Poland: Mandatory reimbursement of expenses related to remote work

Unlike the teleworking legislation, which continues to be binding, or the remote work arrangements implemented on the basis of the COVID Special Act, the new legislation has introduced some new requirements, including, most importantly, an explicit obligation for employers to reimburse employees for the expenses they incur in connection with working remotely.

It is true that the approach adopted by employers regarding this question varied under the teleworking regime. Some did not reimburse any remote work-related expenses, treating remote work as a benefit in itself. Others offered their employees a monthly allowance. However, the law was unclear as to what expenses should fall under the allowance.

Unfortunately, despite lengthy legislative work, some uncertainty remains following the implementation of the new legislation. This is what we know for sure:

• Employers are required to reimburse employees for the increased costs of electricity and Internet related to working remotely from home.
• Reimbursement of the costs actually incurred (1:1) can be replaced by an allowance corresponding to the amount of the anticipated costs.
• The reimbursement of expenses incurred in connection with remote work or payment of a fixed allowance are exempt from public law charges such as PIT or social insurance contributions.

Employers should only compensate employees for the cost of electricity and Internet access, which the employers themselves do not directly provide to the employees for the purposes of remote work. Consequently, it may happen that employees will use their own phones while others will use company phones with a subscription paid directly by the employer. This is why different groups of employees may receive different allowance amounts.

The allowance should reflect such differences, irrespective of other issues affecting the cost of the actual hours spent working from home, including:

• working hours (full-time/ part-time employment),
• 100% remote working hours or hybrid work.

Another question which the legislation leaves unanswered is the issue of employee absences during a given month due to, for example, illness or annual leave, and what impact such absence has on the amount of the allowance received. On the one hand, the position presented by tax authorities in tax rulings handed down regarding the Covid Act suggests that this question does not have to be taken into account when making payments. On the other hand, however, the allowance is supposed to correspond to anticipated costs.

Therefore, employers are likely to take a more cautious approach and refuse to pay all or a part of the allowance, especially when an employee’s absence lasts for the whole or most of a month (for example, due to pregnancy or maternity leave). In such cases, the tax authorities will have no grounds for alleging an unjustified use of the tax exemption.

Excluding the remote work-related expenses from taxation at a fixed rate may tempt employers to inflate the reimbursed amount, since the allowance is beneficial for both the employer and the employee.

Speaking to MarketNews24, Paulina Grotkowska, a counsel in our Employment practice, said the problem that now arises is how one should calculate the allowance so that, on the one hand, it is not too low and covers the actual expenses incurred by the employee, and, on the other hand, is not too high, since the reimbursement of the remote work-related expenses and the allowance that replaces it are exempt from public charges such as PIT and social insurance contributions. The problem is a serious one, as the authorities may consider the allowances to be a hidden salary increase or an additional bonus.

In the case of a tax inspection, this will, however, be treated as an unprofitable optimisation. As a result of such reclassification, the optimisation will be subject to PIT and social insurance contributions in same way as salaries.

In addition, previous payments will have to be adjusted and outstanding public charges plus interest paid (currently, 16.5%).

On top of that, there is the issue of fiscal criminal liability, so employers, in the event of a tax inspection, should have documentary material to show how allowances have been calculated - added Paulina Grotkowska.