1. Who is obliged to create the Company Social Fund?
Employers are obliged to create the Company Social Fund as of 1 January of a given year employing over 50 employees on a full-time basis.
If the employment with the Employer is less than 50 employees, the Employer may establish a social fund or, in the event of not creating it, is obliged to pay the holiday allowance. If the employer decides not to take any of the above measures, he is obliged to notify employees about the failure to establish the fund and payment of the benefit within the time specified by law.
2. What is a holiday allowance and how much is paid?
The holiday benefit is paid by employers employing less than 50 people (full-time equivalent) who have not decided to establish the Company Social Benefits Fund.
The upper limit of the vacation benefit amount is, in principle, equal to the amount of the basic contribution to the Social Fund. The amount of the mandatory contribution to the fund for 2024 is not yet known. The amount of the write-off in 2023 was PLN 1,914.34. In the case of part-time employment, the amount of holiday allowance is determined in proportion to the working time. The employer may decide in a given year to pay a vacation benefit in the amount lower than the amount of the basic contribution to the Social Fund, but must inform employees about it by the end of January of a given year.
3. Rules for granting and paying holiday allowance to employees
The holiday benefit is paid to every employee who has taken a continuous 14-day holiday leave in a given calendar year. In this case, calendar days are taken into account, not working days. The employee may receive the holiday allowance only once in a given calendar year.
In accordance with art. 3, 5a of the Act on the Company Social Fund, payment of the holiday allowance takes place not later than on the day preceding the start of the employee’s holiday leave.
4. What if employer employ less than 50 employees but does not want to pay holiday allowance?
An employer employing less than 50 people and not creating a Company Social Fund may opt out of holiday allowance in a given calendar year. For this purpose, by January 31 of a given year, the Employer should inform its employees about this fact in the manner adopted by a given Employer (e.g. providing written information about not establishing the fund, sending information by e-mail, suspending information on the notice board). Information about not creating a Company Social Fund and non-payment of a holiday allowance is valid only in a given calendar year and it should be remembered to provide it to employees in subsequent years.
5. What are the tax and contribution consequences of the payment of the holiday allowance for the Employee?
The holiday benefit paid to employees up to the amount of the basic contribution to the Company Social Fund (PLN 1,914.34 PLN) constitutes income for them within the meaning of the Personal Income Tax Act, but it is not a basis for calculating social contributions.