Settlement of overtime pay may take up to a year

Under the amended provisions of the Polish Labour Code, in effect since 23 August 2013, employers are now permitted to apply approaches to determining employees’ working time that are more flexible than under the previous law.

A major change that is controversial among employees is the possibility of extending the period for calculation of working time to a maximum of 12 months, which parallels the rules previously in force under the temporary Anti-Crisis Act of 1 July 2009.

The extended settlement period may be used in any system of working time, but must be justified by grounds that are objective, technical, or involve organisation of the work. Such grounds were not identified specifically in the law, giving employers significant leeway in determining whether use of the extended settlement period is truly justified at the specific workplace. It appears that the most common justification for introducing an extended settlement period will probably be “objective” grounds, which may include economic or market considerations connected with the seasonality of the business or seasonal demand for particular goods or services.

For example, employers in the construction industry employing workers in an equivalent working time system will be able to lengthen the workday (i.e. the number of hours to be worked), or in the case of employment of workers in the basic system, require employees to work 6 days a week during the summer, when the demand for construction services is greatest, and make up for the extra work during the summer by giving employees additional time off during other seasons. Similarly, retailers at shopping malls will be able to assure sufficient staffing levels in the Christmas shopping season without incurring additional costs, by compensating the staff with time off during slower periods. However, employers must face the risk that if employees are absent (e.g. due to illness) during the period when they were scheduled to work less, and do not return to work before the end of the settlement period, the employer will be required to pay them overtime for the additional hours worked during the busy season. Likewise, if an employee’s contract is terminated before the end of the settlement period, the employer will also be required to compensate the employee accordingly.

Apart from the employer’s duties under other regulations to provide employees with safe and hygienic working conditions, the importance of such requirements is stressed in the new law by the provision that use of an extended system for calculating working time requires compliance with general rules for occupational health and safety. This should be understood to include assuring that employees working under an extended working time calculation system are still provided the periods of uninterrupted daily and weekly rest set forth in the Labour Code. Thus employees applying such a system may expect closer scrutiny of this issue by labour inspectors.

The amendment includes provisions protecting employees’ existing salary when, due to the work schedule adopted, they are not required to work during a calculation period, by providing that in such case they will be entitled to receive no less than the minimum wage (PLN 1,600 per month in 2013). This situation will apply for example to staff paid on a piecework basis. It will not apply to staff paid a fixed monthly salary, who will be entitled to receive their regular base pay.

Employers’ freedom to extend working time calculation periods is limited by a requirement to agree on such extension with bodies representing the employees. At workplaces where trade unions are established, employers should provide for extension of the calculation period in the collective labour agreement or in agreement with all of the trade unions, or if this is not possible, with representative union organisations. For employers at workplaces where trade unions are established, this requirement may prove a major barrier to use of this new solution.

If there are no trade unions in operation at the workplace, extended calculation periods may be used on the basis of an agreement with employee representatives. The regulations do not specify a particular procedure for appointment of employee representatives, but only indicate that this should be done under the procedure adopted at the specific workplace. In practice, employee representatives are most often appointed ad hoc. It is not clear in this respect whether the employee council may be regarded as employee representatives authorised to reach such an agreement. It appears that this will be possible if at the time elections to the employee council are held, it is indicated that the council, when elected, will be authorised to serve as employee representatives, including the authority to reach agreement on extending the working time calculation period. Or, if the employee council has already been appointed, the employees could vest the council with this additional authority.

The employer is required to forward a copy of the agreement on extension of the working time calculation period to the labour inspectorate within 5 business days after it is concluded.

Extended calculation periods applied under the previous regulations by employers involved in agriculture and security will remain in force until the end of the period for which they were introduced. After they expire, the employers will be required to establish calculation periods for employees under the new rules.

Katarzyna Żukowska, Employment Law Practice, Wardyński & Partners