The additional cash benefit paid to the employee under the agreement of the parties in connection with the termination of the employment contract should be excluded from the social security contribution base.
As per content Article 18(1)(2) and Article 20(1) Act of 13 October 1998 on the social security system, the basis of the social security contribution of workers is income within the meaning of the provisions on personal income tax on employed persons in the framework of the employment relationship excluding the revenues mentioned in section 2 Regulation of the Minister of Labour and Social Policy of 18 December 1998 on detailed rules for determining the basis for the assessment of pension and pension contributions, as well as remuneration for incapacity to work due to illness or isolation due to infectious disease and social security benefits.
The fact that these benefits are paid on the basis, for example, of an agreement between the employer and the employee does not preclude the application of the exemption provided for in section 2 section 1 point 3 the cited regulation.
The income from the employment relationship shall be considered to be all kinds of cash payments and the monetary value of benefits in kind or their equivalents, irrespective of the source of the financing of these payments and benefits, and in particular: basic salaries, overtime salaries, various allowances, prizes, allowances for unused leave and any other amount, irrespective of whether their amount has been fixed in advance and the cash benefits incurred for the worker, as well as the value of other unpaid benefits or partially paid benefits.
In accordance with the provisions section 2 section 1 point 3 Regulations of the Minister of Labour and Social Policy on 18 December 1998 on detailed rules for determining the basis for the assessment of pension contributions (i.e. Journal of Laws of 2023, item 728 as amended), the following income received by the employee: severance, compensation, compensation for termination or termination of employment, including termination of employment for reasons attributable to the employer, unjustified or unlawful termination of the employment contract or termination thereof without notice, shortening of the period of notice, failure to issue a wrong work certificate.
Therefore, the exclusion from the basis of the contribution of the employee’s income from the termination of the employment contract applies to both those severance payments which are of particular origin in the specific laws, including the Act of 13 March 2003 specific rules for the resolution of labour relations with workers for reasons not affecting workers, as well as those resulting from voluntary agreements concluded between the employer and the employee.
Quoted provision section 2 section 1 point 3 The above-mentioned Regulation applies only if the payment, for example, of a check-in, of an additional cash benefit remains directly and inextricably linked to the fact that the employment relationship is terminated or terminated.
The only reason for the employer to pay these benefits should be the cessation of employment. This means that such benefits cannot be paid by the employer in circumstances other than those closely linked to termination of employment. The fact that these benefits are paid on the basis, for example, of an agreement between the employer and the employee does not preclude the application of the exemption provided for in section 2 section 1 point 3 the cited regulation.
* Source - Letter of the Day 22 November 2013 Headquarters of the Social Insurance Institution Dl/100000/451/1371/2013