Labour Fund (Fundusz Pracy)

The Labour Fund (Fundusz Pracy) is one of the institutions established by the government to provide support for employees and unemployed individuals. This fund is financed by contributions collected from employers and employees for the state budget.

Labour Fund (Fundusz Pracy)

The main objective of the Labour Fund is to provide financial support for unemployed individuals, including unemployment benefits, reimbursement of vocational training costs, or co-financing for projects aimed at creating new jobs. The Labour Fund can also support people with disabilities in their integration into the labour market.

The Labour Fund is also responsible for financing training for employees, which aims to improve their qualifications and professional skills. These training courses can be conducted by both public institutions and training companies.

The Labour Fund is managed by the Ministry of Labour and Social Policy and by the Powiatowe Urzędy Pracy (District Labour Offices). Decisions regarding the granting of benefits and subsidies are made based on specific procedures and criteria, which depend on the type of support.

In Poland, the Labour Fund is an important tool of labour market policy, helping to build a flexible and sustainable employment system and to reduce unemployment and social exclusion.

How much is paid to the Labour Fund?

The contribution to the Labour Fund is 2.45% of the assessment base for the old-age pension contribution. This means that employers and employees each pay 1.225%.

The assessment base for the Labour Fund contribution is the remuneration, including all components of remuneration, such as bonuses, awards, or allowances. However, this base cannot exceed 30 times the minimum wage applicable in a given year. In 2022, the minimum wage was 3,200 zł gross, which means that the assessment base for the Labour Fund contribution could not exceed 96,000 zł annually.

It is worth noting, however, that contributions to the Labour Fund are just one of many contributions that must be paid in Poland. Employers and employees must also pay contributions for social insurance, health insurance, the Guaranteed Employee Benefits Fund (Fundusz Gwarantowanych Świadczeń Pracowniczych), and the Bridging Pensions Fund (Fundusz Emerytur Pomostowych). The final amount of contributions depends on many factors, including the type of employment contract, the amount of remuneration, and the industry in which the employer operates.

Who is exempt from the Labour Fund?

Exemption from the obligation to pay contributions to the Labour Fund applies only to specific groups of people or companies. Here are some of them:

• Individuals who earn income from self-employment and are not employed under an employment contract.
• Entrepreneurs starting a business who do not employ staff.
• Employers who employ individuals under internship programmes, vocational traineeships, or other forms of practical training.
• Individuals who receive old-age pensions or disability pensions but continue to run a business.
• Employers who employ workers covered by pre-retirement protection.
• Employers who employ apprentices under 25 years of age.

It is worth noting, however, that exemption from the Labour Fund does not mean exemption from other contributions, such as social insurance or health insurance contributions. Additionally, individuals exempt from the Labour Fund cannot benefit from financial assistance provided by this fund, such as unemployment benefits or vocational training co-financing.

Is the Labour Fund mandatory?

Yes, the Labour Fund is mandatory in Poland for both employers and employees. This obligation arises from the Act of 20 April 2004 on employment promotion and labour market institutions.

Employers must pay contributions to the Labour Fund based on their employees' remuneration. This contribution amounts to 2.45% of the assessment base for the old-age pension contribution and is paid to the ZUS (Zakład Ubezpieczeń Społecznych) account.

Employees, in turn, do not pay contributions to the Labour Fund directly from their remuneration, but they are collected by the employer along with other social insurance contributions and paid to ZUS.

The Labour Fund is one of three funds to which employers and employees contribute. The other two are the Social Insurance Fund (FUS) and the Bridging Pensions Fund (FEP). The purpose of the Labour Fund is to support activities related to employment promotion, as well as to finance vocational training, professional activation programmes, and other initiatives aimed at improving the situation in the labour market.