Polish HR and payroll in corporate HR

Let’s start with a dilemma that affects virtually every multinational company operating in Poland and hiring locally. This dilemma is whether to implement a local SAP HR solution or adapt a corporate template (template) – in SAP HCM or SuccessFactors? What should a company that already has a global HR template, but is entering such a specific market as Poland, do?

Krzysztof Nowak: This is a very common scenario. A company has a ready-made, proven HR template – often working very well in countries such as Germany, France or the United States – and simply wants to implement it in Poland. The problem is that Poland is not simply “another country on the list." We have unique regulations, rapidly changing labor laws, mandatory reporting and integration with government systems. All of this means that no global template can work here immediately upon implementation. The system inevitably requires labor-intensive and therefore costly customization. Such implementation can become more of a hindrance than a help. We have seen cases where the lack of flexibility has forced the HR department to handle parts of processes manually, or even completely outside the system.

What about the option to implement SAP HR locally – without using a corporate template?

This is the second way – and it’s not ideal either. The company loses consistency with the rest of the organization, has to maintain the system itself, and often ends up explaining to headquarters why “Poland is once again doing things its own way." But a local system means local support – any change, for example in legislation, can be handled by an SAP partner in the country, such as All for One Poland.

So there is a dilemma about which path to take. And a local implementation partner can advise which is more cost-effective?

He can advise on what is optimal for the client from a business perspective. He has experience in both implementation and local SAP HR implementations, so he knows the pros and cons of both options and where the pitfalls lie. Regardless of whether the companies we worked with opted for a template adaptation or a local HR system, the key was to ensure compliance with Polish law, data security and the ordering of HR and payroll processes.

What could be the consequences if the company does not properly adjust the system?

Then “life outside the system" begins. HR personnel start doing calculations manually, which means that some processes are handled in Excel, confidential data is sent via email and no one really knows who has access to it. This not only poses a risk of errors, but also a serious threat to the security of personal data. No corporation wants to expose itself to this. Let me add right away that these are not theoretical risks. These are problems we encounter on a daily basis with our customers.

Can you list some specific examples of such “blind spots" that can occur both during deployment and in already running systems?

The first pitfall is the calculation of the sick pay base. In Poland, it works quite differently than in other countries. We have a PLZLA function that handles monthly, quarterly, semiannual and annual components – and they all have to be recalculated correctly. What should you pay attention to?

• for “monthly" components, paid regularly each month, which are included in the base;
• for “longer-than-monthly" components paid periodically – for example, quarterly or semiannual bonuses – which are included in the sick pay base at the rate of one-third or one-sixth, respectively;
• for verification of periods relevant to the basis of sick pay – checking whether a given month, and thus the salary paid for that period, can be included in the basis, and what actually determines this relevance (1 hour or 1 day worked);
• on the continuity of the sick pay base – after calculating the sick pay base, the employee must work a full calendar month to establish the new base. Otherwise, the system must “carry over" the previously calculated base, even if this results in a significant difference, favorable or unfavorable to the employee.

If all this is not set up properly, sick pay can be incorrectly calculated for many months.

And this directly affects the employee’s salary?

Yes – and also for regulatory compliance. And if the company doesn’t have it in the system, the HR department has to do it manually, in Excel. At this point, no one knows who is calculating the data, where it is stored, and whether these processes are compliant with the RODO.

The second “blind spot" is the calculation of the vacation pay base. What can go wrong?

The first issue concerns the method of calculation. The standard SAP system calculates the vacation pay base according to the period “FOR" – that is, the period for which the components were accrued. However, many companies prefer to calculate it according to the “W" period – that is, the period in which the component was actually paid. The difference may seem small, but it can result in lower or higher vacation pay, for example, if the bonus was paid later.

The second issue is the scope of what should be included – which components should or should not be part of the base, as well as what working time counts as part of the base (there are different combinations, depending on the company’s internal regulations).

Can you explain this with an example?

The employee received in his salary for June payable in July an outstanding bonus for February. In July there is an absence (list for July payable in August). According to the standard, this component will not be taken into the base, and therefore the vacation base will be lower. In the case of accrual after the “W" period, this bonus, despite the “ZA" period preceding the vacation base accrual period, will be taken into the base.

So an employee may be under- or overpaid?

Exactly. And the company may not be aware that the system counts it differently than its internal regulations. We can adjust it – but you have to know that it’s a problem at all.

Working time is a broad topic. What are the biggest risks in this area?

Overtime – 50%, 100%, 200% – there are different limits and different rates. Plus attendance, absences, night work, weekend work… The SAP standard does not take into account all the Polish nuances. If a company doesn’t have this well configured, it can calculate allowances incorrectly or not at all.

In addition, there is the question of whether the working time evaluation is negative or positive. Negative evaluation can be handled as standard. However, positive evaluation of working time – where employees record their entries and exits with cards and so-called RCPs (Time and Attendance Recorders), and every minute is counted – requires adjustment. The aforementioned overtime, Poland-specific types of absences and the wide range of limits in effect have to be taken into account.

And this is no longer just a personnel problem, but also a legal risk.

Yes. And again – if the system cannot handle it, this work is done manually. However, manual accrual of work time is asking for errors.

PIT (personal income tax) forms – an issue that recurs every year. Why can it be a “trap"?

Every employer is required to issue his employees a PIT-11 tax form based on their wages. The employer must send these documents to the Ministry of Finance, and also give them to the employees. The standard SAP system does not offer an option to automate this process.

In addition, the employer may be required to issue other PIT forms, such as PIT-8C or PIT-R.

What’s more, the standard functionality is unable to correctly aggregate all salary components into the appropriate fields of PIT forms. These components – especially non-standard ones, often used in Polish companies – have to be configured “manually."

And this is a statutory obligation, right?

Exactly. That’s why, at our clients, we implement the All for One e-Deklaracje solution, which fully automates the entire process – from generating the forms, to securely delivering them to employees via email, to archiving. However, many companies don’t even realize that this can be done in SAP.

What other “blind spots" in SAP for HR do Polish companies face?

We can’t leave out the reports to the Central Statistical Office (GUS) that every company must submit. Although the standard SAP system provides this possibility, its configuration is quite complex. Missing data or sending incorrect data to the CSO entails the risk of financial penalties.

Another challenge is pension programs. Under Polish law, every employer is required to provide one of two pension programs: Employee Capital Program (ECP) or Employee Pension Program (EPP). The SAP standard only provides a payroll component, which (after adjusting the payroll scheme) can calculate the PPE contribution. In the case of PPK, it looks similar. However, PPK is a more complex instrument, requiring the employer to select a service provider (bank), collect employee statements of joining or opting out of PPK, determine the PPK contributions of both the employee and the employer, send this data to the service provider, etc. SAP does not provide this functionality.

We have a ready-made All for One PPK solution that automates this process, regardless of the service provider you choose.

What about the documentation that employees request from their employer, such as wage certificates, labor certificates, or other forms?

The SAP standard is particularly limited in this area. And yet, companies must provide certificates to employees with the company logo, the signature of an authorized person, sometimes in PDF format, sometimes by email. We configure all this in the system. Without this, the HR department ends up printing, signing, scanning, and it’s a waste of time.

Regardless of how an SAP system is maintained, it often needs to connect to other platforms.

Yes. These are other systems inside the organization like SAP ERP in a separate installation, they may be other modules of SAP SuccessFactors, e-Payer, internal data management systems, business travel planning and accounting systems, etc. But they are also external systems of public authorities, such as the Social Insurance Institution. Without integration, data is scattered, incomplete, and processes are duplicated. We know how to bring it all together.

So it turns out that even if a company already has SAP HR, some things may only work… “on paper"?

Unfortunately, this is not an uncommon scenario – the system somehow works, but some of the processes remain outside it. In Excel, in emails, in manual notes. This means lack of control, lack of compliance with RODO, risk of errors and a huge burden on the HR department. We help get things in order – whether a company is preparing for implementation or has long since done so.

Interviewed: Joanna Michoń

Magdalena Marcinowska, Partner, Outsourcing Department, Grant Thornton: Foreign companies planning to open a branch in Poland need to understand the complexity of the domestic regulatory environment. It affects every aspect of business operations. One of the most important areas is human resources and payroll.

It is essential to know the regulations governing the rights and obligations of the employer and employee. These include, among others, the Labor Code and industry regulations. Foreign employers who hire employees in Poland are required to apply Polish law. This also applies to forms of employment: employment contract, contract of mandate or contract for specific work, each of which is subject to separate rules. Employers must ensure compliance with minimum wages, working time standards, vacation rules and special regulations for, among others, pregnant women or parents of young children.

It is also necessary to keep detailed employee records. This includes contracts, personnel questionnaires and documents such as health and safety certificates and medical certificates. It is equally important to ensure compliance with RODO data protection regulations.

The payroll area is another key element. It is not just about paying salaries on time. The employer must also correctly calculate and pay advances for income tax and social security contributions. It is necessary to apply tax benefits, account for non-wage benefits, handle Employee Capital Plans and report to institutions such as Social Security, PFRON and the tax office.

Failure to comply with these obligations can lead to serious consequences. Institutions such as the Social Security Administration and the State Labor Inspectorate may conduct inspections. If irregularities are found, companies risk financial penalties and, in extreme situations, even the need to cease operations.

Errors in HR administration and payroll can also negatively affect employee confidence, the company’s reputation and hinder the recruitment process.

Maintaining compliance with Polish regulations is particularly challenging due to the frequent changes in legislation. The Grant Thornton Polska report “Changing and burdensome laws in Poland from the perspective of entrepreneurs" shows that labor law and social security are among the fastest-changing legislative areas – second only to taxes and accounting. If even Polish companies find it difficult to keep up with these changes, it is all the more challenging for foreign entities that are unfamiliar with local realities.