Limitations and exclusions of the obligation to establish a Company Social Benefits Fund - consequences for employers


Entrepreneurs employing employees under an employment contract are obliged to satisfy the living, social and cultural needs of their employees - according to their abilities and conditions (Article 16 and Article 94 point 8 of the Labor Code).

What obligations does the Company Social Benefits Fund - Company Social Benefit Fund impose on employers?

One of the ways to partially implement the above-mentioned the obligation is to run a company social benefit fund (hereinafter referred to as ZFŚS). The principles of creating and managing the funds of the Company Social Benefits Fund were regulated in the Act of March 4, 1994 on the company social benefits fund (consolidated text, Journal of Laws of 2017, item 2191) - hereinafter the Act on the Company Social Benefits Fund. It imposes serious obligations on entrepreneurs, which are worth knowing in order not to be exposed to financial penalties from control authorities.

According to the above-mentioned of the Act, employers who employ at least 50 full-time full-time employees and employers operating in the form of budgetary units and local government budgetary establishments, regardless of the number of employees, as of January 1 of a given year, are required to establish a ZFŚS.

On the other hand, employers employing at least 20 and less than 50 full-time employees as of 1 January of a given year, create ZFŚS at the request of the company trade union organization - if there is one for a given employer. A trade union organization may also decide that the Company Social Benefits Fund will not be created.

An entrepreneur who creates a company social benefit fund is obliged to manage the funds of the Company Social Benefits Fund in accordance with the provisions of law. Operating the Company Social Benefits Fund is not as simple as it might seem and requires additional work of its staff (social, accounting and HR committees). The Company Social Benefits Fund must be established and operate in accordance with applicable regulations. The case is made difficult by the lack of discrepancies regarding the ways of spending the funds of the Company Social Benefits Fund and the inconsistent judicial decisions.

At the same time, it is worth mentioning that funds disbursed in breach of the Act on the Company Social Benefits Fund (even in good faith) constitute the basis for calculating contributions to the Social Insurance Institution (ZUS) as additional remuneration for the employee. ZFŚS is also inspected by the National Labor Inspectorate and the tax office.

Sometimes the financial condition of some entrepreneurs does not allow for allocating additional funds for social activities. Smaller entrepreneurs (up to 50 jobs) have a choice whether to create a Company Social Benefits Fund or not. However, it should be remembered that failure to create a Company Social Benefits Fund has other consequences.

So what about employers who are not obliged to create an enterprise social benefit fund (ZFŚS)?

Well, the Act on the Company Social Benefits Fund obliges this group of employers to pay holiday benefits.

Let us mention that we are talking about a very large group of entrepreneurs, which include, among others all employing even one person (including small shops, small eateries, local service companies). According to the Report on the condition of the small and medium-sized enterprise sector published in 2016 by the Polish Agency for Enterprise Development, the number of Polish enterprises is close to 2 million - data for 2014 is 1.84 million. Among them, micro enterprises account for 1.76 million, and small 59.2 thousand. It follows that the situation of the holiday payment may concern nearly 98.9% of entrepreneurs. According to the data of the Central Statistical Office of Poland from 2014, 38.2% of all employees are employed in companies with up to 10 employees, and 13.4% of the employed work in enterprises with 10-49 employees. Thus, the payment of vacation benefits may concern approximately half of all employees in our country.

Often times, micro and small entrepreneurs are not aware of their obligation to pay holiday benefits for their employees.

The amount of the vacation benefit is determined in proportion to the employee's working time and in 2018 it is the maximum amount:

  • PLN 1,185.66 per employee employed in the so-called normal working conditions on a full-time basis,

  • PLN 1,580.89 for an employee performing work in special conditions or work of a special nature - within the meaning of the provisions on bridging pensions.

The holiday allowance is paid by the employer once a year to each employee taking a holiday leave in a given calendar year for at least 14 consecutive calendar days. Payment of the above-mentioned the benefit must be made on the last day before the start of the annual leave at the latest. The holiday allowance is not subject to social or health insurance contributions.

Example 1.

Jan Kowalski is employed part-time as an accountant for an employer employing 9 people. The employer is obliged to pay the holiday allowance. Mr. Jan submitted an application for leave from April 30 to May 11, 2018 - 8 working days in total. Including weekends and days off, his vacation will be for 14 consecutive calendar days. The employer should pay him a holiday allowance no later than April 27, 2018 in the amount of PLN 592.83 (1/2 amount, because Mr. Jan works half time).

It is worth noting that employers creating the company's social benefits fund must spend ZFŚS funds in accordance with the provisions of the Act on the Company Social Benefits Fund, and the benefits paid are discretionary and not of a claim nature, which means that the employee cannot apply for any equivalent (cash compensation), if not received the benefits for which he applied for. On the other hand, the holiday allowance is obligatory, which means that each employee is entitled to it after fulfilling the leave condition.


The entrepreneur may take advantage of the option to exclude him from the obligation to pay the holiday benefit. The legislator provided for such a possibility, but under certain conditions (Articles 3a and 3b of the Act on the Company Social Benefits Fund).

They do not create ZFŚS or pay holiday benefits to employers who:

  • as of January 1 of a given year, they employ fewer than 50 full-time employees and are not covered by a collective labor agreement, i.e. they have no trade union organization and are not obliged to issue remuneration regulations - if they provide their employees with information on non-establishment of the Social Fund and non-payment of holiday benefits by January 31 of a given calendar year. This information should be provided in the manner customary for a given employer - it can be posted on the notice board, via an internal intranet or, for example, by handing each employee a letter with information with confirmation of acceptance.

  • employ at least 50 employees as of January 1 of a given year, converted into full-time jobs, are covered by a collective labor agreement, but the collective agreement will include provisions on the non-establishment of the ZFŚS and non-payment of holiday benefits. If, on the other hand, employees of such employers are not covered by a collective labor agreement, the provisions on not establishing a ZFŚS and not paying holiday benefits are included in the remuneration regulations. In the case of employers with at least 20 and less than 50 full-time full-time employees, in which the trade union organization does not operate, the provisions of the remuneration regulations regarding the non-establishment of the ZFŚS require agreement with the employee selected by the staff to represent its interests.

Therefore, entrepreneurs who meet the above conditions do not have to pay holiday benefits or create a Social Benefits Fund. This is good news especially for those employers who are in a more difficult financial condition and the above would be a heavy burden for them.

Finally, it is worth recalling the wording of Art. 12a of the Act on the Company Social Benefits Fund, stating that who, being the employer or being responsible on behalf of the employer for the implementation of the provisions of the Act on the Company Social Benefits Fund, does not comply with these provisions or undertakes actions inconsistent with the provisions, shall be liable to a fine. In cases of fines, decisions are made on the basis of a motion from the National Labor Inspectorate in accordance with the provisions of the Code of Petty Offenses Procedure.