What foreign investors need to know about polish labor law

A Step-by-Step Guide for Foreign Investors – Status as of July 2025

Launching a greenfield investment in Poland involves much more than finding the right location and hiring the right people. It also requires setting up operationally sound and fully compliant payroll and HR structures. These back-office processes play a critical role in ensuring legal compliance, supporting employee satisfaction, and minimizing financial and reputational risks.

This article outlines key steps and considerations for foreign investors establishing HR and payroll operations in Poland. From entity setup and workforce registration to choosing between internal HR teams and outsourcing partners, the following guide offers a practical perspective based on Polish regulatory standards as of July 2025.

Understanding the Legal Environment

Poland has a well-developed legal framework that governs employment, payroll, and data processing. Employers must comply with the Polish Labor Code, social insurance regulations, income tax laws, and GDPR. These obligations apply to all companies operating in Poland, regardless of whether the workforce is local or international. As part of their initial planning, foreign investors should align with trusted local legal and tax experts to define an appropriate HR and payroll operating model.

This legal context makes it crucial to develop internal compliance procedures from the outset. Employers are advised to conduct initial HR audits or gap analyses to understand the full extent of regulatory obligations. These reviews can be instrumental in identifying risks and defining responsibilities between headquarters and local teams. By proactively planning for compliance, companies can avoid unnecessary delays, fines, or conflicts with authorities.

Choosing the Right Operating Structure

The structure of your local business entity will determine how HR and payroll functions are set up. Most greenfield investors establish a limited liability company (spółka z o.o.), which allows them to hire staff directly and manage payroll in their own name. Branch offices are also possible but may face more complexity in reporting and taxation.

Before hiring employees, the entity must be registered in the National Court Register (KRS), obtain a tax identification number (NIP), open a business bank account in PLN, and register with the Social Insurance Institution (ZUS). These formalities are typically handled during the company formation process and must be completed before employment contracts can legally begin.

It is worth noting that these registrations can take several weeks, especially during peak administrative periods. Investors should therefore include buffer time in their project timelines to avoid hiring delays.

Hiring and Onboarding: Legal and Administrative Steps

Once the entity is established, employers must conclude employment contracts in writing, in line with Polish labor law. Every new hire must be reported to ZUS within seven days. In addition, pre-employment medical examinations and health & safety training must be carried out. Within seven days of the employment start date, the employer must also provide written information on employment terms. Finally, it is necessary to implement systems for time tracking and leave recordkeeping. Failure to comply with these requirements can lead to penalties or disputes.

Employers should also develop a structured onboarding process. Beyond compliance, onboarding helps new employees understand organizational culture, team structure, and internal tools. This early stage is key to building engagement and reducing turnover—especially in a competitive labor market.

Payroll Calculation and Processing

Payroll in Poland involves gross-to-net salary calculations, mandatory social contributions, and income tax withholding. As of July 2025, employers are responsible for accounting for both employee and employer ZUS contributions, including pension, disability, accident, and sickness insurance. Health insurance premiums are also included but are not deductible from income. Personal income tax is withheld at progressive rates of 12% and 32%, with a PLN 30,000 annual tax-free allowance.

Payroll must be processed monthly, and salaries must be paid by the 10th of the following month. Payslips must be issued to employees, and reporting obligations must be met electronically with both ZUS and tax authorities. Mistakes or delays may result in financial penalties or inspections.

Employers must also account for fringe benefits, such as company cars, bonuses, private healthcare, or meal subsidies, all of which may be partially taxable. Proper documentation and valuation of benefits is essential to remain compliant.

Internal HR Department vs. External Providers

Foreign investors must choose whether to manage payroll and HR functions in-house or work with local outsourcing providers. In early stages or for smaller teams, outsourcing often proves more efficient and reduces compliance risks. Professional payroll firms can handle salary and tax calculations, distribute payslips, manage employee registrations with ZUS, and submit annual tax declarations.

As operations grow, companies may internalize HR processes by hiring dedicated professionals such as HR managers, HR administrators, and payroll officers. Many businesses adopt a hybrid model that combines internal HR capabilities with external payroll support.

One additional consideration is language. HR documentation and employee communication must be in Polish. External providers can help bridge language gaps and ensure that international employers meet all obligations in the local language.

HR Policies and Internal Documentation

Once a company in Poland reaches 50 employees, internal labor regulations become mandatory. However, even smaller organizations benefit from having clearly defined HR policies covering working time, remote work, leave entitlements, employee benefits, disciplinary processes, and data privacy. These policies should be made available in Polish and acknowledged by employees. Employers may choose to prepare this documentation in collaboration with local legal or HR consultants.

Companies operating across multiple jurisdictions often need to reconcile global HR policies with local labor requirements. It is common to adopt a two-tiered approach: global frameworks supported by country-specific annexes or adjustments. This ensures consistency with corporate values while maintaining legal compliance.

GDPR and Employee Data Protection

HR and payroll systems process sensitive employee data protected under GDPR. Employers must implement appropriate data protection measures, define clear retention periods, and inform employees of their data processing rights. Consent is not always necessary, but the employer must always establish a lawful basis and document it.

Special care must be taken with the management of medical documentation, storage of personnel files, third-party access to payroll data, and any transfer of information to headquarters or service centers outside Poland. It is essential to review and prepare necessary documentation such as internal GDPR policies, RODO clauses, and data processing agreements with vendors.

Training HR staff on GDPR obligations is equally important. Internal awareness can prevent accidental breaches, especially in companies where data flows between multiple systems or countries.

Cooperation with Local Experts

Managing HR and payroll in a foreign regulatory environment can be challenging without local expertise. Payroll service providers and HR consulting firms offer valuable support in interpreting local laws, automating filings, and liaising with authorities like ZUS, the tax office, or the labor inspectorate. They also assist in establishing good communication with employees and help foreign managers understand expectations in the Polish work culture.

Regular consultations with local experts also help companies adapt to changing regulations. Employment law in Poland continues to evolve, especially under the influence of EU directives. Staying current is essential to remain compliant and competitive.

Conclusion: A Strategic Enabler, Not Just Administration

Establishing compliant HR and payroll operations is a key element of successful market entry in Poland. It ensures business continuity, employee confidence, and regulatory security. By choosing experienced local partners, setting up proper systems, and building a compliance-first culture, foreign investors can focus on growth while meeting all requirements under Polish law.

Well-managed HR and payroll structures not only support legal compliance—they also improve the overall employee experience. In a tight labor market, professional onboarding, timely salary payments, clear policies, and transparent communication are all factors that contribute to retention and employer branding. Foreign investors who treat HR as a strategic function are better positioned to grow sustainably and attract top talent in the Polish market.