How to Terminate the Employee Pension Program Without Unnecessary Formalities? The Amendment as an Opportunity for Employers

The government has submitted a draft act amending certain acts in order to eliminate administrative and legal barriers affecting the functioning of citizens and entrepreneurs – the so-called “legal shield”. The amendment includes, among other things, a modification of the Employee Pension Programme (PPE) Act.

The objective of all measures proposed in the draft is to reduce unnecessary and excessive regulatory burdens, generating time and cost savings for both citizens and entrepreneurs. As a result, administrative procedures will become faster and more efficient, which will also improve the effectiveness of public administration and generate savings on its part. The implemented measures (including the digitalisation of procedures) are expected to provide a positive stimulus for businesses and citizens, significantly impacting quality of life and business operations.

Employee Pension Programmes in the Pandemic Era

The amendment introduces changes regarding the possibility of suspending the calculation and payment of basic contributions, temporarily reducing their amount, or suspending their funding.

If justified by the financial situation, the employer may continue to be exempt from the obligation to pay the basic contribution at the rate specified in the company agreement. This may involve a unilateral suspension of the basic contribution or a unilateral reduction in its amount, provided that an agreement is reached with employee representatives regarding the suspension of calculating and paying basic contributions, or the temporary reduction of their amount, by defining the rule for calculating the basic contribution during the period of such limitation.

Within 7 days from the date of exemption from the obligation to pay the basic contribution at the rate specified in the company agreement, the employer is required to notify the supervisory authority, providing:

1) information about the unilateral suspension of calculating and paying basic contributions, specifying the date of the suspension and the period for which it applies, along with the agreement on the suspension of calculating and paying contributions, stating the date it was concluded, the effective date, and the duration – in the case of unilateral suspension;

2) information about the unilateral reduction of the amount of the basic contribution, specifying the date of implementation, the applicable period, and the amount of the basic contribution during that time, along with the agreement on the reduction, stating the date it was concluded, the effective date, the period for which it applies, and the amount of the contribution during that period – in the case of a unilateral reduction.

Exemptions from the obligation to pay the basic contribution at the level specified in the company agreement apply from the dates indicated in the agreement, taking into account statutory provisions defining the maximum periods for suspension or reduction.

Other changes

The above-mentioned changes are not the full extent of the improvements proposed by the legislator as part of the upcoming legal shield for entrepreneurs. The amendment also includes:

• Expanded possibility of not transferring contributions to PPE;
• digitalisation of procedures;
• cautious introduction of single-instance proceedings;
• broad application of silent procedure and simplified proceedings;
• extension of deadlines for fulfilling selected regulatory obligations by citizens, entrepreneurs, and authorities due to the COVID-19 pandemic;
• other types of procedural and administrative improvements.

Further elements of the legal shield are to be introduced on a quarterly basis. Four amendment packages are planned, and if not all the proposed regulations can be implemented within this timeframe, the process will be extended by additional quarters. The delay in implementing changes is intended to allow citizens and institutions adequate time to adapt to the new regulations.