A mid-sized logistics company based in the Mazowieckie region reduced its workforce by 18 employees in a single restructuring round. The employer had calculated severance payments using the employee's current base salary only. Three of the dismissed employees challenged that calculation before the Labour Court in Warsaw. The case turned on a question that surprises many employers: what exactly counts as "salary" for severance purposes under Polish employment law?

Under the ustawa o szczególnych zasadach rozwiązywania z pracownikami stosunków pracy z przyczyn niedotyczących pracowników (Act on Collective Redundancies), severance pay is calculated on the basis of the employee's average monthly remuneration, not base salary alone. The calculation follows the same methodology used for holiday pay – meaning variable components such as bonuses, shift allowances, and overtime supplements are included. The statutory cap is 15 times the national minimum wage, which in 2026 stands at PLN 4,666 gross per month.

This case study examines how the miscalculation arose, the strategy our team deployed to resolve it, and the compliance lessons that apply to any employer conducting redundancies in Poland. The matter also raised questions about work permit Poland obligations for two foreign national employees, adding a cross-border dimension that shaped the overall approach.

What was the background to the dispute?

The employer operated a hub-and-spoke distribution network across central Poland. Following a contract loss, management decided to close one operational unit entirely. Under Polish employment law, a redundancy affecting at least 10 employees within 30 days qualifies as a collective redundancy and triggers specific procedural obligations – including consultation with trade unions or employee representatives registered with the National Court Register (KRS). The employer had completed that consultation, but the severance calculations had been prepared by the HR department without legal review.

The three claimants had each received variable remuneration components over the preceding 12 months. One employee earned a monthly performance bonus averaging PLN 1,800. Another received regular Sunday shift supplements of approximately PLN 900 per month. The third had received a quarterly transport allowance. None of these components had been included in the severance base. The resulting underpayment per claimant ranged from PLN 3,600 to PLN 7,200 – significant amounts, but below the threshold that would have attracted attention during the initial HR review.

The employees filed claims with the Labour Court in Warsaw within the standard 21-day period. The Polish Financial Supervision Authority (KNF) had no direct role here, but the employer's parent company – a Dutch logistics group – was sensitive to any regulatory findings that might affect its broader operations. Speed and a clean resolution were both commercial priorities. (The employer also faced a parallel question about social insurance contributions owed to the Social Insurance Institution, known as ZUS, on the underpaid amounts.)

How did we approach the calculation strategy?

Our first step was a full audit of each claimant's remuneration over the 12 months preceding termination. Polish employment regulations require that variable components be averaged over that 12-month reference period when calculating the holiday pay equivalent used for severance. Where a component had been paid irregularly, we applied the proportional averaging method confirmed by the Supreme Court of Poland in its labour chamber rulings. The audit took four working days and produced a recalculated severance figure for each employee.

We identified that the employer had also misclassified one lump-sum payment made in the previous year. That payment had been labelled an "anniversary award" in the payroll system. Under Polish labour law, one-time awards linked to individual performance or tenure are excluded from the severance base. The classification mattered: including it would have overstated the employer's liability by approximately PLN 4,200 for that claimant. We documented the legal basis for the exclusion carefully, anticipating that the claimant's representative would challenge it.

We secured a settlement for the employer in the Mazowieckie region (spring 2026) that resolved all three claims for a combined additional payment of PLN 14,800 – below the claimants' initial demand of PLN 22,400. The settlement was reached at a mediation session before the first substantive hearing. This outcome avoided a public judgment, which was important to the Dutch parent company.

For clients dealing with foreign national employees, the situation required one additional layer of analysis. Two of the 18 redundant employees held EU Blue Card status. Termination of employment triggers an obligation to notify the relevant voivodeship office within 7 days. Failure to do so can complicate any future work permit Poland applications the employer might need to make for replacement hires. We coordinated those notifications as part of the same engagement.

To receive an expert assessment of your severance calculation methodology, contact info@kordeckipartners.com.

What lessons does this case transfer to other employers?

The core lesson is structural. Severance calculations that rely on payroll system exports without legal verification will routinely understate liability. Payroll systems are configured to pay correctly – they are not configured to calculate severance correctly. The two tasks use different inputs and different averaging rules. Employers who treat them as equivalent expose themselves to Labour Court claims that are almost always winnable by the employee, because the statutory methodology is clear.

Three practical checkpoints follow from this case:

  • Identify every recurring variable component paid in the 12 months before the termination date – bonuses, supplements, allowances, and incentive payments.
  • Verify whether each component is pensionable under ZUS rules; non-pensionable components are generally excluded from the severance base.
  • Apply the 15-times-minimum-wage cap only after completing the full average calculation, not before.

The whistleblower Poland framework is worth noting in any larger redundancy. The ustawa o ochronie sygnalistów (Whistleblower Protection Act) prohibits dismissal of employees who have reported irregularities in good faith. If a redundant employee had previously filed an internal report, the employer must be able to demonstrate that the redundancy decision was genuinely economic and not retaliatory. This point is increasingly raised in Labour Court proceedings and should be addressed in the redundancy documentation from the outset.

Foreign investors conducting redundancies in Poland for the first time often underestimate the consultation timeline. The statutory minimum consultation period is 20 days where no agreement is reached with employee representatives. Starting the calculation process before consultation concludes is a common error – and one that can invalidate the entire procedure. Our employment law compliance guide for UK companies in Poland sets out the procedural sequence in detail. For employers with cross-border workforce arrangements, our analysis of posted workers from Switzerland to Poland and A1 certificates addresses a related set of social insurance obligations that frequently arise during restructurings.

We also obtained interim measures protecting assets worth over EUR 800,000 for a German investor's subsidiary in Lower Silesia (winter 2026), in a separate employment dispute where the employer had failed to complete the collective redundancy consultation before issuing termination notices. That procedural gap rendered the dismissals ineffective under Polish employment legislation – meaning the employees remained legally employed despite receiving termination letters. The cost of correction exceeded the cost of prevention by a factor of six.

If your company is planning a redundancy affecting five or more employees, the calculation and procedural risks described here are live risks. Personal liability of directors for social insurance arrears – including ZUS contributions on understated severance – can arise where the employer is insolvent at the time of the underpayment. That consequence is irreversible once insolvency proceedings open. For employment disputes already in progress, our disputes practice in Poland provides litigation and mediation support at all court levels.

To discuss how severance calculation rules apply to your specific restructuring, email info@kordeckipartners.com.

Frequently asked questions

Q: Does severance pay under the Collective Redundancies Act apply to all dismissals, or only large-scale redundancies?

A: The Act applies when the employer has at least 20 employees and the redundancy meets the numerical thresholds – at least 10 employees within 30 days for smaller employers, or 20 or 30 employees depending on workforce size. Individual dismissals for reasons not attributable to the employee can also trigger severance entitlement under the general provisions of the Labour Code, but the calculation methodology differs slightly. An employment lawyer Warsaw-based or elsewhere can confirm which regime applies to your specific headcount and timeline.

Q: How long does an employee have to challenge an incorrect severance calculation?

A: Claims relating to severance pay must be filed with the Labour Court within 3 years of the payment becoming due. This is a longer window than the 21-day period for challenging the dismissal itself. Many employers assume that once the 21-day period passes without a challenge, the matter is closed. That assumption is incorrect: the employee retains the right to claim the underpaid amount for up to 3 years.

Q: Are non-cash benefits such as a company car or housing allowance included in the severance calculation base?

A: Generally, no. The severance base mirrors the holiday pay calculation, which includes cash remuneration components only. A company car provided for personal use and a housing allowance paid in kind are typically excluded. However, a cash car allowance – paid monthly as a fixed sum – may be included if it forms a regular part of remuneration. The classification of each component requires individual analysis, and misclassification in either direction creates legal exposure.

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, collective redundancies, and 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.