1. Who is obliged to create the Company Social Fund?
2. What is a holiday allowance and how much is paid?
3. Rules for granting and paying holiday allowance to employees
4. What if I employ less than 50 employees but do not want to pay holiday allowance?
5. What are the tax and contribution consequences of the payment of the holiday benefit for the Employee?

1. Who is obliged to create the Company Social Fund?

Employers employing over 50 employees on a full-time basis are obliged to create the Company Social Fund as at January 1st of a given year.
If the employment with an employer is less than 50 employees, the employer may establish a social fund or, in the event of not creating it, is obliged to pay the holiday allowance. If the employer decides not to take any of the above measures, he is obliged to notify employees about the failure to establish the Fund and non-payment of the benefit within the time specified by law.

2. What is a holiday allowance and how much is paid?

A holiday benefit is paid by employers employing less than 50 people (full-time equivalent) who have not decided to establish the Company Social Fund.
The upper limit of the holiday allowance amount is, in principle, equal to the amount of the basic contribution to the Company Social Fund. The amount of the obligatory write-off to the Fund for the year 2022 is PLN 1,662.97. An employer may decide in a given year to pay a holiday benefit in the amount lower than the amount of the basic contribution, but must inform employees about it by the end of January of a given year.

3. Rules for granting and paying holiday allowance to employees

A holiday benefit is paid to every employee who has taken a continuous 14-day holiday leave in a given calendar year. In this case, calendar days are taken into account, not working days. An employee may receive the holiday allowance only once in a given calendar year.
In accordance with art. 3 clause 5a of the Act on the Company Social Fund, payment of a holiday allowance takes place not later than on a day preceding the start of the employee’s holiday leave.

4. What if I employ less than 50 employees but do not want to pay holiday allowance?

An employer employing less than 50 people and not creating a Company Social Fund may opt out of holiday allowance in a given calendar year. For this purpose, by January 31st of a given year, the employer should inform its employees about this fact in the manner adopted by a given employer (e.g. providing written information about not establishing the Fund, sending information by e-mail, suspending information on the notice board). Information about not creating a Company Social Fund and non-payment of a holiday benefit is valid only in a given calendar year and shall be communicated again to employees in subsequent years.

5. What are the tax and contribution consequences of the payment of the holiday allowance for the Employee?

A holiday benefit paid to employees up to the amount of a basic contribution to the Company Social Fund constitutes income for them within the meaning of the Personal Income Tax Act, but it is not a basis for calculating social security insurance contributions.