A foreign-owned manufacturing subsidiary in Silesia restructures its operations and terminates forty employees within a single month. The HR director asks a straightforward question: how much severance do we owe? The answer depends on years of service, the basis for termination, the employee's average remuneration, and – critically – whether the dismissal qualifies as a collective redundancy under Polish law. Getting any element wrong exposes the company to personal liability claims, labour court proceedings, and reputational damage that is difficult to reverse.

Polish severance pay is governed primarily by the ustawa o szczególnych zasadach rozwiązywania z pracownikami stosunków pracy z przyczyn niedotyczących pracowników (Act on Collective Redundancies). The statute entitles employees to severance of between one and three months' salary, scaled by length of service, subject to a statutory cap equal to 15 times the national average monthly remuneration. The payment obligation arises on the date of termination and cannot be contractually waived.

This analysis unpacks the calculation mechanics, doctrinal nuances, and cross-border dimensions that matter most to employers operating in Poland. The structure follows a logical arc: the statutory framework, the calculation formula, common errors and their consequences, the cross-border dimension, and a strategic outlook. Foreign investors and in-house legal teams will find the decision matrix and checklist sections especially practical.

What is the statutory basis for severance pay in Poland?

Polish employment law draws a sharp line between individual and collective redundancy. Severance entitlement under the Act on Collective Redundancies applies when the reason for dismissal lies exclusively with the employer – not with the employee's conduct or performance. That distinction is critical. An employer who misclassifies a capability-based dismissal as a redundancy, or vice versa, faces an immediate risk of a successful labour court challenge before the Sąd Pracy (Labour Court).

The Act on Collective Redundancies covers employers with at least 20 employees. Smaller employers are not subject to its severance obligations, though they may face other claims under the Kodeks pracy (Labour Code). For employers meeting the 20-employee threshold, the statute applies both to collective redundancies (affecting a defined number of employees within 30 days) and to individual dismissals made for reasons not attributable to the employee. The National Labour Inspectorate (Państwowa Inspekcja Pracy, PIP) monitors compliance and may impose sanctions for non-payment.

Three conditions must simultaneously be met before the severance obligation crystallises. First, the employer must have at least 20 employees. Second, the termination must be initiated by the employer. Third, the reason must not relate to the employee personally. Meeting all three is the doctrinal gateway. Employers registered in the National Court Register (Krajowy Rejestr Sądowy, KRS) and employing staff across multiple locations must assess each site separately for headcount purposes – a point that surprises many multi-site operators.

The Act does not require a formal collective redundancy process to trigger individual severance entitlement. A single employee dismissed for organisational reasons is entitled to severance if the employer meets the 20-person threshold. This is a common misconception: many HR managers assume severance only arises in group layoffs. In practice, every individual redundancy at a qualifying employer carries the same statutory payment obligation – and the Labour Court will enforce it even if the employer was unaware.

How is the severance amount calculated?

The calculation formula has three tiers based on length of service with the current employer. An employee with fewer than two years' service receives one month's salary. An employee with between two and eight years receives two months' salary. An employee with more than eight years receives three months' salary. Service is measured to the day of termination – a single day beyond the two-year or eight-year threshold moves the employee into the higher tier.

The salary base for calculation is the employee's average remuneration computed according to the rules governing holiday pay. This is not simply the base contractual salary. Variable components – regular bonuses, shift supplements, commission payments – are included if paid over the preceding 12 months. A sales employee earning a modest base salary but substantial quarterly bonuses may therefore attract a severance figure two to three times higher than the bare contractual rate suggests. Employers frequently underestimate this exposure.

The statutory cap is equally important. The maximum severance payment cannot exceed 15 times the national average monthly gross remuneration, as published quarterly by the Główny Urząd Statystyczny (Central Statistical Office, GUS). For 2025, that figure placed the ceiling at approximately PLN 90,000 for a single employee. The cap applies per individual, not per redundancy event. An employee whose three-month salary calculation exceeds the cap receives only the capped amount – no contractual override can raise it above the statutory maximum.

We secured a reversal of a severance underpayment claim exceeding PLN 180,000 for a logistics operator in the Mazowieckie region (autumn 2025). The employer had applied the base salary only, omitting quarterly performance bonuses paid consistently over 24 months. The Labour Court confirmed that regularly paid bonuses form part of the calculation base. That outcome underlined the importance of auditing variable pay structures before any redundancy programme begins.

  • Service under 2 years: one month's salary
  • Service 2–8 years: two months' salary
  • Service over 8 years: three months' salary
  • Cap: 15 times the national average monthly remuneration (published by GUS)
  • Base: average remuneration including regular variable components

What are the most frequent calculation errors and their consequences?

Three errors appear with striking regularity in Labour Court proceedings. The first is using the wrong salary base – typically the contractual base wage without variable components. The second is misapplying the service threshold, particularly when an employee has transferred between group companies or returned from long-term leave. The third is failing to pay on time: severance is due on the date of termination, not on the next payroll cycle.

Late payment triggers statutory interest under the Labour Code. Interest accrues from the day after the termination date. In a restructuring affecting dozens of employees, the aggregate interest exposure can reach tens of thousands of zlotys within weeks. More seriously, wilful non-payment may expose management to personal liability under Polish employment law – a consequence that is difficult to reverse once the Labour Court issues a judgment. The risk mirrors the dynamic described in our analysis of fiscal criminal defence strategy for board members.

Service continuity presents a particular trap for corporate groups. Polish employment law does not automatically aggregate service across affiliated entities. However, if an employee was transferred between group companies under a contract novation – rather than a fresh hire – the Labour Court may treat the entire period as continuous service with the same employer. The distinction between a novation and a termination-and-rehire arrangement is fact-specific and frequently litigated.

Employees on long-term sick leave or parental leave present another complexity. The period of protected absence does not break continuity of service, but it may affect the 12-month averaging period used to calculate the salary base. An employer who calculates severance based only on months when the employee was actively working – excluding periods of reduced or zero pay during leave – will almost certainly underpay. The Labour Court applies the rules that produce the higher figure for the employee.

A German-owned IT services company in Lower Silesia contacted us after receiving 12 simultaneous Labour Court claims following a restructuring (spring 2026). Each claim alleged underpayment of severance. Our review found that the company had applied base salary only and had treated a group transfer five years earlier as a break in service. Correcting both errors increased the aggregate liability by approximately PLN 320,000. Acting before judgment – rather than after – reduced interest exposure and avoided enforcement proceedings.

How does the cross-border dimension affect severance obligations?

Foreign employers operating in Poland through a Polish-registered entity are fully subject to Polish employment law, including the Act on Collective Redundancies. The governing law of the parent company is irrelevant. A Spanish holding company that instructs its Warsaw subsidiary to implement redundancies cannot apply Spanish severance rules to Polish employees. Polish law governs – and Polish Labour Courts will enforce it. For context on compliance obligations facing Spanish-owned entities, see our guide on employment law compliance for Spain companies in Poland.

Posted workers present a distinct scenario. An employee posted to Poland from another EU member state retains certain protections under the host-country law, including minimum wage rules, but severance entitlement is determined by the law governing the employment contract – typically the home-country law unless Polish law is more favourable. The analysis requires comparing both regimes. Employers who assume that home-country rules always prevail in a posting context take on unnecessary litigation risk.

Employees holding a work permit Poland or an EU Blue Card are entitled to the same severance protections as Polish nationals. There is no distinction in the Act on Collective Redundancies based on citizenship or residence status. This is worth emphasising to HR teams unfamiliar with Polish law: a Ukrainian engineer on a work permit in Poland and a Polish engineer doing identical work are treated identically for severance purposes. The Ukrainian and CIS Desks at our firm frequently handle queries on this point.

Collective redundancy notification obligations add a cross-border layer. When a redundancy event qualifies as collective, the employer must notify the local labour office (urząd pracy) and consult with employee representatives before issuing termination notices. For foreign investors managing the process from abroad, coordinating these procedural steps across time zones and legal teams creates operational complexity. Missing the notification deadline – even by one day – can invalidate the termination notices, requiring the entire process to restart. Czech-owned entities face the same procedural obligations; our analysis of employment law compliance for Czech Republic companies in Poland covers this in detail.

What strategic steps should employers take before implementing redundancies?

Strategic preparation reduces legal exposure and accelerates the process. The first step is a headcount audit: confirm whether the 20-employee threshold is met across all Polish entities, taking into account any aggregation arguments the Labour Court might accept. The second step is a salary audit: identify all variable components paid in the past 12 months and calculate the true average remuneration for each employee at risk. Do not rely on payroll system outputs without verification – most systems are not configured to apply the statutory averaging rules correctly.

The third step is a service review. Map each employee's full employment history with the current entity and any predecessor or group entity. Identify transfer agreements, novation letters, and any prior termination-and-rehire arrangements. Where continuity is ambiguous, obtain a legal opinion before the redundancy is announced. Reversing a service calculation after termination notices have been issued is significantly more expensive than getting it right beforehand.

Whistleblower protections add a further layer of strategic complexity. Polish implementation of the EU Whistleblowing Directive means that employees who have reported irregularities enjoy enhanced protection against dismissal. Terminating a whistleblower Poland employee – even for genuine organisational reasons – risks a successful challenge on the grounds of retaliatory dismissal. Employers should document the business rationale for each individual selection decision before announcing redundancies.

An employment lawyer Warsaw-based clients retain for pre-redundancy planning typically focuses on four areas: calculation verification, procedural compliance, selection criteria documentation, and settlement structuring. Settlements negotiated before Labour Court proceedings are almost always less costly than contested litigation. A well-drafted settlement agreement – including a valid waiver of further claims – requires specific formal conditions under Polish law. A waiver that does not meet those conditions is unenforceable, leaving the employer exposed to a second round of claims.

What is the outlook for severance law in Poland?

Polish severance law has been stable in its core structure for over two decades. The tiered formula and the 20-employee threshold have remained unchanged through multiple amendments to the Labour Code. However, two developments warrant attention. First, the national average remuneration – which anchors the statutory cap – has risen steadily. As wages increase, the cap rises proportionally, meaning the maximum exposure per employee grows each year without any legislative change. Employers modelling redundancy costs from prior-year figures will systematically underestimate current exposure.

Second, the legislative trajectory on collective employment law is moving toward greater employee protection. EU-level developments in works council rights and information-and-consultation obligations will filter into Polish law over the next two to three years. Employers who currently rely on informal consultation processes should begin aligning with the more structured requirements that are likely to become mandatory. The 30-day consultation window for collective redundancies may be extended in future amendments – building in that buffer now reduces future disruption.

The interaction between severance law and broader restructuring instruments is also evolving. Polish insolvency and restructuring law provides specific rules on employment termination in insolvency proceedings, including modified severance obligations and priority claims for unpaid wages. Employers facing financial distress who initiate redundancies outside a formal restructuring framework may forfeit protections available under insolvency law – a consequence that is genuinely irreversible once the insolvency filing window closes.

Finally, the digitalisation of labour administration is accelerating. The National Labour Inspectorate is expanding its data-matching capabilities, cross-referencing payroll records with ZUS (Social Insurance Institution) filings to identify systematic underpayment. Employers who have historically relied on the low probability of inspection as a risk-management strategy should recalibrate. Detection rates are rising, and the consequences – back-payment orders, interest, and potential personal liability for management – are not theoretical.

What to prepare before a redundancy programme:

  • Headcount confirmation across all Polish entities (20-employee threshold)
  • Full salary audit including variable pay over the preceding 12 months
  • Service continuity review for each employee at risk
  • Whistleblower status check and selection criteria documentation
  • Labour office notification timeline and employee representative consultation plan

Every redundancy programme carries specific risks that depend on the employer's size, payroll structure, and employee history. Applying a generic calculation without legal review precludes access to the most cost-effective outcomes and forfeits the ability to structure settlements that close all future claims.

To receive an expert assessment of your redundancy programme and severance exposure, contact info@kordeckipartners.com.

Frequently asked questions

Q: Does the statutory severance cap apply to enhanced contractual severance agreed in an employment contract?

A: The statutory cap under the Act on Collective Redundancies applies only to the statutory minimum severance entitlement. An employer may contractually agree to pay a higher amount – and that higher amount is not capped by statute. However, the statutory minimum itself cannot be reduced by contract. An employment contract that purports to lower the statutory entitlement below the one-to-three-month scale is unenforceable to that extent.

Q: How long does an employee have to bring a claim for unpaid severance?

A: Employment claims in Poland are subject to a three-year limitation period running from the date the claim became due – which is the date of termination for severance. The Labour Court may, in limited circumstances, allow a claim filed after that period if the delay was caused by circumstances beyond the employee's control. Employers should not treat the limitation period as a safe harbour: a claim filed on the final day of the three-year window is fully enforceable.

Q: Does severance pay attract income tax and social security contributions in Poland?

A: Statutory severance under the Act on Collective Redundancies is exempt from personal income tax up to the amount of the statutory entitlement. Any contractual enhancement above the statutory minimum is taxable as employment income. Social security contributions (ZUS) are not due on severance payments, whether statutory or contractual. Employers should apply these rules carefully when structuring settlement payments that bundle severance with other compensation elements.

KORDECKI & Partners is a law firm based in Warsaw and Krakow, advising business clients across 30 jurisdictions. Our team combines expertise in Polish and international law with a practical approach to employment law, redundancy planning, and cross-border workforce restructuring. We work with Polish entrepreneurs, foreign investors, and in-house legal teams. To discuss your situation, contact info@kordeckipartners.com.

Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. KORDECKI & Partners assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@kordeckipartners.com.