Additional costs of employing employees
The total cost of employing an employee does not only apply to the basic salary and contributions to be paid by the employer, as the employee is entitled to many additional benefits, such as an equivalent for unused vacation leave, severance pay or functional allowance. In this article, we will briefly present the most common additional employment costs for employees.
Additional employment costs
One of the most important obligations of the employer is the timely payment of remuneration for work. However, there are additional benefits from the employment relationship. Some of them are paid on a regular basis, others are paid on a one-off basis. Some result from the law, others from contractual or company regulations. Those that result from the law, the employer may regulate in company regulations, but only if they are more favorable for the employee.
Additional employment costs that the employer must take into account include overtime allowance. Each employee is bound by working time standards, the exceeding of which results in daily or weekly overtime (Article 151 § 1 of the Labor Code). Then, in addition to the normal remuneration, the employee is entitled to a supplement in the amount of:
100% of remuneration for overtime work for:
in the night,
on Sundays and public holidays that are not working days for the employee,
on a non-working day granted in exchange for work on a Sunday or a holiday,
as well as for average weekly overtime,
50% of remuneration - in other cases (Article 1511 § 1 of the Labor Code).
We advise on how to calculate the employee's salary supplement.
Overtime work is entitled to an allowance in the amount of 50 or 100% of the remuneration.
Allowance for night work
If an employee works at night, he is entitled to an allowance for each night hour. This allowance is paid in the amount of 20% of the hourly rate resulting from the minimum remuneration in a given year (Article 1518 § 1 of the Labor Code), which in 2018 amounts to PLN 2,100 gross.
The amount of the allowance in individual months of 2018 can be found here.
Allowance for working in arduous conditions
For work in harmful, burdensome or dangerous conditions and for shift work, the employer may undertake the payment of bonuses to remuneration. Such an allowance may be determined as an amount or percentage and is due for each hour of working in harmful conditions, and the employer should specify the number of hours that the employee must work in these conditions in order to receive the allowance.
The employer should also create a list of workplaces where work is considered to be performed in harmful, burdensome or dangerous conditions.
In turn, the shift allowance is to compensate the employee for the provision of work at different times.
In the event of an employee's on-call duty, i.e. remaining on the employer's request outside working hours, ready to perform work under the employment contract at the workplace or in another place designated by the employer (Article 1515 of the Labor Code), the employee should be granted time off, and if not has the option to pay out a salary supplement.
The amount of remuneration for on-call time depends on whether or not:
in the workplace or other designated place,
outside the workplace, e.g. at home.
For the time of on-call duty at home, neither free time nor remuneration is granted, unless work was performed at that time. The employee then receives the normal salary plus possibly an overtime bonus.
In other cases, the on-call allowance is paid in the amount resulting from the personal grade of the employee, and if this component has not been separated, in the amount of 60% of the remuneration.
Persons employed in managerial positions may receive a bonus from the employer for the performed function. Sometimes it may be legally mandated, for example by lawyers. However, it can also be introduced by the employer. In such case, the amount and rules of awarding should be established in the remuneration regulations or in a collective labor agreement.
A function allowance may be paid to employees in managerial positions.
Additional employment costs are also an internship allowance, which is related to the seniority of general, company or industry employment.
As a rule, you are entitled to an internship bonus after you have worked for a given employer for a certain number of years, i.e. after you have reached a certain minimum internship ceiling. Employees of budgetary units and teachers are entitled to the allowance. It depends on the employer whether the internship allowance is also due in the other cases. In the case of the payment of this supplement, the amount and general principles of the award are regulated by internal company regulations, e.g. a collective agreement or remuneration regulations.
The amount of the internship allowance is usually a certain percentage of the salary, which increases with the length of service.
Sometimes the employer has to change the employee's position to another one with a lower salary. Then, if a given employee is covered by special protection, the employer must maintain the employee's remuneration at the current level, and thus pay a compensatory supplement.
The compensatory allowance is the difference between the salary previously received and the salary received for working in a new job.
When is this supplement usually due?
in the case of pregnant and lactating women,
in the case of an occupational disease of an employee,
in the event of incapacity for work caused by an occupational disease or an accident at work.
Equivalent for unused annual leave
In the event of termination or expiry of the employment relationship, it may turn out that the employee has not had time to use the holiday leave he / she is entitled to. In such a situation, the employer is obliged to pay an equivalent for unused leave, unless both parties agree that the leave will be used under another contract concluded with the same employer immediately after the termination or expiry of the previous one.
How to calculate additional employment costs, which is the equivalent for unused vacation? Check!
An employee who does not use his holiday leave is entitled to a holiday allowance.
Equivalent for workwear
The employer's obligation is to provide employees with work clothing and footwear free of charge, if the employee's own clothing may be damaged, dirty or required for technological, sanitary or health and safety reasons (Article 2377 (1) of the Labor Code). If the employer does not provide the employees with clothes, then they are entitled to an equivalent for using their own work clothes or footwear. Its amount is determined on the basis of its current price and time of its use.
Equivalent for washing
If the employer is unable to ensure the cleanliness of the employees' working clothes, he should pay them an equivalent for washing the amount of which corresponds to the costs incurred by the employees, i.e. the costs of detergents, utilities, work performed and time spent. The equivalent is paid cyclically, usually monthly, and its amount changes along with changes in the prices of detergents, energy and water.
Various types of severance pay may be paid to employees. It is an additional benefit that is usually due in connection with the termination or expiry of the employment relationship. Among the severance pay paid by employers, we can distinguish:
severance pay or retirement severance pay - if the contract is terminated due to the employee's retirement or disability pension,
posthumous severance pay - for family members of the deceased employee,
severance pay - in the case of group layoffs,
severance pay for an employee of choice - if he was not in connection with the selection on unpaid leave,
severance pay - intended for an employee who has been called up to perform basic military service,
additional severance pay - for the dismissed employees, provided that the company regulations provide for it.
Bonuses and rewards
The employer may pay employees awards and distinctions for contributing to the performance of the company's tasks by exemplary fulfillment of their duties, showing initiative at work and increasing its efficiency and quality (Article 105 of the Labor Code).
Awards are granted on a discretionary basis. On the other hand, bonuses may be discretionary or regulatory, and the bonus rules should be regulated in internal regulations.
A special type of award is the anniversary award. It is paid in some workplaces, usually state-owned, for many years of work. The rules of acquiring the right to the jubilee award and its amount should be regulated in company regulations, e.g. in a collective labor agreement.
Employee's disease and additional employment costs
When talking about additional costs for the employer, one should also mention employee absenteeism. On the one hand, the costs arise from the fact that other employees have to work more intensively during the employee's absence, which results in overtime. On the other hand, the current labor market requires additional benefits from employers to attract job candidates. Among these benefits is private healthcare paid for by the employer.
Other bonuses offered by employers also include life insurance, vouchers, food coupons, laptops, telephones, cars, apartments or subsidies to summer camps or trips. Increasingly, employers want their employees to improve their qualifications, which is why they finance them with various courses and training.
As it turns out, the additional costs of hiring employees are quite extensive and varied. We have listed only some of them in the article. Therefore, when talking about the total cost of employment, we cannot limit ourselves to the basic salary only. If we want our employees to be satisfied with their work, and thus more effective, it is worth thinking about additional gratuities for them.