On April 23, 2021, the deadline for implementing employee capital plans (“PPK”) for the last group of entities employing less than 20 employees expired. However, this does not change the fact that for some entities the issue of implementing the PPK has been closed. Unclear and unintuitive interpretations of the regulations mean that some non-Polish companies may be required to implement PPK without being fully aware of it.
Identification of the obligation to implement PPK
Pursuant to the Act of October 4, 2018 on Employee Capital Plans, an entity employing at least one person entitled to participate in the PPK is obliged to implement it, i.e. conclude at least a PPK management contract. Such people are, among others employees, adult contractors performing duties based on civil law contracts and members of supervisory boards who are remunerated for performance of their duties. The basic condition for being a person entitled to participate in the PPK is being subject to obligatory pension and disability insurance in Poland.
The obligation to be subject to social insurance in Poland also applies to certain people engaged by non-Polish entities. This may happen when Polish legislation is applicable for a non-Polish individual on the basis of the provisions on the coordination of social security systems.
Exclusion of the obligation to implement PPK
The Act on Employee Capital Plans provides for the exclusion of the obligation to conclude a management contract for small entities in which employees are not interested in participating in PPK. Such companies must meet the conditions stipulated in the Employee Capital Plans law.
According to the interpretation of the regulations applied by the Polish Development Fund (entity supervising the implementation of the PPK), the above exemption will not apply to the majority of non-Polish entities engaging single employees in Poland, e.g. sales representatives operating on a minor scale in Poland. This is due to the fact that the fulfillment of the exemption conditions should be assessed in the context of the entire non-Polish company and not only at a part of its activities in Poland, i.e. business generated by local employees. In this way, a company employing hundreds of employees abroad, of which only one is a sales representative responsible for the Polish market (and subject to retirement and disability insurance in Poland), may have obligations resulting from the Employee Capital Plans law in Poland.
Practical problems
The process of implementing the PPK in a non-Polish entity generates a number of practical problems that make its course not as simple as in the case of a company registered in Poland. One of the issues may be the consequence of a fact that non-Polish entity does not have a complete set of identification numbers relevant for a Polish entity (KRS, NIP, REGON) or such a prosaic thing as lack of the Polish telephone number for a person concluding a contract on behalf of the entity.
Additionally, the manner of fulfilling the obligation to implement the PPK will be influenced by the way in which the company performs the payer's obligations in the field of social insurance (based on registration in Poland or assuming the payer's obligations by an employee). The situation of foreign companies is not facilitated by the lack of clear guidelines from the Polish Development Fund and, consequently, inconsistent practices of entities managing PPK.
Necessary actions
Foreign companies that conduct even limited activities in Poland, but engage employees subject to social insurance in Poland, should verify their obligation to conclude a PPK management contract.
In further steps, it may be necessary to carry out the process of implementing the PPK, the course of which will largely depend on the individual situation of a given company.
Failure to conclude a management agreement may subject the company to a fine of up to 1.5% of the remuneration fund assessed at the level of the non-Polish company for the previous financial year.
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