Accounting for small businesses
16 December 2024
Forms of business taxation
December 20, 2024
Costs of hiring an employee
What are the costs of hiring an employee?
Hiring an employee in Poland involves a number of costs that the employer must include in the company's budget. In addition to the gross salary, there are additional financial burdens, such as social security, health insurance and other funds. Below we present the main components of the costs of hiring an employee in 2024.
Gross salary
This is the amount that the employer undertakes to pay the employee before deductions of taxes and contributions. From 1 July 2024, the minimum wage is PLN 4,300 gross.
Social and health insurance contributions
The employer is required to pay part of the social and health insurance contributions for the employee. These contributions include:
- Pension contribution (9.76% of the assessment base): Financed equally by the employer and employee.
- Pension contribution (6.5%): 1.5% financed by the employee, 4.5% by the employer.
- Sickness insurance contribution (2,45%): Entirely financed by the employee.
- Accident contribution: The rate depends on the type of business and number of employees; financed entirely by the employer.
- Contribution to the Labour Fund (2,45%): Financed by the employer.
- Contribution to the Guaranteed Employee Benefits Fund (0.10%): Financed by the employer.
For example, for a minimum wage of PLN 4,300 gross, the contributions paid by the employer are:
- Pension contribution (9,76%): 419.68 PLN
- Pension contribution (6.5%): 279.50 PLN
- Accident contribution (1.67%): 71.81 PLN
- Labor Fund (2,45%): 105.35 PLN
- Guaranteed Employee Benefits Fund (0.10%): 4.30 PLN
In total, this gives additional costs for the employer of approximately PLN 880 per month.
Employee Capital Plans (PPK)
If the employer participates in PPK, they are obliged to pay a basic contribution of 1.5% of the employee's gross salary. For a salary of PLN 4,300, this is PLN 64.50 per month.
Recruitment and implementation costs
The process of hiring a new employee involves additional expenses, such as:
- Recruitment: Job advertisements, time spent on candidate selection and interviews.
- Initial training: Occupational health and safety training, familiarization with company procedures.
Workplace equipment
The employer must provide appropriate tools and a workspace, which may include:
- Computer hardware and software
- Office furniture
- Consumables
Administrative costs
Hiring an employee also generates costs related to:
- Maintaining personnel and payroll documentation
- Accounting services
- Compliance with labor law regulations
The total cost of hiring an employee significantly exceeds their gross salary. The employer must take into account additional burdens in the form of insurance contributions, funds and other expenses related to providing appropriate working conditions. Before making a decision to hire, it is worth carefully analyzing all costs to assess their impact on the company's budget.
Sources:
Biznes.gov.pl – How much does it cost to hire an employee under an employment contract?
ZUS – Amount of social insurance contributions
Entrepreneur's Guide - Total cost of employing an employee in 2024
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