At the beginning of each calendar year, entrepreneurs employing fewer than 50 employees must decide whether or not to create a Company Social Benefits Fund in their organizations. If the employer does not want to create the Fund, they are obliged to pay the holiday allowance.

1. Who is obliged to create the Company Social Fund?

Employers are obliged to create the Company Social Fund as at 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 fewer than 50 people in full-time equivalents who have not decided to establish a Company Social Benefit Fund. The upper limit of the holiday benefit amount is generally equal to the amount of the basic deduction to the Company Social Benefit Fund. The amount of the mandatory deduction to the fund for 2025 is not yet known. This amount will be calculated based on the average salary in the national economy in 2024. The Central Statistical Office has until 20 February 2025 to publish this indicator.

At the moment, the amount of the benefit applicable in 2024, which was PLN 2,417.14, should be adopted. In the event that the holiday benefit would be due to the employee already in January 2025, a benefit of PLN 2,417.14 should be paid and then a possible adjustment should be made in the event of a change in the amount of the benefit.

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 (in 2024 up to PLN 2,417.14) constitutes income for them within the meaning of the Personal Income Tax Act, but it is not a basis for calculating social contributions.