How much does it cost to hire developers in Poland? Which form of employment is better: a contract of employment or a B2B contract? We know firsthand that these are some of the most common questions asked by companies looking to hire tech talent in Poland.
In this article, we’ve put together a list of the key differences between these two most common types of contracts you can sign with IT developers in Poland. We’ve focused on the areas that matter most in practice, namely remuneration, taxes, and social security contributions, paid vacation, and notice periods.
We discuss each of these aspects in detail in the article below.
Employment under a contract of employment is the most popular type of employment in Poland. It is governed by the provisions of the Polish Labor Code, which sets out the rights and obligations of both employers and employees. As an employer, you may receive an inspection by the National Labor Inspectorate (PIP), which monitors compliance with labor law in Poland. Your employees are entitled to the full set of rights granted to them by the Labor Code, such as the right to paid vacation (20–26 days), notice periods prescribed by law, paid maternity leave, and many more. This type of employment is chosen by candidates who want job stability and the protection afforded by the Labor Code and offered by employers that want to boost their image and attract job seekers interested in working under employment contracts.
As the name suggests, a business-to-business contract, or a B2B contract, is simply an agreement between two businesses. If you’ve already set up a business, then your status is clear. But what does a developer need to do to become a B2B contractor in Poland? Such a person may set up a sole proprietorship (an unincorporated business owned and run by one person) and register it with Poland’s CEIDG (Central Register and Information on Economic Activity). Developers who conduct business as sole proprietors are considered to be self-employed, and they will charge you for their services based on VAT invoices, typically on a monthly basis. B2B contractors are free to decide who they work for, for how long, and where. On the other hand, they are responsible for calculating and remitting all relevant taxes as well as social security and health contributions (called ZUS contributions).
Are you wondering if a B2B contract is good or bad for a developer or how much it would cost you to hire a developer under a B2B contract in Poland? You can read more about the pros and cons of this type of employment in Humeo’s article:
If you’re considering hiring developers in Poland, you should understand the most popular types of employment. Here are the 5 most important differences between a contract of employment and a B2B contract in Poland.
If you choose to employ developers under a contract of employment, they will be your employees, so you must pay them a salary at least once a month. Also, you must specify the amount of remuneration and the date of payment. Polish labor law requires you to pay your employees by the 10th of the following month.
If you sign a B2B contract with a self-employed developer, you will pay the developer based on invoices issued once a month and by the date specified in the contract. Of course, you can always agree on a fixed price as part of work done on a specific project.
You typically pay the developer by bank transfer into the bank account specified by the developer.
If you hire developers under contracts of employment, you will be required to calculate and pay social security and health contributions (called ZUS contributions) and taxes for your employees. A gross monthly salary of 10,000 zlotys means that you need to deduct a total of 2,859.61 zlotys in ZUS contributions and taxes and pay them for your employee. In this case, the developer’s net (or take-home) salary will be 7,140.39 zlotys. As an employer, you should also keep in mind that you will additionally incur what are referred to as the employer’s costs, which come on top of the gross salary. Simply put, these are the additional costs related to advance payments for income tax and social security contributions paid by the employer. In the example discussed here, the employer’s costs amount to 2,048 zlotys, which means that the total monthly cost of hiring the developer will be 12,048 zlotys.
* Importantly, you don’t have to pay some of the ZUS contributions for your employees provided that they are not aged more than 26. Also, such employees are exempt from income tax, but only if their annual income doesn’t exceed 85,628 zlotys.
If you choose to employ a developer under a B2B contract, the developer will have to calculate and pay all relevant taxes and ZUS contributions. In the case of an invoice for 12,048 zlotys, the developer will have to pay a total of 3,724.76 zlotys in taxes and ZUS contributions. In this case, the developer’s take home pay will be 8,323.24 zlotys, which means 1,182.85 zlotys more than under a contract of employment.
* Importantly, you don’t have to worry about the costs incurred by B2B contractors because they’re already included in the invoices they issue. Ultimately, you have the same cost, i.e. 12,048 zlotys, but you can offer higher net remuneration (8,323.24 zlotys), which will definitely prove useful in negotiations.
Costs under a contract of employment versus a B2B contract:
GROSS AMOUNT | NET AMOUNT (FOR THE DEVELOPER) | EMPLOYER’S COSTS | TOTAL EMPLOYMENT COST | |
EMPLOYMENT CONTRACT | PLN 10,000 | PLN 7,140.39 | PLN 2,048 | PLN 12,048 |
B2B CONTRACT | PLN 12,048 | PLN 8,323.24 | PLN 0 | PLN 12,048 |
A contract of employment is governed by the provisions of the Polish Labor Code, which imposes certain obligations on employers and gives specific rights to employees. In order for you to offer this type of employment in Poland (and for the Polish authorities to be able to monitor your compliance with Polish labor law), you must set up a business in Poland, for example as a spółka z ograniczoną odpowiedzialnością (private limited company).
If you sign a B2B contract with a self-employed developer, in turn, you can do so as a foreign business entity without the need to complete any additional formalities or to register your business in Poland because a B2B contract is governed by the provisions of the Civil Code, not the Labor Code.
One of the most important rights given to employees under the Polish Labor Code is the right to paid vacation. If you employ developers under a contract of employment, you must offer them paid vacation. You calculate the number of vacation days based on the total length of employment (with all employers). For a high school or university graduate, the number of paid vacation days will be as follows:
Importantly, the total length of employment also includes the period of education at secondary and tertiary level (periods of education at specific stages are not added together):
In other words, if you’re employing a university graduate, this person’s total length of employment will be 8 years, so in two years they will be entitled to 26 paid vacation days.
This is the statutory minimum you must give to your employees. Of course, if you want, you can offer more vacation days. In addition to paid vacation, employees are also entitled to other forms of paid time off, such as maternity leave for women (between 20 and 37 weeks after giving birth) and shorter periods of paid absence, for example 1–2 days in the case of a wedding or a funeral.
Paid vacation days prove more problematic under a B2B contract, because labor law does not guarantee paid vacation to individuals who are self-employed. As an employer, you may include what are referred to as “days of non-performance” into a B2B contract (days on which the B2B contractor is free not to work and remains entitled to full remuneration). This is usually 20–26 days.
Finally, we need to say a few words about an aspect that will be important for you as an employer, namely notice periods. For a contract of employment, they depend on the period of employment with the current employer , and are as follows:
* Keep in mind that notice periods are calculated starting from the last day of the month or, for the two-week notice period, from the end of the week in which the notice of termination was given. For this reason, the notice periods may prove longer.
* In addition, Polish labor law provides for employment for a probationary period, which allows you to see if the employee is suited for the job. A probationary period may not exceed 3 months, and the required notice period is shorter and therefore better for the employer.
In B2B contract, notice periods are agreed by the parties and are usually 30 calendar days.
See how we help our clients achieve their goals:
Employment contract | B2B contract | |
Payments | By bank transfer by the 10th of the following month; salary must be paid at least once a month | By bank transfer based on an invoice, typically once a month; individual arrangements on the date of payment are possible |
Taxes and ZUS contributions | Paid by the employer | Paid by the B2B contractor as a sole proprietor |
Legal requirements | The employer must set up a business in Poland Employment under a contract of employment | No need for the employer to set up and register a business in PolandEmployment based on an international business-to-business agreement |
Paid vacation | 20-26 paid vacation days plus additional days off in special situations (childbirth, wedding, etc.) | Agreed by the parties in the form of “days of non-performance,” typically 15–20 days |
Notice periods | From 2 weeks to 3 months (calculated starting from the last day of the month or, in the case of the two-week notice period, from the end of the week in which the notice of termination was given) | Agreed on a case-by-case basis, usually 30 calendar days |
As you can see, Polish law is quite complicated. But it also gives you the possibility of employing developers under contracts of employment or B2B contracts, depending on which solution is right for you. You need to remember that every Polish national or every Polish employer must pay social security and health contributions (ZUS contributions) and income tax. If you employ a developer under a contract of employment, you are responsible for compliance with all legal requirements in this respect. In the case of a B2B contract, the person responsible for such payments is the developer as a sole proprietor.
In the final analysis, employing developers under B2B contracts is more beneficial in the context of both legal formalities and the amount of remuneration. However, this type of employment gives developers more room to negotiate the terms of the contract. In turn, a contract of employment means that you as an employer must comply with certain legal and accounting requirements, but the contract itself is regulated in a clear and transparent way by the Polish Labor Code.
Ultimately, the choice is yours, but one of these contracts may prove inevitable, because half of Polish developers in the IT sector work under B2B contracts and the other half under employment contracts, and they’re reluctant to change their preferences in this respect.
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