Minimum wage in 2021.

Minimum wage in 2021

Yesterday (15 September), the government officially adopted the minimum wage rates for 2021.

The remuneration paid on the basis of an employment relationship is to amount to PLN 2,800, which means an increase of PLN 200 compared to the current amount. However, the minimum monthly remuneration is set as a gross amount. In 2021, an employee earning the national minimum wage will receive approximately PLN 2,060 per month after tax. This represents an increase of approximately 7% compared to the current year.

In turn, the minimum hourly rate for persons performing tasks on the basis of certain civil law contracts in 2021 will be PLN 18.30 gross, i.e. PLN 1.30 more than in the current year.

If an employment contract provides for a lower remuneration, the minimum wage will apply by law. Payment of remuneration below the minimum wage is a violation of employee rights.

What is included in the minimum wage?

The minimum monthly wage is not only the basic salary. The minimum wage also includes, for example, bonuses and holiday pay. However, the minimum wage does not include, among other things, jubilee awards, retirement severance pay, overtime pay, night work allowances or seniority allowances. This means that if an employee becomes eligible for a long-service award, for example, they should receive remuneration in excess of the minimum wage by the value of that award.

What does the minimum wage affect?

The effect of an increase in the minimum wage is not only higher salaries for employees. A higher minimum monthly wage affects other employment benefits, the amount of which depends on the minimum wage. In connection with the planned increase in the minimum wage, at the beginning of 2021, the amount of the allowance for night work and the minimum compensation for violation of the principle of equal treatment in employment will increase. The statutory limit on severance pay under the Act on Group Redundancies (up to PLN 42,000) and the earnings threshold allowing for the payment of a reduced basic contribution for employees to the Employee Capital Plan (PPK) will also be increased. The higher amount will also be the basis for calculating social security contributions and personal income tax.

The government estimates that approximately 1.7 million employees earning the minimum wage will benefit from the new regulations. They will see an increase in their income and in the amount of benefits from the Social Insurance Institution (ZUS) as a result of the increase in contributions paid for pension and sickness insurance. On the other hand, the increase in the minimum wage means an increase in total labour costs for as many as 2 million employers who hire employees on the basis of employment contracts or contracts of mandate. According to the government's regulatory impact assessment, the minimum wage increase will cost large enterprises £826.2 million and micro, small and medium-sized enterprises £3,039.7 million annually. For employers, the increase in the minimum wage may also mean pressure for pay rises among groups of employees earning slightly above the minimum wage.