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.
You typically pay the developer by bank transfer into the bank account specified by the developer.
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|
|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.