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Magdalena Andrałojć, Amsterdam 27.01.2005 Measuring wages and working hours, and calculating wages in Poland Magdalena Andrałojć The Poznan University.

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Presentation on theme: "Magdalena Andrałojć, Amsterdam 27.01.2005 Measuring wages and working hours, and calculating wages in Poland Magdalena Andrałojć The Poznan University."— Presentation transcript:

1 Magdalena Andrałojć, Amsterdam 27.01.2005 Measuring wages and working hours, and calculating wages in Poland Magdalena Andrałojć The Poznan University of Economics

2 Magdalena Andrałojć, Amsterdam 27.01.2005 The outline of presentation 1.The most popular contracts concerning work in Poland 2.Gross and net wage 3.Working hours 4.Some Polish data – Central statistical office 5.Summary - comments to WIQ

3 Magdalena Andrałojć, Amsterdam 27.01.2005 The most popular contracts concerning work in Poland 1.On the basis of civil law Special contract 1 - contract by results - Umowa o dzieło Special contract 1 - contract by results - Umowa o dzieło Special contract 2 - free-for-task agreement - Umowa zlecenie Special contract 2 - free-for-task agreement - Umowa zlecenie 2.On the basis of labour law contract of employment – permanent contract, fix-term contract, replacement contract contract of employment – permanent contract, fix-term contract, replacement contract

4 Magdalena Andrałojć, Amsterdam 27.01.2005 Contracts concerning work indicated in WIQ Question E01 and E03 what kind of contract do you have? permanent contract (labour law) permanent contract (labour law) fixed-term contract (labour law) fixed-term contract (labour law) apprentice, trainee (civil law, no-name agreement) apprentice, trainee (civil law, no-name agreement) replacement contract (labour law) replacement contract (labour law) community work scheme / subsidized employment (labour law) community work scheme / subsidized employment (labour law) contractor / labour-only subcontractor ( contract by results, free-for-task agreement - civil law) contractor / labour-only subcontractor ( contract by results, free-for-task agreement - civil law) contract with temp agency (labour law) contract with temp agency (labour law) seasonal work (labour law, sort of fix-term contract) seasonal work (labour law, sort of fix-term contract)

5 Magdalena Andrałojć, Amsterdam 27.01.2005 Contract by results 1.There are two partners of the contract – contractor, who agrees to do some work and client who agrees to pay for results of this work (e.g. writing a book) 2.It is not subordinate relationship 3.Client has to pay for result 4.Written form is required 5.The time limit is agreed, but working hours are not 6.The cost of achieving income is 20% (without copyright) or 50% (with copyright) of contractors income – this amount diminishes the basis of tax calculation 7.Social security contribution is not paid

6 Magdalena Andrałojć, Amsterdam 27.01.2005 Free-for-task agreement 1.There are two partners of the contract – contractor, who agrees to do some work and client who agrees to pay for doing this work (e.g. teaching), contractor gives a promise to do the work as good as he can, but doesnt give a promise to achieve results 2.It is not subordinate relationship 3.Client doesnt have to pay if the partners agreed so 4.Written or verbal form 5.The time limit is agreed, but working hours are not 6.The cost of achieving income is 20% (without copyright) or 50% (with copyright) of contractors income 7.There is an obligation to pay social security contribution

7 Magdalena Andrałojć, Amsterdam 27.01.2005 Contract of employment 1.There are two partners of the contract – employee, who agrees to do some work and employer who agrees to pay for work and secure the good working condition 2.It is subordinate (work) relationship 3.Employer has to pay agreed amount of money for employee in agreed period of time 4.Written form is required 5.Working hours are agreed 6.The cost of achieving income is 102,25 PLN per month (1227 PLN per year) 7.There is an obligation to pay social security contribution

8 Magdalena Andrałojć, Amsterdam 27.01.2005 Type of contract Legal basement Object of the contract Relationship Secured good working condition Form of agreem ent Working hours Cost of achieving income Social security contributi on and health Contract by results Civil law Results of work Equal (contractor – client) NoWritten Not agreed 20% 50% No Free-for- task agreeme nt Civil law Doing a work Equal (contractor – client) No Written or verbal Not agreed 20%50%Yes Contract of employm ent Labour law Doing a work Dependenc e (employee – employer) NoWrittenAgreed 102,25 PLN per month (1227 per year) Yes Contract by result, free-for-task agreement, and contract of employment compared

9 Magdalena Andrałojć, Amsterdam 27.01.2005 Does question E03 what kind of contract do you have? correspond with A01 Which description matches best your current employment activity? If yes, who has to answer E03? Does question E03 what kind of contract do you have? correspond with A01 Which description matches best your current employment activity? If yes, who has to answer E03? A01 Employee Family worker / working for family business Self- employed Apprentice / trainee In a job creation scheme School pupil, student in full-time education Unemployed / looking for a job Sickness benefit / incapacity for work other E 01 and E03 permanent contract (labour law) fixed-term contract (labour law) apprentice, trainee (civil law) replacement contract (labour law) community work scheme / subsidized employment (labour law) contractor / labour-only subcontractor (civil law) contract with temp agency (labour law) seasonal work (labour law, sort of fix-term contract) Contract by results Free-for- task agreement

10 Magdalena Andrałojć, Amsterdam 27.01.2005 Gross and net wage NET WAGE = GROSS WAGE – STATUTORY DEDUCTION Statutory deduction: 1.Social security contribution (pension contribution, sick live contribution) 2.Obligatory health contribution 3.Tax deduction (tax deduction is made every month, but at the beginning of each year employee has to square up with the Internal Revenue/Taxation Office previous year – employee can use tax relief and then he receive some money back)

11 Magdalena Andrałojć, Amsterdam 27.01.2005 Social security contribution 18,71% of pay for worked time (contracted pay + overtime – pay getting during sick live) up to 33 days in a year pay is covered by employer, from 34 day employee gets sickness benefit from Social Security) up to 33 days in a year pay is covered by employer, from 34 day employee gets sickness benefit from Social Security)

12 Magdalena Andrałojć, Amsterdam 27.01.2005 Obligatory health contribution Basis of health contribution = income (contracted pay + overtime + pay getting during sick live) – social security contribution 2005 – 8,5% of basis (7,75% is deducted from the tax and 0,75% is deducted from income after tax – decreasing net wage) 2006 – 8,75% (7,75% from tax, 1% from income after tax) 2007 – 9% (7,75% from tax, 1,25% from income after tax)

13 Magdalena Andrałojć, Amsterdam 27.01.2005 Tax deduction Basis of income tax = income (contracted pay + overtime + pay getting during sick live) – social security contribution - cost of achieving the income (20% or 50% or 102,25 PLN per month depends on the contract)

14 Magdalena Andrałojć, Amsterdam 27.01.2005 Income tax Progressive income tax scale, 4 tax rate – 19%, 30%, 40%, 50% free tax quota – 2 790 PLN per year (232,5 PLN per month) it means that we can deduct from calculated tax 530,08 PLN per year (2 790PLN*0,19) or 44,17 PLN per month (232,5*0,19 ) incomescale up to 37 024 PLN per year (3 085,33 PLN per month) 19% tax basis – 530,08 PLN per year or (44,17 PLN per month) 37 024 – 74 048 per year (3 085,33 – 6 170,67 per month) 6 504,48 + 30% surplus over 37 024 per year (542,04 + 30% surplus over 3 085,33 per month) 74 048 – 600 000 per year (6 170,67 – 50 000 per month) 17 611,68 + 40% surplus over 74 048 per year (1467,64 +40%) Over 600 000 PLN per year (50 000 per month) 227 992,48 + 50% surplus over 600 000 per year (18999,37 + 50% surplus per month)

15 Magdalena Andrałojć, Amsterdam 27.01.2005 Gross and net wage Gross and net wage Contract by results Net = gross - tax deduction (using 20% or 50% of cost of achieving the income) Free-for- task agreement Net = gross – (social security contribution + obligatory health contribution + tax deduction) using 20% or 50% of cost of achieving the income Contract of employment Net = gross – (social security contribution + obligatory health contribution + tax deduction) cost of achieving the income 102,25 PLN per month

16 Magdalena Andrałojć, Amsterdam 27.01.2005 Working time and wage estimation Contract by results Free-for- task agreement We can estimate hourly wage using question E22 On which payment period was your last wage based? + usual hours on the last project It is difficult to estimate an annual wage We can treat them as self-employed – ask them for annual earnings or just exclude them

17 Magdalena Andrałojć, Amsterdam 27.01.2005 Working time and wage estimation Contract of employment Calculation using contractual (standard) hours + paid overtime Standard working day = 8 hours Standard working week = 5 days Standard working month = 21 days Standard working year = 251 days It means 114 days off (103 days of weekends + 11 statutory free days) Almost every third day!!! + 23 days of paid holidays

18 Magdalena Andrałojć, Amsterdam 27.01.2005 Measuring wages in national survey – Central Statistical Office Structure of wages by occupation in October 2002 (2004 is coming soon) Monthly gross wage = contracted pay (including flat wages and salaries, overtime bonuses, functions, seniority bonuses) + overtime + payments for periods exceeding one month in amount due to one month (e.g. one third of the quarterly premium, one sixth of the last paid semi-annual premium, one twelfth of the annual premium or bonuses) + payments from balance surplus in co-operatives and from profit for distribution in enterprises Monthly gross wage doesnt include payments such as: anniversary prizes, gratifications, retirement severance- pays, compensations for lost vacations.

19 Magdalena Andrałojć, Amsterdam 27.01.2005 Gross monthly wage in PLN according to age and gender, Poland 2002

20 Magdalena Andrałojć, Amsterdam 27.01.2005 Gender pay gap

21 Magdalena Andrałojć, Amsterdam 27.01.2005 Gross monthly wage in PLN according to age and gender, Poland 2002

22 Magdalena Andrałojć, Amsterdam 27.01.2005 Gender pay gap

23 Magdalena Andrałojć, Amsterdam 27.01.2005 Summary – comments to WIQ 1.Indicate in questionnaire (question A1) contract by results and free-for-task agreement – routing similar to self-employed, some more question is needed (e.g. the time of starting and ending the project) or just thank them for interest 1.Indicate in questionnaire (question A1) contract by results and free-for-task agreement – routing similar to self-employed, some more question is needed (e.g. the time of starting and ending the project) or just thank them for interest 2.If we want to convert gross to net information about cost of achieving the income are needed 3.For calculation hourly wages use contractual monthly hours with and without paid overtime 4.Include in the calculation wages from the main job only 5.In question E29 dont ask about annual bonuses, but indicate them only in E31 and ask how much

24 Magdalena Andrałojć, Amsterdam 27.01.2005 Thank you! Any questions?


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