How to Find and Pay Contractors in Poland
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Published on August 24, 2021
Employment relationship versus contract relationship 👥The type of worker that companies hire falls into two categories:
Employment contract 👮In employment relationships, the employer manages the employee's schedule and instructs the employee on their duties.An employment contract in Poland must be consistent with Polish laws (e.g. a collective agreement as per labor code). Employees under this contract are entitled to a salary with benefits as well. Some of these benefits may include:
- pay for overtime hours
- health insurance contributions
- compulsory social insurance
- social security contributions
- retirement pension insurance
- disability pension insurance
- paid leave like annual leave or maternity leave
Independent worker contract 👷With the increase of remote work and the desire for a better work/life balance, more workers are interested in self employment. A worker may even establish themselves as their own limited company.A self employed worker, or independent contractor, works autonomously with little oversight from an employer. A contractor receives pay, but does not receive benefits such as paid leave. Additionally, a contractor is not entitled to things like severance pay if an employer ends their employment relationship with them. They operate as their own entity, and usually use their own equipment to provide a service.It's up to the independent contractors to pay income tax, and they will also need to pay for their own benefits, like health insurance. Many employers seek independent contractors because it costs less for their company to provide benefits for them.
Know the difference!If your company is hiring independent contractors in Poland, it’s important to know the difference between employment contracts and independent worker contracts.Polish law strictly distinguishes between the two kinds of contracts, and accidentally misclassifying a worker is risky. Failure to classify a worker correctly could result in back taxes or back pay for any amount of time that an employee was not receiving overtime or paid time off. It’s a legal and logistical nightmare, and could potentially hurt your company’s budget.The risk involved in taking your business overseas should not deter you from participating in an eager job market, however. Especially since the pandemic started, workers in Poland are even more open to remote and contract work, especially those in the tech industry. What's even more appealing? Working for an employer remotely does not require a work visa like it would if they were to relocate. A contract relationship is flexible and autonomous, and many workers prefer it to the employee relationship, embracing the minimal tax liability that goes along with it.
Hiring independent contractors in Poland 🌍Traditional employees operate and are protected under labor code contracts, which is pretty standard globally. Independent contract workers in Poland are given civil law agreements when hired. There are two types of civil law contracts:
- A contract of mandate, or umowa zlecenie
- a contract to perform specific work, or umowa o dzieło. This contract is sometimes referred to in English as Contract for Specific Work, or Contract of Commission.
Contract of mandate 📃A “zlecenie”, as it is referred to in Poland, is quite different from service agreements, or business to business contracts. The general rules of a mandate contract is much the same as an employment contract, but with fewer obligations for the employer. It's like a lightweight version of an employment relationship, where the work is pretty continuous, and the employer has more supervision over the worker.The employer can also specify when and where the contractor will perform work. A zlecenie would be used for some kind of activity, like opening a store and hiring staff for an international company.
Service agreement 🤝Dzielo is a specified type of job that cannot be used for any type of activity. It’s a project-based contract, a mutual agreement between a company and a worker that often has a fixed term.So while you couldn’t use it for a worker who is opening a store and hiring staff in Krakow, you can use it for, say, a contractor designing your company’s mobile app in Poland, or creating a website in Polish.If your company plans on using dzielos, each of the projects must be unique. In other words, the worker can’t start a project and then pick it up again. Each commission has to be independent from the last. So, using our earlier example, if you hire someone to create a website for you, they can’t run it or maintain it. You would need a zlecenie for that.It’s a little complex, right? So why even bother with a dzielo?
The benefits of a specific work contract ➕While the dzielo does not offer benefits, there are some pros for contractors. For one, the time and place that the contract work happens is not generally limited to the office space, offering more options to the contractor for how they choose to perform work.Additionally, the job's pay isn’t subject to minimum wage, which, as of June 2020, is rated at 18.6 zlotych an hour, or 18.6 zl for short. If a worker wanted to charge 600 zl instead of minimum wage for work performed, that’s their prerogative.Moreover, a contractor can decide when they get paid (e.g. per project or monthly), and they are not responsible for any taxes except for personal income taxes.
Finding a talented independent contractor in Poland 🔎There are a few ways to find skilled workers in Poland. The pandemic obviously shifted the employment landscape, and there has been a surge in contractors, especially in the tech and IT industries. The best job boards to use in Poland for general hiring are:
Role description 📋It’s important to include a detailed description about your company, the skills in an ideal candidate, and specifics about what you’re looking for in a working relationship. Bullet points are useful to communicate this information succinctly.Make sure you include expectations for pay, too. In general, people are more likely to send in a resume if they know what the pay is. Don’t be mysterious!
Translation 🗣Unless you specify that you’re looking solely for English speakers, you can expect most resumes you receive to be in Polish. You don’t have to learn Polish, but it helps to use a Polish translator to translate your advertisement. In fact, there are Polish staffing agencies that can help your team not only translate your advertisement, but also sift through applications that are written in Polish.
Applications ✍As mentioned, staffing agencies can assist you in sorting through job applications. Some popular agencies in Poland are:
Interviews 💻And not to sound like a broken record, but unless you’re strictly hiring English speakers, you should learn a few Polish phrases to put a Polish-speaking candidate at ease. A friendly greeting like “Miło cię poznać” (MEE-wo chez pose-nach), or “Nice to meet you" is a great start.Virtual interviews are quite common and convenient for hiring an independent contractor in any other country.
Don't forget time zones! ⏰Poland is in Central European Time, which is 9 hours ahead of PST, 6 hours ahead of EST. So if an interview is scheduled for 9am and you’re in San Francisco, the interview in Poland will be at 6pm. The earlier you can schedule the interview, the more convenient it will be for your potential hire.
Paying international contractors in Poland 💸
Okay, so you have hired your talent. Now how do you pay them?
SWIFT 🏦↔🏦A company may consider using SWIFT (Society for Worldwide Interbank Financial Telecommunications) to pay independent contractors because it is used by financial institutions around the world. It's a secure method to ensure that a contractor's pay is safely transferred to their personal bank account in their home country.There are some drawbacks to SWIFT, however: namely, SWIFT expenses can add up. Payments from SWIFT to a specific bank account are usually routed through multiple banks before they reach the contractor’s bank account. Each bank typically charges a fee from the funds being transferred.So unless a self employed worker doesn’t mind reducing their income by $20 to $40 USD (or sometimes more), they may not be keen on this payment method. The fees for these banks aren’t consistent, either; even if the same banks have been used previously to transfer funds to the same bank account, the fees may be different each time money is sent.
Money transfer company 📲The main advantage for using a money transfer company like Xoom (owned by Paypal), Wise, or Remitly, is convenience. Each of these companies can be found online, or on an app that makes money transfers an uncomplicated process....to an extent. Some transfer services will require that payees use one of their company-issued debit cards. These debit cards charge a fee to the customer every time it is used, and even though markups from money transfer companies are slightly better than those of banks, the percent-based fees or markup charges for Polish sourced income can be a pain.Unlike most European countries, Poland does not use the Euro as its currency. Poles were once considered non-EU nationals, and even though they are part of the EU now, their currency is still the zloty, or PLN (Polish Zloty New). As far as exchange rates go, the dollar is strong in Poland. Even still, a fee is a fee in a money transfer, and your company will have to account for those expenses.
Traditional money transfer services 🏦Companies like MoneyGram and Western Union have online services and physical locations as well, so they are easy to access no matter where you are. The markups on currency rates are also a little less stringent than at companies like Moneygram, for instance. But like any money transfer service, they still charge percent-based fees or add markup fees for currency exchange.
Cryptocurrencies 🔗Cryptocurrency has increased in popularity in the last few years as a method for payment, and Poland has no law prohibiting this kind of exchange. The Polish Financial Supervision Authority, or KNF, made a statement in 2018 that bodies operating as an exchange office have to abide by anti-laundering laws and are prohibited from funding terrorist activities.And while you can use Bitcoin, Dogecoin, Ethereum, or other cryptocurrencies to pay Polish independent contractors, not everyone has a system set up for sending or receiving cryptocurrency.If a foreign contractor wants to be paid using cryptocurrency and needs to convert the payment into their local currency, the employer will need to be able to provide that. And yes, unfortunately. both parties will still have to accept exchange rates and potential fees.Income tax rates for cryptocurrency in Poland should be considered as well. As a self-employed individual, one is subject to a flat rate tax system in which they must pay 19% of their income as a self-employed tax resident. So while some may assume crypto income is outside traditional methods of payment and therefore impervious to taxes or civil law, crypto income is still income, and the Polish tax office stipulates that Poland contractors pay taxes on whatever income they earn in a calendar year.
Compliance ✅Compliance in hiring internationally is of utmost importance, and partnering with a professional service that specializes in compliance is ultimately the most cost-effective measure to offset the risk of inadvertently overlooking a country's specific legislation, labor code, taxes, and regulations.Outsourcing a compliance team also protects a business from any potential legal action for misclassifying independent contractors. It’s critical for navigating the hiring and payroll process.
The information contained in this site is provided for informational purposes only, and should not be construed as legal advice on any subject matter.
Pilot, and the benefits of outsourcing international paymentsPilot is a company that specializes in remote payroll, benefits, and compliance for US-based companies hiring globally. Our team of experts can assist with everything from classifying a worker to acquiring a work permit, from payroll to taxes. We know the complexities of international hiring and want to make it as easy as possible for growing businesses.Pilot never marks up exchange rates, and we don't require that contractors use a debit card or e-wallet: funds go straight to your independent contractors’ bank accounts. Our team is international and fully distributed, and we can assist with issuing payments in over 240 countries around the world.Our services allow your team to focus on the other aspects that are essential for growing a company. Contractors love Pilot, too, because our optimal exchange rates means that they get paid more.
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