A Warsaw-based logistics company recently discovered it had been calculating severance pay incorrectly for three years. The error – a misapplication of the salary cap rule – exposed the company to back-payment claims from dozens of former employees. The financial exposure ran into hundreds of thousands of zlotys. That scenario is more common than most HR teams realise.

Polish labour law entitles employees dismissed for reasons not attributable to the employee to severance pay under the Act on Specific Rules for Terminating Employment Relationships for Reasons Not Related to Employees (ustawa o szczególnych zasadach rozwiązywania z pracownikami stosunków pracy z przyczyn niedotyczących pracowników, the Collective Redundancy Act). The payment equals one, two, or three months' salary depending on length of service, and is capped at 15 times the national minimum wage. Errors in the base salary calculation or the cap trigger personal liability claims and labour court proceedings that can take 12 to 24 months to resolve.

This alert covers the three elements most frequently miscalculated: the statutory entitlement thresholds, the salary base, and the cap. It also sets out immediate action items for employers who may have applied the wrong formula.

Who is entitled and at what threshold?

The Collective Redundancy Act applies to employers with at least 20 employees. Smaller employers are not covered by the collective redundancy framework, though individual employment contracts may grant equivalent rights. The National Labour Inspectorate (Państwowa Inspekcja Pracy, PIP) treats the 20-employee threshold as a hard cut-off, calculated on the date the notice of termination is issued.

Entitlement depends on length of service with the current employer:

  • Less than 2 years of service – one month's salary
  • 2 to 8 years of service – two months' salary
  • More than 8 years of service – three months' salary

The service periods are calculated to the day. An employee dismissed one week before the two-year mark receives only one month's pay. That detail generates a disproportionate share of disputes filed with the District Labour Court (Sąd Rejonowy – Wydział Pracy). Employers sometimes round down; courts do not.

Foreign nationals holding a work permit Poland or an EU Blue Card are entitled to the same severance rights as Polish employees. Their service periods include time worked under consecutive permits, provided there was no break exceeding 30 days between contracts. This is a common miscalculation for companies running international mobility programmes.

How is the salary base calculated?

The salary base for severance is the employee's monthly remuneration calculated under the rules for holiday pay, not the contractual gross salary. This distinction matters. Variable components – bonuses, commissions, overtime supplements – are averaged over the 12 months preceding termination. A sales employee earning a PLN 5,000 base plus average monthly commissions of PLN 8,000 has a severance base of PLN 13,000, not PLN 5,000.

We secured a recalculation and recovery of overpaid severance for a manufacturing client in the Mazowieckie region (autumn 2025). The employer had used only the fixed base salary, ignoring variable components entirely. The resulting underpayment to three senior employees exceeded PLN 180,000 in aggregate. The matter was resolved before court proceedings commenced.

Components excluded from the base include one-off payments, jubilee awards, and benefits in kind that are not regular. The Social Insurance Institution (Zakład Ubezpieczeń Społecznych, ZUS) does not treat severance as a basis for social contributions, provided the amount does not exceed the statutory cap. Any excess above the cap is subject to ZUS contributions and personal income tax – a further reason to apply the cap correctly.

For employers employing staff across multiple jurisdictions, the base calculation must reflect only Polish-source remuneration unless the employment contract explicitly incorporates foreign allowances into the Polish pay structure.

What is the statutory cap and why does it generate liability?

The Collective Redundancy Act caps severance at 15 times the national minimum wage in force on the date of termination. From 1 January 2026, the minimum wage is PLN 4,666 gross per month. The cap therefore stands at PLN 69,990. Any contractual provision granting higher severance is enforceable, but the statutory floor cannot be waived.

Errors run in both directions. Some employers pay below the cap by miscalculating the base. Others pay above the statutory amount without realising the excess attracts ZUS contributions, which the employer must settle within 15 days of the payment date. Late ZUS contributions carry interest at 8% per annum and may trigger a PIP audit.

Our team obtained a favourable settlement for an IT sector client in Lower Silesia (spring 2026). The company had applied a cap based on the prior year's minimum wage rather than the rate in force on the termination date. The gap was PLN 6,000 per affected employee across 11 redundancies. Correcting the error before the employees filed claims avoided litigation costs estimated at PLN 40,000 in legal fees alone.

Whistleblower protection rules – introduced under the Whistleblower Protection Act (ustawa o ochronie sygnalistów) – add a further layer of risk. An employee dismissed in circumstances that could be characterised as retaliation for reporting a compliance concern is entitled to reinstatement or enhanced compensation, regardless of whether the employer followed the redundancy procedure correctly. Employment lawyers in Warsaw are seeing a rise in claims combining severance underpayment with whistleblower retaliation arguments.

Employers should also note that structural changes at group level – mergers, demergers, or transfers of undertakings – do not reset the service period for severance purposes. The acquiring entity inherits the employment history of transferred employees in full.

Immediate action items for employers

If your company has carried out redundancies in the past three years, a recalculation audit is the first step. The limitation period for employee claims under Polish labour law is three years from the date the claim arose. An underpayment made in March 2023 remains actionable until March 2026. Acting now, before claims are filed, preserves the option of a negotiated correction rather than court-ordered back-payment with statutory interest.

What to prepare for an internal audit:

  • Full employment history for each affected employee, including dates of consecutive contracts
  • Payroll records for the 12 months preceding each termination, broken down by component
  • Confirmation of the minimum wage rate in force on each termination date
  • ZUS settlement records for each severance payment
  • Any contractual severance clauses that may exceed the statutory minimum

Foreign-owned companies operating in Poland face an additional complication. Group HR policies drafted under German, Dutch, or Czech law often define "monthly salary" differently from the Polish holiday-pay formula. Applying the group policy without local adaptation is one of the most frequent sources of underpayment identified in PIP audits.

The PIP can initiate an inspection without prior notice and issue a binding order to pay the correct amount within 30 days. Non-compliance with a PIP order is a misdemeanour carrying a fine of up to PLN 30,000 per violation. Personal liability of the HR director or CFO who signed the termination documentation is a real, not theoretical, risk.

Specific situation of your company requires individual assessment. An error in severance calculation is not self-correcting – it compounds as interest accrues and as additional employees become aware of the underpayment, making collective action more likely.

If your company has conducted redundancies affecting employees with more than two years of service and has not verified the salary base against the holiday-pay formula, contact us for a targeted recalculation review: info@kordeckipartners.com.

Frequently asked questions

Q: Does the three-year limitation period apply from the date of termination or the date the severance was paid?

A: The limitation period runs from the date the claim arose, which is the date the severance payment fell due – typically the last day of employment or the date specified in the termination agreement. If severance was paid but at an incorrect amount, the limitation period for the underpaid portion runs from the same date, not from when the employee discovered the error. Employees are advised by employment lawyers to file claims promptly to avoid limitation arguments.

Q: Is a company with 19 employees ever required to pay statutory severance?

A: The Collective Redundancy Act does not apply below the 20-employee threshold. However, an employment contract, collective bargaining agreement, or internal remuneration regulations may independently grant severance rights. If such a provision exists, it is fully enforceable regardless of company size. Employers below the threshold should audit their internal documents before assuming no severance obligation exists.

Q: How does a transfer of undertaking affect severance entitlement?

A: Under Polish labour law, a transfer of undertaking does not break the continuity of employment. The transferee employer inherits the full service history of transferred employees. An employee with six years at the transferor and three years at the transferee has nine years of continuous service for severance purposes. Calculating severance from the transfer date is a common and costly error.

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 compliance, redundancy procedures, and cross-border workforce management. 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.