Polish labor law provides stronger statutory regulation of severance compared to jurisdictions such as Switzerland or Sweden. Employers must justify termination of indefinite contracts and comply with strict procedural rules, including consultation with employee representatives where applicable. Employment relationships are primarily governed by the Polish Labor Code, collective agreements, and individual employment contracts, meaning understanding severance pay in Poland is essential for workforce restructuring, redundancy planning, and compliance with employee protection standards.
What Is Severance Pay in Poland?
Severance pay in Poland refers to a statutory or contractual payment made to employees whose employment ends due to employer-initiated reasons, particularly economic or organizational restructuring.
Unlike many flexible termination regimes, Poland provides mandatory severance compensation in specific redundancy scenarios. However, severance does not apply to all dismissals and depends on employer size and termination reason.
Termination costs typically include:
- Statutory severance for redundancies
- Notice period salary
- Unused vacation payout
- Contractual compensation or settlement payments
- Collective agreement benefits
Is Severance Pay in Poland Mandatory?
Yes, but only under defined conditions.
Statutory severance applies when:
- Termination occurs for reasons not attributable to the employee
- The employer has at least 20 employees
- The dismissal forms part of collective or individual redundancy for economic reasons
Severance is governed primarily by the Act on Special Rules for Termination of Employment for Reasons Not Attributable to Employees.
Severance is not required in cases of:
- Resignation by the employee
- Dismissal for misconduct
- Termination due to employee fault
- Expiry of fixed-term contracts (unless redundancy rules apply)
Legal Framework Governing Severance Pay in Poland
Termination and severance rules are regulated by several key legal instruments.
Primary legal sources include:
- Polish Labor Code
- Act on Collective Redundancies
- Collective bargaining agreements
- Individual employment contracts
The legal framework distinguishes between:
- Notice period salary
- Statutory redundancy severance
- Compensation for unlawful dismissal
- Settlement agreement payments
- Social plan compensation
Understanding these distinctions is essential for accurate termination cost planning.
When Is Severance Pay Required in Poland?
Severance pay is triggered mainly by employer-initiated redundancy.
Employer Size Threshold
Statutory severance applies only where the employer has 20 or more employees.
This threshold is critical and often misunderstood by international employers.
Economic or Organizational Reasons
Severance applies when termination results from:
- Restructuring
- Downsizing
- Financial difficulty
- Technological changes
- Closure of business units
- Role elimination
Even individual redundancies may trigger severance if the termination reason is employer-driven.
How Is Severance Pay in Poland Calculated?
Statutory severance is based on employee seniority with the employer.
Statutory severance formula
- Less than 2 years of service: 1 month’s salary
- 2–8 years of service: 2 months’ salary
- More than 8 years of service: 3 months’ salary
Maximum cap
Severance cannot exceed 15 times the national minimum wage at the time of termination.
Included remuneration elements
- Base salary
- Regular allowances
- Fixed bonuses
- Other guaranteed compensation elements
Variable bonuses are typically excluded unless contractually guaranteed.
Severance Pay vs Notice Pay in Poland
Employers must distinguish between severance and notice compensation.
Category | Required in Most Cases | Typical Amount | Legal Basis |
Notice Period Salary | Yes | 2 weeks–3 months | Labor Code |
Statutory Severance | Conditional | 1–3 months salary | Collective Redundancy Act |
Compensation for Unlawful Dismissal | Possible | Reinstatement or damages | Labor Code |
Negotiated Severance | Common | Variable | Settlement agreements |
Both notice pay and severance may apply simultaneously in redundancy situations.
Notice Periods for Indefinite Contracts
Notice periods depend on seniority.
Employer notice periods:
- Less than 6 months: 2 weeks
- 6 months–3 years: 1 month
- Over 3 years: 3 months
Notice periods must be respected even when severance is payable.
Is Severance Pay Taxable in Poland?
Yes.
Severance payments are generally subject to:
- Personal income tax
- Social security contributions (depending on structure and legal basis)
- Certain statutory severance payments may receive preferential social security treatment, but proper classification is essential.
Unfair and Unlawful Termination in Poland
Termination of indefinite contracts must be justified and documented.
Examples of unlawful dismissal include:
- Lack of a valid termination reason
- Procedural violations
- Failure to consult unions where required
- Discrimination
- Incorrect redundancy selection process
Compensation for unlawful dismissal
Courts may award:
- Reinstatement
- Compensation up to several months’ salary
- Additional damages
The risk of reinstatement makes negotiated severance a common risk-management tool.
Collective Redundancies and Social Plans
Collective redundancies trigger additional obligations.
Employers must:
- Consult unions or employee representatives
- Notify labor authorities
- Negotiate social plans where required
- Apply objective selection criteria
Social plans may include enhanced severance payments beyond statutory minimums.
Termination Restrictions
Termination may be restricted during protected situations, including:
- Pregnancy and maternity leave
- Pre-retirement protection period
- Sick leave (limited duration)
- Trade union protection
- Parental leave
These protections may delay dismissal, but do not automatically create severance entitlement.
Fixed-Term Contracts and Severance Pay in Poland
Fixed-term contracts usually end automatically without severance.
However, severance may apply when:
- Early termination occurs for redundancy reasons
- Collective redundancy rules apply
- Settlement agreements include compensation
Improper early termination may trigger damages equal to the remaining salary.
Severance Pay for Executives in Poland
Executive contracts often include negotiated severance provisions.
Typical arrangements include:
- Multiple months of salary
- Lump-sum compensation
- Bonus continuation
- Garden leave
- Non-compete compensation
Executive severance may exceed statutory limits but must comply with corporate governance and tax rules.
Common Employer Mistakes
International employers frequently:
- Assume severance applies to all dismissals
- Overlook the 20-employee threshold
- Confuse redundancy severance with notice pay
- Ignore collective redundancy consultation rules
- Fail to document termination justification
- Miscalculate severance caps
Procedural errors may expose employers to reinstatement and damages.
Step-by-Step Guide to Lawful Termination in Poland
Termination of employment in Poland must follow a structured legal process defined primarily by the Polish Labor Code (Kodeks pracy) and, in redundancy cases, the Act on Special Rules for Terminating Employment Relationships for Reasons Not Attributable to Employees. Polish law requires employers to justify dismissals, comply with procedural safeguards, and calculate termination compensation accurately. Failure to follow these rules may result in termination being declared invalid by a labor court, potentially leading to reinstatement or compensation liability.
The following step-by-step framework outlines the key compliance stages employers should follow when terminating employment in Poland.
1. Confirm termination reason and documentation
The first step in any termination process is confirming that the dismissal is based on a legally valid reason. Under Polish employment law, termination of indefinite-term contracts must be justified, and the employer must clearly identify the grounds for dismissal.
Termination reasons typically fall into two broad categories:
- Employee-related reasons, such as misconduct, disciplinary violations, or failure to meet job performance expectations.
- Employer-related reasons, such as restructuring, redundancy, financial difficulties, or technological changes affecting the workforce.
For indefinite contracts, the employer must state the termination reason in the dismissal notice. The justification must be specific, genuine, and supported by evidence. Employers should therefore prepare documentation in advance, including performance reviews, disciplinary records, restructuring plans, or internal communications explaining the decision.
Proper documentation is particularly important because employees may challenge dismissal in court, and the employer bears the burden of proving that termination was justified.
2. Check employer size threshold
The size of the employer determines whether special redundancy rules apply. Under Polish law, employers with at least 20 employees are subject to additional regulations governing dismissals for reasons not attributable to employees.
If the workforce meets this threshold, employers must comply with the collective redundancy framework, which includes statutory severance obligations and consultation procedures. These rules apply even when dismissals involve only a small number of employees, provided the underlying reason is organizational or economic.
Employers with fewer than 20 employees are not subject to these redundancy provisions, although general termination rules under the Labor Code still apply.
3. Determine redundancy eligibility
Where termination is linked to employer-driven reasons, the next step is determining whether the dismissal qualifies as redundancy under Polish law.
Redundancy typically arises when the position itself is eliminated or when workforce reductions are necessary due to operational changes, such as:
- Organizational restructuring
- Business downsizing
- Technological changes affecting job roles
- Financial difficulties
- Closure of departments or business units
If the dismissal is classified as redundancy and the employer meets the 20-employee threshold, the employee becomes eligible for statutory severance compensation. Employers must therefore carefully assess the legal classification of the termination reason before proceeding.
4. Review collective agreement obligations
Many workplaces in Poland operate under collective bargaining agreements or internal workplace regulations, which may introduce additional termination requirements beyond statutory law.
Employers should review applicable agreements to determine whether they include:
- Enhanced severance compensation
- Additional consultation requirements
- Extended notice periods
- Internal approval procedures before termination
- Redeployment or retraining obligations
These agreements may significantly affect termination procedures and financial obligations. Ignoring collective agreement provisions may expose employers to legal disputes or compensation claims.
5. Conduct union consultation if required
If the employee is a member of a trade union or if a union operates within the workplace, employers may be required to consult the relevant union organization before termination.
For individual dismissals of union members, employers must notify the union of the planned termination and provide the justification for dismissal. The union typically has a limited period to present its opinion regarding the termination decision.
In collective redundancy situations, consultation obligations are broader and may include discussions regarding:
- Reasons for workforce reductions
- Number and categories of affected employees
- Proposed timeline for dismissals
- Potential alternatives to layoffs
- Social support measures for affected workers
Failure to comply with required consultation procedures may invalidate the termination process or increase litigation risk.
6. Confirm notice period
Notice periods in Poland depend on the employee’s length of service with the employer and apply primarily to indefinite-term employment contracts.
Statutory notice periods are generally:
- 2 weeks for employees with less than 6 months of service
- 1 month for employees with at least 6 months but less than 3 years of service
- 3 months for employees with 3 years or more of service
Employers must confirm whether the employee will work during the notice period or be released from duties while continuing to receive salary. The applicable notice period must be clearly stated in the termination notice.
7. Calculate statutory severance
If the termination qualifies as redundancy and the employer has at least 20 employees, statutory severance compensation must be calculated according to the employee’s length of service.
Statutory severance amounts are:
- 1 month’s salary for employees with less than 2 years of service
- 2 months’ salary for employees with 2–8 years of service
- 3 months’ salary for employees with more than 8 years of service
Severance payments are subject to a maximum cap equal to 15 times the national minimum wage. Employers must ensure that the salary used for the calculation includes all legally required components of remuneration.
8. Deliver written notice with justification
Termination must be delivered in writing, and the dismissal notice must clearly specify the reason for termination in cases involving indefinite-term contracts.
The notice should include:
- The termination justification
- The applicable notice period
- Information regarding the employee’s right to challenge the dismissal before a labor court
Written notice must be delivered directly to the employee or sent using legally recognized delivery methods. Failure to provide written notice or properly explain the termination reason may render the dismissal defective.
9. Calculate final compensation
The final step involves calculating all payments owed to the employee at the end of employment.
Final compensation typically includes:
- Salary for the notice period
- Statutory severance pay where applicable
- Payment for unused annual leave
- Outstanding bonuses or commissions
- Any contractual termination benefits
Employers must also provide mandatory employment documentation, including a work certificate (świadectwo pracy) confirming employment history and termination details.
Employer of Record (EOR) Services in Poland
Managing severance pay in Poland requires understanding statutory redundancy rules, collective consultation obligations, and reinstatement risk.
An EOR in Poland ensures:
- Contract structuring aligned with the Polish Labor Code
- Redundancy eligibility assessment
- Union consultation compliance
- Severance calculation accuracy
- Payroll and social security coordination
- Lawful termination procedures
Because severance pay in Poland is mandatory in redundancy scenarios, employers must carefully distinguish between statutory severance, notice compensation, and damages exposure. INS Global supports companies hiring in Poland by ensuring compliant employment management and reducing dismissal risk throughout the employee lifecycle.
To learn more, contact our local expansion advisors today.
Additional Frequently Asked Questions About Severance Pay in Poland
Severance pay in Poland is primarily governed by statutory redundancy rules rather than employer discretion. Under the Act on Special Rules for Terminating Employment Relationships for Reasons Not Attributable to Employees, statutory severance depends on the employee’s length of service with the employer.
The minimum statutory severance amounts are:
- Less than 2 years of service: 1 month’s salary
- 2–8 years of service: 2 months’ salary
- More than 8 years of service: 3 months’ salary
These amounts represent the legal minimum when redundancy rules apply. However, the law also establishes a maximum cap, which limits severance to 15 times the national minimum wage at the time of termination.
In practice, negotiated severance packages may exceed these statutory amounts, particularly in cases involving senior employees, long service periods, organizational restructuring, or dispute resolution. Employers sometimes offer additional compensation to encourage voluntary departure or reduce litigation risk.
Yes. Severance payments in Poland are frequently negotiated through termination agreements (mutual termination settlements). These agreements allow both parties to end the employment relationship voluntarily while determining compensation terms.
Negotiated settlements are common in situations such as:
- Workforce restructuring or downsizing
- Disputed termination decisions
- Executive or senior management departures
- Situations where employers wish to avoid litigation
Settlement agreements may include additional compensation beyond statutory severance, as well as provisions such as:
- Lump-sum severance payments
- Salary continuation for a defined period
- Bonus protection or partial bonus payouts
- Waivers of legal claims
- Confidentiality clauses or non-compete arrangements
Because these agreements involve the waiver of potential legal claims, employees often seek independent legal advice before signing.
Yes, severance pay is typically required in redundancy situations when certain legal criteria are met. Specifically, statutory severance applies when:
- The termination occurs for reasons not attributable to the employee, such as restructuring or downsizing
- The employer has at least 20 employees
- The dismissal is linked to organizational, economic, or technological changes
Severance may apply both in collective redundancies and in individual redundancies, provided the underlying reason for dismissal is employer-driven rather than related to employee misconduct or performance.
In large restructuring programs, employers may also implement social plans or voluntary exit packages that include compensation above statutory severance levels.
No, the statutory redundancy severance rules generally apply only to employers with at least 20 employees.
Companies employing fewer than 20 workers are not subject to the redundancy compensation provisions contained in the collective redundancy legislation. However, even smaller employers must still comply with the Polish Labor Code, including requirements regarding notice periods, termination justification, and employee protection rules.
Although statutory severance is not mandatory for small employers, severance compensation may still arise through:
- Employment contract provisions
- Collective agreements
- Negotiated settlement agreements
Yes. Polish law allows severance payments to be structured as either lump-sum payments or installment arrangements, provided both parties agree to the payment structure.
Installment payments are most commonly used in negotiated settlement agreements or in restructuring programs where employers aim to spread termination costs over time. Payment schedules must be clearly documented in the termination agreement to prevent disputes regarding timing or amount.
Regardless of the payment structure, employers must ensure that severance payments are properly reported for tax and payroll purposes.
Yes. Termination during a probationary period typically does not trigger severance entitlement.
Probationary employment contracts in Poland are designed to allow employers and employees to evaluate the employment relationship before entering into longer-term arrangements. Because probationary employees usually have short tenures and reduced dismissal protection, severance payments rarely apply.
However, employers must still ensure that termination during probation complies with anti-discrimination laws and other basic employment protections.
If an employer becomes insolvent, employees may receive partial protection through Poland’s Guaranteed Employee Benefits Fund (FGŚP – Fundusz Gwarantowanych Świadczeń Pracowniczych).
This state-managed fund may cover certain unpaid employment-related claims, including:
- Outstanding wages
- Unpaid holiday pay
- Notice compensation
- Certain statutory termination payments
However, compensation from the fund is subject to legal limits, and negotiated severance packages or contractual payments exceeding statutory obligations may not always be fully protected.
Employees, therefore, face a higher risk of partial recovery if termination compensation exceeds statutory entitlements.
No. Severance pay is not required when employment is terminated for cause, meaning due to serious employee misconduct.
Immediate dismissal may occur in cases such as:
- Serious breach of employee duties
- Criminal activity affecting employment
- Gross violations of workplace rules
- Actions causing significant harm to the employer
Because dismissal for cause eliminates severance entitlement, employers must ensure that the grounds for termination are properly documented and supported by evidence. If a court later determines that dismissal for cause was unjustified, the employer may be required to pay compensation.
Employees in Poland benefit from special protection during the pre-retirement period, which typically applies during the four years preceding the employee’s statutory retirement age.
During this protected period, employers generally cannot terminate employment through ordinary dismissal unless exceptional circumstances apply, such as:
- Company liquidation or bankruptcy
- Serious employee misconduct
- Mutual termination agreement
While this protection makes dismissal more difficult, it does not change the statutory severance calculation rules. If termination occurs legally for redundancy reasons, severance payments are still calculated based on seniority and statutory limits.
Yes. Senior executives and managerial employees often receive enhanced severance packages through employment contracts or negotiated termination agreements.
Executive severance arrangements may include:
- Multiple months of salary beyond statutory severance
- Bonus continuation or prorated bonuses
- Non-compete compensation
- Garden leave arrangements
- Lump-sum settlement payments
Because executive severance is typically contract-driven rather than statutory, the exact amount and structure depend on negotiation outcomes, company policy, and corporate governance considerations.
