With the arrival of the new year, many workplaces are starting to plan their employee compensation expenses. One possibility of additional financial support for employees that an employer may grant is leave compensation.
What is leave compensation?
Leave compensation, is the additional remuneration that an employee may be entitled to due to their taking a holiday leave. According to Article 162 of the Polish Labour Code, an employee should take a holiday leave of at least next 14 calendar days at least once a year. Introducing leave compensation into an organisation can be a great motivator for an employee to go on an extended holiday.
The leave compensation is an alternative for employers who have not decided to grant benefits under the Company Social Benefits Fund (ZFŚS) to their employees in a given calendar year – we wrote more on the subject of the Company Social Benefits Fund (ZFŚS) here. Therefore, in practice, it applies to workplaces with fewer than 50 full-time equivalent employees. It is worth highlighting that the number of 50 employees is calculated as at 1 January, so it is irrelevant for a given calendar year whether further employees are hired by the employer in later months.
Who is entitled to leave compensation?
According to the current regulations, all employees of the organisation with employment contracts are entitled to holiday pay. In principle, the length of service or the employee’s salary are not relevant for the granting of holiday pay. The only requirement is that the employee must have taken holiday for a consecutive period of next 14 calendar days.
Except for workplaces covered by a collective agreement and having pay regulations, if an employer decides not to grant holiday pay to employees, it should inform employees in the first month of the calendar year in question in a generally accepted manner.
The amount of leave compensation in 2024
Based on the provisions of the Act from 4.03.1994 on the Company Social Benefits Fund (hereinafter: ,,ZFŚS Act”), the amount of holiday pay shall not exceed the amount of the basic allowance for the Company Social Benefits Fund (ZFŚS), the amount of which was customarily specified in the budget act or acts around the budget. However, as these amounts have not been specified in the above acts this year, in accordance with article 5 of the ZFŚS Act, the amount of the holiday pay shall be determined on the basis of the average monthly salary in the national economy in the previous year or the second half of the previous year, if it is a higher amount. These amounts are announced by the Head of the Central Statistical Office in the Monitor Polski by 20 February each year.
In view of the above, the maximum amount of leave compensation in 2024, is as follows:
2.417,14 PLN – for an employee, who works full time (and proportionally less for employees, who works part time);
3.222,86 PLN – for an employee working full-time and performing work in special conditions or work of special nature;
322,29 PLN – for a juvenile employee during the first year of education;
386,74 PLN – for a young employee during the 2nd year of education;
451,20 PLN – for a juvenile employee during the third year of education.
At the same time, it is worth mentioning that the leave compensation must be paid to the employee at the latest on the day before the start of the employee’s leave of absence for a continuous period of 14 calendar days.
Summary
Leave compensation is an important element of the employee’s remuneration system that should be considered with proper attention. From the employer’s perspective, it should be extremely important for an employee to take a holiday leave of a further 14 calendar days at least once a year – this is not only due to the need to comply with the requirements of Article 162 of the Polish Labour Code, but also due to numerous studies showing an increase in the effectiveness of the work performed by the employee after returning from a long rest. Given the above, implementing leave compensation into your organisation can provide an additional incentive for employees to go on extended holidays. This, in turn, will benefit both employee satisfaction and employer contentment in the long run. Our team will be happy to support you in implementing leave compensation into your organisation!
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