January is an important month for employers in terms of implementing the company social benefits fund in the organization. Employers employing at least 50 employees in full-time equivalents as of January 1 of the given year are generally obliged to establish the fund.
Moreover, January 31 is the latest deadline for informing employees about the non-establishment of the fund and non-payment of leave benefits for employers employing fewer than 50 employees in full-time equivalents. This applies to those who are not covered by a collective bargaining agreement and are not obliged to introduce a remuneration regulation in the organization.
Who is obliged to create the company social benefits fund?
Employers are obliged to establish the company social benefits fund if they:
- operate in the form of budgetary units and self-government budgetary institutions, regardless of the number of employees;
- employ at least 50 employees in full-time equivalents as of January 1 of the given year;
- employ at least 20 but fewer than 50 employees in full-time equivalents as of January 1 of the given year, upon the request of the plant trade union organization.
The financial resources of the fund are collected in a separate bank account to support the social needs of entitled employees and other individuals.
For whom are the funds from the company social benefits fund?
According to the company social benefits fund Act, those entitled to utilize the fund encompass employees and their families, retirees and pensioners (former employees) along with their families, as well as other individuals to whom the employer has granted the right to access benefits through the regulations. This implies that the employer has the flexibility to broaden the group of eligible individuals, such as those employed under civil law contracts.
What can the funds from the fund be spent on?
The resources from the fund may be specifically allocated to support a variety of recreational activities, cultural and educational initiatives, sports and leisure pursuits, childcare, or the provision of material assistance.
As a rule, the amount of the granted benefit should depend on the life, family, and financial situation of the person entitled to use the company social benefits fund. The function of this institution is to mitigate differences in the standard of living of employees and their families, and therefore, the worse the financial situation of the entitled person, the higher the benefit should be. The most commonly used criterion in this regard is the income per family member.
The employer can satisfy the collective needs of employees with funds from the fund, organizing sports events, trips, or picnics. Such a manifestation of activity, constituting a form of recreation or cultural activity, may fall within the concept of the employer’s social activity, and in such a case, its use does not have to be dependent on social criteria.
However, an individual assessment of each undertaking is important, along with ensuring appropriate provisions in the social benefits regulations. The fund should not finance, for example, employee training to improve their qualifications or the costs of salaries and bonuses for employees.
The employer acts as the administrator of the company social benefits fund. Among its responsibilities is ensuring technical, personnel, and financial support necessary for the proper functioning of the company social benefits fund.
Responsibility for compliance with the regulations regarding the functioning of the fund lies with the employer or the responsible person acting on behalf of the employer.
Company social benefits fund not for everyone
Currently, employers, aiming to attract job candidates and retain existing employees, offer a variety of employee benefits. In this respect, a definite advantage of introducing such benefits in the form of the Company Social Benefits Fund is the possibility of benefiting from contributions and tax relief.
However, some employers decide against implementing this solution. The most common reasons include difficulties in settlements, complicated procedures, and the inability to finance some important aspects for employees or employers.
It is worth remembering that an employer employing more than 50 employees can opt-out of the company social benefits fund, provided that all necessary formalities in this regard are fulfilled.
For questions or uncertainties related to this topic, we encourage you to contact our law firm, which deals with issues in the field of labour law, including matters related to the company social benefits fund.
Maria Aleksiejak, Trainee attorney-at-law (PL)