Minimum wage increase in 2027 - what do we know so far?
The government is planning another increase in the minimum wage for work, which is due to take effect on 1 January 2027. According to the regulatory impact assessment (OSR) attached to the regulation of the Ministry of Finance and Economy, the minimum wage will rise to PLN 4,950 gross, an increase of 3 per cent compared with the previous year. At the same time, the minimum hourly rate for civil-law contracts will be raised to PLN 32.30.
It is worth stressing that these amounts are identical to the proposals the government adopted in June and submitted to the Social Dialogue Council (RDS) for negotiation. The Ministry of Labour stated explicitly that the rate for 2027 was set in the absence of agreement with the RDS - which means that the social partners did not reach a common position with the government. This is important information from a legal perspective, as the lack of consensus may raise questions about the future direction of pay policy.
For business owners, the key point is that the increase - although moderate in percentage terms - generates specific, quantifiable costs. In the remainder of this article we analyse exactly how much more companies will pay and what legal obligations come with the change in the rules.
Cost of the increase for businesses - who will pay the most?
The regulatory impact assessment clearly shows that small and medium-sized enterprises will bear the greatest burden of the increase (SMEs). The estimated additional cost for this sector is as much as PLN 2.9 billion. For large companies the bill will be proportionally lower - around PLN 320 million. In total, businesses will pay over PLN 3.2 billion more than before.
Why do SMEs bear the greater burden? The reason is simple - in the small and medium-sized company sector a much larger share of employees receive the minimum wage or a wage close to it. An increase in the minimum wage therefore means having to raise the pay of a large part of the workforce at the same time, not just a few individual employees.
The Ministry of Labour also indicates that the increase will translate into an additional PLN 2.2 billion in household budgets, while the impact on the public finance sector is estimated at around plus PLN 1 billion. However, the ministry openly admits that a rise in the minimum wage may have a negative impact on business profits, although it should at the same time contribute to growth in domestic demand.
Summary of the cost of the 2027 minimum wage increase
- Cost for SMEs: PLN 2.9 billion per year
- Cost for large enterprises: PLN 0.32 billion per year
- Total cost for the private sector: over PLN 3.2 billion
- Increase in household income: PLN 2.2 billion
- Impact on public finances: +PLN 1 billion (higher tax and contribution revenue)
Employers' obligations - what should change before 1 January 2027?
An increase in the minimum wage is not just a matter of raising the amount transferred to an employee's account. It comes with a number of legal obligations, and failing to meet them may have serious consequences. Every employer should prepare in good time to implement the changes.
First, employment contracts must be updated - this applies to all employees whose pay equals the current minimum wage or is stated in the contract as an amount below the new threshold. Second, the change also covers contracts of mandate and contracts for services, in which the hourly rate cannot be lower than PLN 32.30 gross.
Employers must also remember the related employment costs. An increase in the minimum wage automatically raises the amount of Social Insurance Institution (ZUS) contributions and of the allocation to the Company Social Benefits Fund (ZFŚS), and it also affects the calculation of many employee benefits, including severance pay, night-work supplements and pay for downtime. It is these hidden costs that make the actual burden on the employer higher than the difference in basic salary alone.
Key actions for employers to take
- Pay audit - a review of all employment contracts and civil-law contracts for compliance with the new rates.
- Amending contracts - preparing and signing annexes to employment contracts with the changed pay amount.
- Updating hourly rates - verifying contracts of mandate and B2B contracts based on an hourly rate.
- Adjusting the payroll budget - allowing for higher ZUS contributions, ZFŚS allocations and other related costs.
- Reviewing public procurement contracts - checking whether public contracts provide for a mechanism to index the contractor's remuneration.
Impact on public procurement and long-term contracts
The Ministry of Labour has clearly drawn attention to an aspect that is sometimes overlooked in public debate - the impact of the minimum wage increase on the public procurement market. Companies performing public contracts in which contractors' pay was set at the minimum level may face a serious financial problem.
Under Article 436(4)(b) of the Public Procurement Law, contracts concluded for a period longer than 12 months should contain indexation clauses that take into account, among other things, a change in the minimum wage for work. If such a clause is provided for in the contract, the contractor has the right to apply to the contracting authority for a change to the contract remuneration.
In practice, however, many contracts contain indexation clauses that are worded imprecisely or that limit the possibility of a real increase. In such situations, contractors should consult a lawyer specialising in public procurement law in order to assess their negotiating options and, where appropriate, submit an effective indexation request.
The problem affects the services sector in particular - security, cleaning and catering companies - where the share of labour costs in the total cost of performing the contract is dominant. For these businesses, the lack of effective indexation may mean performing the contract at a loss.
What next for the minimum wage? Outlook and recommendations
The increase in the minimum wage to PLN 4,950 in 2027 continues a trend we have observed for several years. By comparison, as recently as 2020 the minimum wage was PLN 2,600 gross, which means that over seven years it has risen by more than 90%. Such rapid growth presents business owners with challenges that are not only financial but above all organisational and legal.
Experts point out that annual increases in the minimum wage cause pay compression - a narrowing of pay differences between employees with different lengths of service and qualifications. This in turn creates pressure to raise pay for employees earning above the minimum as well, which further increases costs for employers.
In this context, strategic planning of the company's pay policy becomes crucial, taking into account not only current rules but also anticipated regulatory changes. Professional legal advice helps minimise the risk of errors and optimise employment costs in a lawful way.
Do you need support in adapting your company to the new minimum wage rules for 2027? Our firm offers comprehensive help in employment law - from auditing contracts and preparing annexes to advice on public procurement matters. Contact us today to prepare your company for the coming changes and avoid costly legal errors.
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