A Warsaw-based technology company recently restructured its operations, cutting 15 positions in a single month. The HR director assumed the standard severance formula applied uniformly. It did not. Three employees received incorrect payments, triggering formal complaints to the Państwowa Inspekcja Pracy (National Labour Inspectorate, PIP) within weeks.
Severance pay under Polish labour law is calculated by multiplying the employee's average monthly salary by a multiplier tied directly to length of service with that employer. The Kodeks pracy (Labour Code) sets three thresholds: one month's pay for service under two years, two months' pay for service between two and eight years, and three months' pay for service exceeding eight years. The payment is capped at 15 times the minimum wage in force on the date of termination.
This alert covers the three elements that most frequently cause errors: the salary base, the service-length calculation, and the statutory cap. Each carries distinct compliance risk. Getting any one wrong exposes the employer to claims before the Sąd Pracy (Labour Court) and potential surcharges from the PIP.
How is the salary base calculated for severance purposes?
The base is not the employee's gross contractual salary. It is the average monthly remuneration calculated using the rules applicable to holiday pay under the Labour Code. That distinction matters. Variable components – bonuses, commissions, overtime premiums – are averaged over the three months preceding termination. For employees with highly variable pay, this can shift the base significantly upward or downward.
Fixed components, such as the base salary and fixed monthly allowances, are taken at their current value on the termination date. Variable components are averaged. If the employment relationship lasted fewer than three months, the averaging period is shortened to the actual duration. This rule catches many foreign employers operating in Poland for the first time – including those managing staff under an employment law compliance framework for Slovakia-based companies entering the Polish market.
One practical checkpoint: if the employee received a salary increase during the averaging period, that increase is factored in proportionally. Ignoring this step is the single most common calculation error we encounter. The result is an underpayment that the Labour Court will correct, often adding statutory interest from the termination date.
- Identify all remuneration components individually
- Separate fixed from variable elements
- Average variable components over the preceding three months
- Apply any mid-period salary increase proportionally
- Verify the result against the statutory cap before payment
What service-length thresholds trigger higher severance?
The three-tier structure is deceptively simple. One month's pay applies to service under two years. Two months' pay applies from two years up to eight years. Three months' pay applies beyond eight years. The threshold is measured against service with the specific employer, not total career length. That boundary has produced substantial litigation before the Sąd Najwyższy (Supreme Court of Poland).
Two situations regularly create disputes. First, employees transferred between related entities: if the transfer involved a formal change of employer, the service clock may restart. If it constituted a transfer of an undertaking under Polish labour legislation, continuity is preserved and the full prior period counts. Second, employees returning from long-term leave – parental or sick leave – retain their accrued service. The leave period does not interrupt the count.
We obtained a reversal of an underpayment claim exceeding PLN 45,000 for a manufacturing client in the Mazowieckie region (autumn 2025). The employer had reset the service clock after an intra-group transfer. The Labour Court confirmed the transfer qualified as a transfer of an undertaking, restoring the employee's eight-year threshold and the three-month multiplier. The same analysis applies to companies structured across multiple jurisdictions – see the guidance on employment compliance obligations for Czech Republic companies in Poland for cross-border context.
What is the statutory cap and who does it affect?
The Labour Code caps severance at 15 times the national minimum wage. From 1 January 2026, the minimum wage in Poland is PLN 4,666 gross per month. The cap therefore stands at PLN 69,990 gross. Any calculated severance exceeding that figure must be reduced to the cap. The cap applies regardless of contractual terms or collective agreements – it is a statutory ceiling, not a default.
Higher-earning employees are the primary group affected. A senior manager on PLN 30,000 per month with eight years of service would theoretically receive PLN 90,000 (three months). The cap reduces that to PLN 69,990. Employers sometimes overlook this reduction and overpay – creating a different compliance risk. Overpayments may be recoverable, but recovery from a former employee is procedurally complex and rarely straightforward.
Foreign investors establishing Polish subsidiaries should note that the cap applies equally to expatriate employees on Polish employment contracts. The calculation uses Polish minimum wage figures regardless of the employee's home-country salary benchmarks. This point is especially relevant for companies managing international mobility and operational compliance across Polish regulatory frameworks. Whistleblower protection rules introduced in 2024 also interact here: employees who reported violations and were subsequently dismissed may claim additional remedies beyond standard severance.
Your specific severance situation may involve overlapping triggers – variable pay, intra-group transfers, the statutory cap, and whistleblower protection rules simultaneously. Each element compounds the risk of an irreversible underpayment claim. To receive an expert assessment of your severance exposure, contact info@kordeckipartners.com.
Frequently asked questions
Q: Does severance apply to all dismissals, or only redundancy-based terminations?
A: Statutory severance under the Labour Code applies specifically to terminations caused by reasons on the employer's side – primarily redundancies and collective dismissals. Dismissals for reasons attributable to the employee, such as gross misconduct, do not trigger the statutory entitlement. Contractual severance clauses may apply more broadly, but those are separate from the statutory obligation and must be assessed individually.
Q: How long does the employer have to pay severance after termination?
A: Severance is due on the last day of employment. There is no grace period under the Labour Code. Late payment triggers statutory interest from the due date, currently calculated at 11.25% per annum. Employees may file a claim before the Labour Court within three years of the payment falling due – that limitation period is a hard deadline that forfeits the claim entirely if missed.
Q: Can a work permit or EU Blue Card status affect severance entitlement for foreign employees?
A: No. Severance entitlement is tied to the employment contract and length of service, not to the employee's immigration status. A foreign national working under a work permit in Poland or holding an EU Blue Card is entitled to the same statutory severance as a Polish national. The employment lawyer Warsaw-based practitioners recommend verifying is whether the employment contract is governed by Polish law – if it is, full statutory protection applies.
About KORDECKI & Partners
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, severance disputes, 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.