magdalena andrałojć, amsterdam 27.01.2005 measuring wages and working hours, and calculating wages...

Magdalena Andrałojć, Amsterdam 27.01.2005Magdalena Andrałojć, Amsterdam 27.01.2005

Measuring wages

and working hours,and calculating wages in Poland

Magdalena AndrałojćMagdalena AndrałojćThe Poznan University of The Poznan University of

EconomicsEconomics


The outline of presentationThe outline of presentation

1.1. The most popular contracts The most popular contracts concerning work in Polandconcerning work in Poland

2.2. Gross and net wage Gross and net wage 3.3. Working hours Working hours 4.4. Some Polish data – Central Some Polish data – Central

statistical officestatistical office5.5. Summary - comments to WIQSummary - comments to WIQ


The most popular contracts The most popular contracts concerning work in Polandconcerning work in Poland

1.1. On the basis of civil lawOn the basis of civil law Special contract 1 - Special contract 1 - contract by resultscontract by results - -

„Umowa o dzieło” „Umowa o dzieło” Special contract 2 - Special contract 2 - free-for-task agreementfree-for-task agreement

- „Umowa zlecenie” - „Umowa zlecenie”

2.2. On the basis of labour lawOn the basis of labour law contract of employmentcontract of employment – – permanent permanent

contract, fix-term contract, replacement contract, fix-term contract, replacement contractcontract


Contracts concerning work Contracts concerning work indicated in WIQ indicated in WIQ

Question E01 and E03 „what kind of contract do you Question E01 and E03 „what kind of contract do you have?have?

permanent contract (labour law)permanent contract (labour law) fixed-term contract (labour law)fixed-term contract (labour law) apprentice, trainee (civil law, no-name agreement)apprentice, trainee (civil law, no-name agreement) replacement contract (labour law)replacement contract (labour law) community work scheme / subsidized employment community work scheme / subsidized employment

(labour law)(labour law) contractor / labour-only subcontractor (contractor / labour-only subcontractor (contract contract

by results, free-for-task agreement - by results, free-for-task agreement - civil law)civil law) contract with temp agency (labour law)contract with temp agency (labour law) seasonal work (labour law, sort of fix-term contract)seasonal work (labour law, sort of fix-term contract)


Contract by resultsContract by results

1.1. There are two partners of the contract – There are two partners of the contract – contractor, who agrees to do some work and contractor, who agrees to do some work and client who agrees to pay for client who agrees to pay for resultsresults of this work of this work (e.g. writing a book)(e.g. writing a book)

2.2. It is not subordinate relationshipIt is not subordinate relationship3.3. Client has to pay for result Client has to pay for result 4.4. Written form is requiredWritten form is required5.5. The time limit is agreed, but working hours are The time limit is agreed, but working hours are

notnot6.6. The cost of achieving income is 20% (without The cost of achieving income is 20% (without

copyright) or copyright) or 50% (with copyright)50% (with copyright) of contractor’s of contractor’s income – this amount diminishes the basis of tax income – this amount diminishes the basis of tax calculationcalculation

7.7. Social security contribution is not paidSocial security contribution is not paid


Free-for-task agreementFree-for-task agreement1.1. There are two partners of the contract – contractor, There are two partners of the contract – contractor,

who agrees to do some work and client who agrees who agrees to do some work and client who agrees to pay for to pay for doing this workdoing this work (e.g. teaching), (e.g. teaching), contractor gives a promise to do the work as good contractor gives a promise to do the work as good as he can, but doesn’t give a promise to achieve as he can, but doesn’t give a promise to achieve resultsresults

2.2. It is not subordinate relationshipIt is not subordinate relationship3.3. Client doesn’t have to pay if the partners agreed soClient doesn’t have to pay if the partners agreed so4.4. Written or verbal formWritten or verbal form5.5. The time limit is agreed, but working hours are notThe time limit is agreed, but working hours are not6.6. The cost of achieving income is The cost of achieving income is 20% (without 20% (without

copyright)copyright) or 50% (with copyright) of contractor’s or 50% (with copyright) of contractor’s incomeincome

7.7. There is an obligation to pay social security There is an obligation to pay social security contributioncontribution


Contract of employmentContract of employment1.1. There are two partners of the contract – There are two partners of the contract –

employeeemployee, who agrees to do some work and , who agrees to do some work and employeremployer who agrees to pay for work and who agrees to pay for work and secure the good working conditionsecure the good working condition

2.2. It is subordinate (work) relationshipIt is subordinate (work) relationship3.3. Employer has to pay agreed amount of money Employer has to pay agreed amount of money

for employee in agreed period of timefor employee in agreed period of time4.4. Written form is requiredWritten form is required5.5. Working hours are agreedWorking hours are agreed6.6. The cost of achieving income is 102,25 PLN per The cost of achieving income is 102,25 PLN per

month (1227 PLN per year)month (1227 PLN per year)7.7. There is an obligation to pay social security There is an obligation to pay social security

contributioncontribution


Type of Type of contractcontract

Legal Legal basemebasementnt

Object Object of the of the contraccontractt

RelationshRelationshipip

Secured Secured good good working working conditioncondition

Form Form of of agreeagreementment

WorkinWorking hoursg hours

Cost of Cost of achievinachieving g incomeincome

Social Social security security contribucontribution and tion and healthhealth

Contract Contract by by resultsresults

Civil lawCivil law Results Results of workof work

Equal Equal (contracto(contractor – client)r – client)

NoNo WrittenWritten Not Not agreedagreed

20% 20% 50%50%

NoNo

Free-for- Free-for- task task agreemagreementent

Civil lawCivil law Doing a Doing a workwork

Equal Equal (contracto(contractor – client)r – client)

NoNo Written Written or or verbalverbal

Not Not agreedagreed

20%20%

50%50%YesYes

Contract Contract of of employemployment ment

Labour Labour lawlaw

Doing a Doing a workwork

DependenDependence ce (employee (employee – – employer)employer)

NoNo WrittenWritten AgreedAgreed 102,25 102,25 PLN per PLN per month month (1227 (1227 per per year)year)

YesYes

Contract by result, free-for-task agreement, and contract of employment

compared


Does question E03 „what kind of contract do you have?” Does question E03 „what kind of contract do you have?” correspond with A01 „Which description matches best your correspond with A01 „Which description matches best your

current employment activity?” If yes, who has to answer E03?current employment activity?” If yes, who has to answer E03?

A01

• Employee

• Family worker / working for family business

• Self- employed

• Apprentice / trainee

• In a job creation scheme

• School pupil, student in full-time education

• Unemployed / looking for a job

• Sickness benefit / incapacity for work

• other

E 01 and E03

• permanent contract (labour law)

• fixed-term contract (labour law)• apprentice, trainee (civil law)• replacement contract (labour law)• community work scheme / subsidized employment (labour law)• contractor / labour-only subcontractor (civil law)• contract with temp agency (labour law)• seasonal work (labour law, sort of fix-term contract)

Contract by Contract by resultsresults

Free-for- task Free-for- task agreementagreement


Gross and net wageGross and net wage

NET WAGE = GROSS WAGE – STATUTORY NET WAGE = GROSS WAGE – STATUTORY DEDUCTIONDEDUCTION

Statutory deduction:Statutory deduction:

1.1. Social security contribution (pension contribution, Social security contribution (pension contribution, sick live contribution)sick live contribution)

2.2. Obligatory health contributionObligatory health contribution

3.3. Tax deduction (tax deduction is made every month, Tax deduction (tax deduction is made every month, but at the beginning of each year employee has to but at the beginning of each year employee has to square up with the Internal Revenue/Taxation square up with the Internal Revenue/Taxation Office previous year – employee can use tax relief Office previous year – employee can use tax relief and then he receive some money back)and then he receive some money back)


Social security contributionSocial security contribution

18,71%18,71% of pay for worked time of pay for worked time (contracted pay + overtime – pay (contracted pay + overtime – pay getting during sick live)getting during sick live)

up to 33 days in a year pay is up to 33 days in a year pay is covered by employer, from 34 day covered by employer, from 34 day employee gets sickness benefit from employee gets sickness benefit from Social Security)Social Security)


Obligatory health contributionObligatory health contribution

Basis of health contributionBasis of health contribution = income = income (contracted pay + overtime + pay getting (contracted pay + overtime + pay getting during sick live) – social security contributionduring sick live) – social security contribution

2005 – 8,5% of basis (7,75% is deducted from the tax and 2005 – 8,5% of basis (7,75% is deducted from the tax and 0,75% is deducted from income after tax – decreasing 0,75% is deducted from income after tax – decreasing net wage)net wage)

2006 – 8,75% (7,75% from tax, 1% from income after tax)2006 – 8,75% (7,75% from tax, 1% from income after tax)

2007 – 9% (7,75% from tax, 1,25% from income after tax)2007 – 9% (7,75% from tax, 1,25% from income after tax)


Tax deductionTax deduction

Basis of income taxBasis of income tax = = incomeincome (contracted pay + overtime + pay (contracted pay + overtime + pay getting during sick live) getting during sick live) – social – social security contribution - cost of security contribution - cost of achieving the incomeachieving the income (20% or 50% (20% or 50% or 102,25 PLN per month depends on or 102,25 PLN per month depends on the contract) the contract)


Income taxIncome taxProgressive income tax scale, Progressive income tax scale, 4 tax rate – 19%, 30%, 40%, 50%4 tax rate – 19%, 30%, 40%, 50%free tax quota – 2 790 PLN per year (232,5 PLN per month)free tax quota – 2 790 PLN per year (232,5 PLN per month)it means that we can deduct from calculated tax 530,08 PLN it means that we can deduct from calculated tax 530,08 PLN

per year (2 790PLN*0,19) or 44,17 PLN per month (232,5*0,19per year (2 790PLN*0,19) or 44,17 PLN per month (232,5*0,19))

income scale

up to 37 024 PLN per year(3 085,33 PLN per month)

19% tax basis – 530,08 PLN per year or (44,17 PLN per month)

37 024 – 74 048 per year(3 085,33 – 6 170,67 per month)

6 504,48 + 30% surplus over 37 024 per year (542,04 + 30% surplus over 3 085,33 per month)

74 048 – 600 000 per year(6 170,67 – 50 000 per month)

17 611,68 + 40% surplus over 74 048 per year (1467,64 +40%)

Over 600 000 PLN per year(50 000 per month)

227 992,48 + 50% surplus over 600 000 per year (18999,37 + 50% surplus per month)


Gross and net wageGross and net wageContract by resultsContract by results

Net = gross - tax deduction (using 20% or 50% of cost of Net = gross - tax deduction (using 20% or 50% of cost of achieving the income)achieving the income)

Free-for- task agreementFree-for- task agreement

Net = gross – (social security contribution + obligatory health Net = gross – (social security contribution + obligatory health contribution + tax deduction) using 20% or 50% of cost of contribution + tax deduction) using 20% or 50% of cost of achieving the incomeachieving the income

Contract of employmentContract of employment

Net = gross – (social security contribution + obligatory health Net = gross – (social security contribution + obligatory health contribution + tax deduction) cost of achieving the income contribution + tax deduction) cost of achieving the income 102,25 PLN per month 102,25 PLN per month

http://www.tempservice.com.pl/pl/dodatki-kalkulator.php


Working time and wage Working time and wage estimationestimation

Contract by resultsContract by results

Free-for- task agreementFree-for- task agreement

We can estimate hourly wage using question E22

„On which payment period was your last wage

based?” + usual hours on the last project

It is difficult to estimate an annual wage

We can treat them as self-employed – ask them for annual earnings or just exclude

them


Working time and wage Working time and wage estimationestimation

Contract of employmentContract of employmentCalculation using contractual (standard) hours + paid Calculation using contractual (standard) hours + paid

overtimeovertimeStandard working day = 8 hoursStandard working day = 8 hoursStandard working week = 5 daysStandard working week = 5 days

Standard working month = 21 daysStandard working month = 21 daysStandard working year = 251 days Standard working year = 251 days

It means 114 days off It means 114 days off (103 days of (103 days of weekends + 11 statutory free days)weekends + 11 statutory free days)

Almost every third day!!!Almost every third day!!!

+ 23 days of paid holidays+ 23 days of paid holidays


Measuring wages in national survey – Measuring wages in national survey – Central Statistical OfficeCentral Statistical Office

Structure of wages by occupation in October 2002 Structure of wages by occupation in October 2002 (2004 is coming soon)(2004 is coming soon)

Monthly gross wage = contracted pay (including flat Monthly gross wage = contracted pay (including flat wages and salaries, overtime bonuses, functions, wages and salaries, overtime bonuses, functions, seniority bonuses) + overtime + payments for seniority bonuses) + overtime + payments for periods exceeding one month in amount due to one periods exceeding one month in amount due to one month (e.g. one third of the quarterly premium, one month (e.g. one third of the quarterly premium, one sixth of the last paid semi-annual premium, one sixth of the last paid semi-annual premium, one twelfth of the annual premium or bonuses) + twelfth of the annual premium or bonuses) + payments from balance surplus in co-operatives payments from balance surplus in co-operatives and from profit for distribution in enterprisesand from profit for distribution in enterprises

Monthly gross wage doesn’t include payments such Monthly gross wage doesn’t include payments such as: anniversary prizes, gratifications, retirement as: anniversary prizes, gratifications, retirement severance-pays, compensations for lost vacations. severance-pays, compensations for lost vacations.


Gross monthly wage in PLN according to age Gross monthly wage in PLN according to age and gender, Poland 2002and gender, Poland 2002

0

500

1000

1500

2000

2500

3000

3500

4000

up to24

years

25 - 34 35 - 44 45 - 54 55 - 59 60 - 64 65 andmore

women

men


Gender pay gapGender pay gap

9,10%

15,44%

21,21%

17,06%

10,08%

14,26%

20,68%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

up to 24years

25 - 34 35 - 44 45 - 54 55 - 59 60 - 64 65 andmore


Gross monthly wage in PLN according to age Gross monthly wage in PLN according to age and gender, Poland 2002and gender, Poland 2002

0

500

1000

1500

2000

2500

3000

up to 1year

2 - 4years

5 - 9-years

10 - 14years

15 - 19years

20 andmore

women

men


Gender pay gapGender pay gap

14,00%15,02%

16,00%

19,34% 19,29%17,04%

0,00%

5,00%

10,00%

15,00%

20,00%

25,00%

up to 1year

2 - 4 years 5 - 9-years

10 - 14years

15 - 19years

20 andmore


Summary – comments to Summary – comments to WIQWIQ

1.1. Indicate in questionnaire (question A1) contract Indicate in questionnaire (question A1) contract by results and free-for-task agreement – routing by results and free-for-task agreement – routing similar to self-employed, some more question is similar to self-employed, some more question is needed (e.g. the time of starting and ending the needed (e.g. the time of starting and ending the project) or just thank them for interest project) or just thank them for interest

2.2. If we want to convert gross to net information If we want to convert gross to net information about cost of achieving the income are neededabout cost of achieving the income are needed

3.3. For calculation hourly wages use contractual For calculation hourly wages use contractual monthly hours with and without paid overtimemonthly hours with and without paid overtime

4.4. Include in the calculation wages from the main Include in the calculation wages from the main job onlyjob only

5.5. In question E29 don’t ask about annual In question E29 don’t ask about annual bonuses, but indicate them only in E31 and ask bonuses, but indicate them only in E31 and ask „how much”„how much”


Thank you!Thank you!Any questions?Any questions?

magdalena andrałojć, amsterdam 27.01.2005 measuring wages and working hours, and calculating wages...

Documents

contract contractor

contract employee

contract relationship

kind of contract

subcontractor contract

health contract

fixterm contract

subordinate work relationship