Three years after statutory regulations on remote work were brought about by the act commonly referred to as the COVID Law, related ordering provisions are finally to be introduced into the Polish Labour Code. Employers are now to be expected to cover employees’ costs of remote work or provide a relevant compensation. Employers may also pay out a specified lump-sum corresponding to the costs expected to be incurred by the employee in relation to remote work.
Labour Code amendments related to remote work
Changes to the remote work regime were made by the amendment to the Labour Code dated 13 January 2023. The act has already been signed by the President. Remote work provisions are to become effective two months after promulgation.
New remote work regulations vs COVID Law
Throughout the COVID-19 pandemic, employers could order their employees to work from home, pursuant to the COVID Law in force under the state of epidemic threat declared. Many companies have embraced remote work for good. Soon, the temporary COVID provisions turned out to be insufficient, also in terms of reimbursing employees’ costs incurred in connection with remote working.
Three years after statutory regulations on remote work were brought about by the act commonly referred to as the COVID Law, related ordering provisions are finally to be introduced into the Polish Labour Code. Employers are now to be expected to cover employees’ costs of remote work or provide a relevant compensation. Employers may also pay out a specified lump-sum corresponding to the costs expected to be incurred by the employee in relation to remote work.
Please note! Not every benefit referred to as a compensation or lump-sum paid to remote workers can be treated as tax- and contribution-free. An important challenge faced by employers will be to correctly determine the amount thereof and meet the statutory conditions, in order to mitigate the risk of exemption being challenged by tax authorities. It is of crucial importance to ensure that the benefit is paid in a correct form, especially in the case of hybrid (i.e., partially remote) working, a model that has already become part of the post-pandemic work culture. This is because hybrid working will not be subject to the amended provisions of the Labour Code, to the extent it is rendered at the employer’s headquarters.
Remote work and new employers’ obligations it brings
Under the amended provisions, the employer must:
- provide the employee with all the materials and tools, including technical equipment, necessary to perform remote work;
- cover the costs related to the installation, servicing, operation and maintenance of work tools, including technical equipment, necessary to perform remote work, costs of energy and telecommunications services;
- refund other expenses directly linked with remote work performed by the employee, if such an obligation is specified in the agreement concluded with the trade union or regulations issued (or in the absence of an agreement concluded or regulations issued - in the instructions issued or agreement concluded with the employee);
- provide the remote worker with training and technical assistance necessary to perform remote work.
In line with the amended provisions, the employer and the employee can enter into agreement on how the employee will use own materials and work tools (including technical equipment) necessary to perform remote work, not provided by the employer. In such cases, the employee will be entitled to a financial compensation in the amount agreed upon with the employer.
Covering remote work costs: a compensation or a lump-sum?
The employer has to cover the costs of remote work or provide the employee with a financial compensation. Alternatively, they can pay the employee a specified lump-sum corresponding to the costs expected to be incurred by the employee in relation to remote work. When calculating the lump-sum or compensation, the following must be considered:
- material and tool consumption standards, including standards for technical appliances;
- documented market prices of materials and work tools;
- amounts of materials used for the employer’s purposes and prices thereof;
- energy consumption standards and costs of telecommunications services.
Benefits related to remote and hybrid work: taxation and social security
Covering costs of remote work, granting a compensation or paying a lump-sum will not constitute income within the meaning of the PIT Act, provided that the amount of compensation or lump-sum is correctly calculated. Currently, however, there are no clear rules on how such values should be calculated, meaning that this issue may pose a significant challenge to employers. This applies both to employers who have already paid such benefits to employees during the pandemic, as well as those who are just preparing to make such payments. In both cases, it should be in the first place assessed whether the applied calculation method makes it possible to demonstrate that these benefits do not constitute revenue from employment relationship and, consequently, are exempt from PIT and social security contributions.
This will be particularly difficult in the case of benefits provided under the hybrid working model, e.g., in the form of compensation for the use of employee-owned equipment, as it cannot be exempt from tax.
KPMG’s assistance
KPMG offers a comprehensive range of services, including:
- certification of compliance of the applied practice with tax regulations and market practice;
- elaboration of rules for calculating the compensation/lump-sum for employees performing remote or hybrid work;
- obtaining rulings confirming exemption of remote work benefits from PIT and social security contributions.
