Net or gross remuneration?
One of the most important elements of any employment contract is the correct determination of remuneration and its components. The Labor Code does not use the terms gross / net remuneration. These concepts have evolved into practice, while in a possible dispute between an employer and employee they should be considered “colloquial”.
Our clients often ask lawyers how the remuneration should be specified in the employment contract. Should they be marked as gross remuneration (so-called pre-deduction) or net (so-called remuneration on hand)?
The correct answer to this question is gross remuneration, because it is the amount of remuneration from which the employer will deduct the public benefits due (social security and health insurance contributions as well as an advance on personal income tax). The gross amount should also be indicated in a court dispute against the employer for payment, e.g. remuneration for overtime or night hours, as well as in a case regarding the establishment of an employment relationship.
Such a position was approved by the Supreme Court, which in one of its judgments indicated that remuneration for work, as an indispensable element of the employment relationship (Article 22 § 1 of the Labor Code), is a concept defined by labor law. It clearly follows from these provisions that remuneration for work is due to the employee, constituting the whole also including the part which the employer may (is obliged to) deduct (deduct) from. Therefore, it is not possible to construct a definition of remuneration for work in which the part of remuneration due to the employee due (net remuneration) and the part which the employee is not entitled to stand out. The remuneration for work is due to the employee in full and such remuneration is determined by the content of the employment relationship, so in such amount it should be awarded in a court dispute between the parties to the employment relationship. The concept of “gross” remuneration does not appear in the labor law at all and is rather colloquial. Labor law uses only the concept of remuneration for work as such. The notion of “net” remuneration, which should be understood as part of the remuneration for work paid to the employee, is only colloquial, but only if the employer makes appropriate deductions under other legal provisions. (see resolution of the Supreme Court of August 7, 2001, reference number III ZP 13/01).
The position presented above has very important consequences for the employee – if the parties indicated a certain amount of remuneration in the employment contract without specifying whether it is gross or net remuneration (or the contract was concluded orally), it is always assumed that it is remuneration gross.
KSJ Legal Law Firm successfully represents employees before labor courts. We advise at every stage of the proceeding, starting from an attempt to resolve the case amicably to obtaining a final decision and execution before law enforcement authorities.
Attorney-at-law Joanna Susło
KJS Legal Kancelaria Adwokacka – Law firm in Wrocław
Advocate – Wrocław – Labour Law in Poland