Employee Equity Plans – new obligations for the employers

What are Employee Equity Plans?

On 26 October 2018 the Senate passed the act on Employee Equity Plans (EEP). The act is to be signed by the President of the Republic of Poland. Following the assumptions of the project, EEP is a saving programme on a regular basis, to be used for payments after reaching the age of 60.

Who and since when is obliged to apply the new act?

The act will be applied not only by employers but also by principals and entities employing members of the Supervisory Boards. The concrete date for the act to be applied depends on the number of people employed:

Equity Plans

What will be the amount of payments to EEP?

The employer is obliged to conclude an EEP management agreement with the financial institution. The employer makes payments to EEP and he may only make basic payments of 1.5% of the salary or also additional payments of up to 2.5% of the salary. Also the EEP participant finances basic payments (2% of the salary) and additional (2% of the salary). Payments are made on a monthly basis.

Does the employer always make payments to EEP?

The act stipulates that each employee shall be automatically covered by EEP and shall be authorised to renounce participation in EEP subject to the submission of a relevant statement. Different rules apply with respect to the employees of 55-70 years of age. They can voluntarily join EEP programme. If an entrepreneur hires employees over 70 years old, the provisions of the EEP act shall not apply with respect to such employees.
The obligation of making basic and extra payments for EEP can be exempted if the employing entity has established the Employee Retirement Plan and pays statutory contributions calculated thereon.

What are the sanctions for breaching the act?

Failure to conclude an EEP management agreement or inciting employees to resign from EEP will be punishable by a fine of up to 1.5% of the remuneration fund of a given employer in the financial year preceding the commission of a prohibited act. Failure to comply with other obligations, such as not concluding an agreement for managing an EEP on behalf of an employee or not making payments to EEP, will be punishable by a fine ranging from PLN 1,000 to PLN 1,000,000. 

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