.
Trial period contracts (probation contracts) have shorter notice periods.
Disciplinary Termination (termination without notice)
Disciplinary / immediate termination route may be used if there is a justified reason in the form of:
- serious violation the basic duties,
- offense, which makes further employment impossible, and if the offense is obvious or has been confirmed in the final court ruling,
- loss of permit required to perform employment related duties.
Appeal Against Termination of Employment Contract
As per Polish law – each termination of employment contract may be appealed against by the employee to the court of law. The appeal shall be lodged by the employee within 21 days from the date of placing the termination letter. Polish court will examine if the termination was lawful (e.g. if all formal requirements were preserved), and justified. Remedies (claims) available to the employee are the following:
- reinstatement to work, or
- compensation for the amount up to 3-months’ salary, but not less than the applicable statutory notice period.
In case of reinstatement to work the labor court may also adjudicate compensation for the time being without work but, in case of 3-month statutory notice period, no longer than for 1-month. It is the employee who chooses the remedy, nonetheless they labor court may decide to grant compensation instead of reinstatement to work if it is for reasonable cause.
Other Important – Termination Related
Work During Notice of Termination
- During notice of termination Employee may work as usual or may be released from obligation to work by the Employer, but with right to salary.
Unused Holiday Entitlement
- If Employee has unused holiday leave, the Employer may oblige him/her to use it during notice period (no consent of the Employee is required). If the accrued holiday entitlement is not used during notice period, the Employer will be obliged to pay the cash equivalent.
- Employee during termination notice is entitled to 2 working days of leave (during 2 weeks or 1 month notice period) or 3 working day of leave (during 3 months’ notice period)
- It shall be noted that if according to separate internal regulation the Employee is covered by any bonus regulation, where certain goals were set to achieve that shall result in payment of the bonus, the Employer will be obliged to make a bonus payment proportionally to a bonus period, if the Employee had met the goals.
- It is important to verify if the Employee does not have any separate – post employment non-compete arrangement as those may result in obligation to pay compensation upon employment termination. Form other perspective – non-payment of such compensation may result in termination / invalidity of such non-compete arrangement.
Severance in Poland
Severance pay is due only in Poland in case of employers hiring at least 20 employees.
If it is due it amounts to:
- 1-month salary – seniority of less than 2 years
- 2-months’ salary – seniority of 2 – 8 years
- 3-months’ salary – seniority of more than 8 years
Maximum severance payment is limited by the amount of 54.000 PLN until end of 2023 (i.e. 15 x Minimum Salary for particular year).
Protection Against Termination of Employment Relationship
Please note that certain groups of employees are protected against termination in Poland i.e.:
- pregnant women,
- employees absent from work upon justified reasons (employee’s justified absence, i.e. for example sick leave, holiday leave, maternity or paternity leave etc.),
- employees protected by trade unions (selected trade union member/s),
- employees in pre-retirement age.
As per Polish Labour Code in case of those employees the employer may not terminate their contracts through the whole time the protection lasts i.e. as long as employee is absent, in pre-retirement protection, on maternity/parental leave. In case of pre-retirement, pregnancy and maternity leave only option in case of liquidation of work positions of such employees is to change their working conditions (moving them to other job position but with guarantee of the same remuneration) or release them from obligation of work with right to remuneration. In case of terminating a contract of protected employee, it may be expected that the labour court would adjudicate reinstatement to work or the compensation equal to three months remuneration (whatever will be employee’s choice to apply for). In addition, in such a case, if the employee will be reinstated to work, a remuneration for whole time being without work (time from dissolution of a contract till reinstatement, if an employee does not start another employment) could be adjudged to the employee. Therefore, it is important to make sure that the Employee is not subject to special protection against termination before termination letter is effected.
Mutual Termination Agreement
As per Polish Law – mutual dissolution agreement (MTA) can be concluded between the Employee and the Employer at any time:
- in the form of written agreement
- there is not requirement of explaining the “reason” of dissolution
- there is no mandatory notice period to be agreement in MTA
- terms and conditions of dissolution may be agreed freely (with certain exemptions)
Key benefit of mutual termination is that Employee has very limited possibilities of overturning it and appealing to the Court.
What cannot be agreed in Mutual Termination
Employment Law in Poland limits parties’ ability of the parties to agree on certain aspects in the mutual termination agreement, therefore it is highly recommended that the agreement is drafted or approved by employment attorney.
In particular, the parties cannot agree in the MTA on the following:
- waiver of the Employee claims
- waiver of the Employee remuneration
- waiver of the Employee severance
- waiver of unused holiday entitlement / equivalent
- modify court jurisdiction
- modify applicable law
What is usually agreed in Mutual Termination Agreement
In the mutual agreement parties usually agree on the following:
- Date of Employment Contract dissolution
- which may be “immediate” upon signing, or
- deferred – i.e. at later designated date, agreed between the parties
- Compensatory Payment – which usually include:
- payment for the notice period that the Employee would receive upon regular termination
- supplement – as an incentive to conclude MTA and to reflect claims that can arise from various grounds (bonuses, equivalents, etc.)
- Work / Release from Work / Unused holiday
- in case of deferred dissolution parties often allow the employee to use the holiday in nature and afterwards release the employee from obligation to work until expiry date of the Employment Agreement
- Non-compete after lapse of employment
- if the employee shall be covered by non-compete – parties shall agree on the term and mandatory compensation
- Confidentiality after lapse of employment
- Usage of Benefits and terms of return (e.g. car, mobile, devices etc.)
Employee Offboarding in Poland
Termination of employment is the moment for the employer when he must fulfill a number of obligations towards the employee with whom he is leaving.
The employer shall act as follows:
Grant Job Seekers Leave
In the event of termination of the employment contract by notice by the employer, the employee acquires the right to leave for job search in the amount of:
- 2 working days during the two-week and one-month notice period,
- 3 business days – during the period of three months’ notice.
It is worth remembering that the above privilege is not due when:
- the employee terminates the employment contract,
- the contract is terminated by mutual agreement of the parties after the expiry of the period for which the contract was concluded, when the contract is terminated without notice.
Employment certificate after termination
In connection with the termination of the employment contract, the employer’s task is to immediately issue a work certificate. This document should be handed over to the employee on the same day on which the employment contract ends – provided that the employer does not intend to establish another, further employment or contract with him within 7 days from the date of termination or expiry of the previous employment contract.
If, for objective reasons, the employer is unable to provide the employee (or a person authorized by him) with the employment certificate within the aforementioned period, he should complete the formalities within a maximum of 7 days, sending the certificate to the employee by traditional mail (i.e. via a postal operator within the meaning of the Postal Law Act) or deliver them in another way.
In the case of employees employed after December 31, 2018, in addition to the employment certificate, information to the employment certificate should be prepared – in paper or electronic form. Information in subject shall contain a notification about:
- the period of storing employee documentation;
- the possibility for the employee to collect the employee documentation by the end of the calendar month following the expiry of the employee documentation storage period – for a period of 10 years from the end of the calendar year in which the employment relationship was terminated or expired, unless separate regulations provide for a longer period of employee documentation storage;
- destruction of employee documentation in the event of failure to collect it.
Equivalent for unused leave
The employee obtains the right to a cash equivalent on the date of the termination without notice, or expiration of the employment relationship. If the employee, during his employment at the workplace and during the notice period, has not used his holiday leave, then the employer is obliged to pay the equivalent for the unused holiday.
Severance pay / retirement severance
An employee has the right to severance pay when his employment contract is terminated on the basis of the Act of March 13, 2003 on special rules for terminating employment contracts and relationships with employees for reasons not related to employees.
Also, when an employee retires or retires, the employer is obliged to pay severance pay in the amount of one month’s salary.
Compensation for shortening the notice period is due to the employee when the employer, terminating the employee’s employment contract for an indefinite period of time for reasons not attributable to the employee, shortened the three-month notice period to a maximum of one month. In such a case, the employee is entitled to compensation in the amount of remuneration for the remaining, unfulfilled part of the notice period.
Collect the employer’s property
Employee shall be obliged by the employer to return to the employer all objects belonging to the employer, including in particular: laptop, cell phone, keys, permits, entry cards, bank cards and codes, documents, files, collection of data, documents of proxy, correspondence, information carriers and data collected on them, as well as all information belonging to and concerning the employer and/or his clients and which the employee has been employed or learned in connection with the work performed- placed in employer’s premises, place of performing duties by the employee or any other place.
In case the parties signed the hand-over protocol, the return of the property shall also be evidenced by signing the protocol containing information about the equipment that has been returned and it’s condition.
Deregister employee from ZUS (Social Security)
After termination of the employment relationship (with notice or without notice), the employer should deregister the employee from insurance on the ZUS ZWUA form within 7 days of termination of the employment relationship. Deregistration from health insurance also includes family members who have been assigned to it.
Inform the enforcement authority about the termination of employment.
Pursuant to the Labor Code, the employer is obliged to include in the employment certificate information about the possible garnishment of remuneration, if it takes place in the case of a given employee.
In this case, the employer should also inform the enforcement authority about the termination of employment of such an employee.
As you can see it is important to run proper payroll and accounting records from the very beginning of company registration in Poland in order to be able to fulfil all post termination requirements.