Employee capital plans – Basic duties

In our previous Newsletter, we presented a general outline of employee capital plans (PPKs). We would now like to proceed to some details concerning the contracts for PPK management and operation, and to discussion of the most important aspect of contributions remittance.

The contract for PPK management

Execution of a contract for PPK management between the employing establishment and a selected financial institution is a prerequisite to actual implementation of employee capital plans. Electronic form will suffice, provided that it lends itself to storing on a permanent data carrier.

Selection of the financial institution ought to proceed in consultation with an in-house union organisation or, if there are is no union active within the given employing establishment, in consultation with employee representatives chosen in accordance with the procedure usually followed at that employer.

An employer who has not executed a contract for PPK management within the applicable deadline will be called to do so by the Polish Development Fund and may be fined up to 1.5% of its remunerations fund for the preceding financial year.

The contract for PPK operation

The next step is comprised in execution of a contract for PPK operation with the same financial institution that was selected for PPK management.

The employer must execute a contract for PPK operation in the name, and to the benefit, of a specific employee upon elapse of the third month of her/his employment at the given establishment (not later than the 10^th day following the month in which the 3-month deadline has elapsed). The employing establishment may refrain from executing a contract for PPK operation in the name, and to the benefit, of a specific employee where, before the above deadline has elapsed, the employee presents a written declaration on non-contribution to the employee capital plan, or if she/he ceases to be an employee.

As a general rule, participation in employee capital plans by specific employees is voluntary. In order to assist its employees in making an informed decision on participation, or otherwise, in the PPK, the employer may brief them on the participation rules and on the respective duties of the employer and of the employees themselves in this regard.

In the event that the employer does not execute the PPK operation contract within the applicable deadline, it is presumed that, as of the first day following the deadline’s elapse, a legal relationship concerning PPK operation arises on an ex lege basis between the given employee and the financial institution with which her/his employer contracted for PPK management.

PPK contributions

As already noted, contributions to employee capital plans are financed by the employing establishment as well as by the employees themselves. The amount of the contribution is correlated with the remuneration of the given employee:

Contributions financed by the employer:

1. Mandatory – if the employee has not submitted a declaration on non-payment / waiver of contributions – basic contribution;
2. Optional – additional contribution:
3. Declared in the PPK management contract;
4. It is possible to change the contribution amount or to forego future contributions;
5. The contributions may be varied in reference to the duration of employment at the given establishment or in line with provisions of the in-house remuneration rules or the applicable collective labour agreement.

Contributions financed by the employer constitute revenue of the employee.

Contributions financed by the employee:

1. Mandatory – if the employee has not submitted a declaration on non-payment / waiver of contributions – basic contribution:
2. 2% of the given employee’s remuneration – by default, or
3. Less than 2%, abut not less than 0.5% of the given employee’s remuneration if her/his remuneration from various sources in the given month does not exceed the amount corresponding to 1.2 times the minimum remuneration – submission of declaration to the employer required;
4. Optional – additional contribution – submission of declaration to the employer required.

Contributions commence in the month following that in which the legal relationship arising from the contract for PPK operation was established.

In our next Newsletter, we will outline the possibility of discontinuing contributions to an employee capital plan and discuss cases where early pay-out may be available.