Compensation for a reduced period of notice. Who's to whom?

The employment contract may be terminated in respective ways, in accordance with the provisions of the Labour Code. This may be done by agreement of the parties, denunciation, without announcement or simply with the expiry of the time for which the contract was concluded (in accordance with Article 30(1) of the Labour Code).

Termination of an employment contract is simply a unilateral declaration of will by 1 of the parties, i.e. an worker or employer, resulting in termination of the contract. In that case, the contract shall be terminated after the expiry of the specified ‘denunciation period’. The provisions of labour law make it possible to shorten this period and in certain cases the worker is entitled to compensation. This article discusses erstwhile shortening the announcement period is acceptable and how to calculate any compensation.

The duration of termination of the employment contract depends on the kind of contract and the duration of employment with the employer concerned. Here are any examples:

• Trial employment contract: 3-day announcement period (working days) for contracts little than 2 weeks, 1-week announcement period for contracts lasting at least 2 weeks, 2-week announcement period for contracts lasting 3 months (in accordance with Article 34 of the Labour Code).
• Permanent or indefinite employment contract: two-week announcement period for employment little than 6 months, one-month announcement period for employment at least 6 months, three-month announcement period for employment at least 3 years (in accordance with Article 36(1) of the Labour Code).

As regards the shortening of notice, this is possible in certain situations, specified as the declaration of bankruptcy or liquidation of the employer or for another reasons not related to the employee. However, this option applies only to permanent employment contracts, with at least a 3-year traineeship with the employer concerned. In this case, the 3-month announcement period may be reduced to a maximum of 1 period (in accordance with Article 361 of the Labour Code).

It is crucial to note that shortening of announcement is allowed only for contracts concluded for an indefinite period of 3 months. The summary declaration must be submitted at the same time as the termination of the employment contract and may not be forwarded to the worker at a later date.

Example 1.

Ms. Halina has been employed at company X since 2.04.2017. Due to the announcement of the liquidation of the employer, the employment contract was terminated with her on 28.07.2023. The employer decided to shorten the 3-month announcement period to 1 month, which in this case was possible. Labour ratio dissolved on 31.08.2023.

The shortening of the announcement period of little than 3 months is besides possible, but only through the agreement of the parties concluded with the worker (Article 36(6) of the Labour Code). It is then possible to fix any time limit for termination of the contract and the worker is not entitled to compensation for a reduced period of notice.

Example 2.

Mr Grzegorz has been employed by Y since 109.2022, 16.06.2023. He received a termination of the employment contract by termination from his employer. Mr Grzegorz was entitled to a 1-month period of notice, but due to the fact that he wanted to start working with another employer before the end of the period of notice, he reduced the period of announcement by agreement of the parties. The employment contract was terminated on 18.07.2023.

Compensation for a reduced period of announcement resulting from a simplification in the 3-month announcement period in the contract for an indefinite period up to a maximum of 1 period shall require the individual to pay compensation for the remainder of the announcement period. It does not substance if the worker has found a fresh occupation after the employer has finished his employment.

The period for which compensation is payable shall be included in the overall traineeship (in accordance with Article 361 §2 of the Labour Code), but shall not be taken into account for the calculation of leave. In the event of shortening the announcement period, the contract shall end with the expiry of the reduced deadline and the compensation shall be paid at the latest on the last day of work.

Information on the shortening of announcement should be included in the work certificate. The calculation of compensation for a reduced period of announcement shall be based on the rules applicable to the calculation of the equivalent for unused leave, but excluding the vacation rate.

Compensation for a reduced period of announcement shall be paid in the amount of an average monthly wage or multiple thereof. The calculation shall take into account:

• fixed components of remuneration, in accordance with the amount due during the period of payment of compensation,
• the remuneration due for the monthly periods of variable nature paid during the 3 months immediately preceding the period in which the individual was entitled to compensation, the average value of that period,
• the remuneration components for periods longer than 1 month, paid during the 12 months preceding the period in which the worker acquired the right to compensation, the average value of that period.

Social and wellness insurance contributions are not levied on compensation, but they are subject to taxation.

Example 3.

Ms Anna receives a basic wage of PLN 5 000. On 30.11.2023, she received a termination of the contract of employment together with an employer's message that the 3-month period of announcement was reduced to 1 month. Therefore, the contract will be terminated on 31.12.2023, and for January and February it will receive compensation, no later than 31.12.2023, amounting to PLN 10,000 (PLN 5,000 x 2 months).

Example 4.

Mr Wojciech was offered a termination of the employment contract with announcement for reasons not affecting the worker on 31.08.20123. The employer besides sent Mr Wojciech a message about the shortening of the announcement period from 3 months to 1 month, so in 2 months Mr Wojciech is entitled to compensation. In addition to the basic wage of PLN 4,000 he received monthly bonuses paid in the amount of:

• 350 PLN – premium paid in August,
• 400 PLN – premium paid in July,
• 520 zł – premium paid in June.

The average amount of the premium paid in the 3 months preceding the period in which Mr Wojciech acquired the right to compensation amounted to PLN 423.33 (PLN 350 + PLN 400 + PLN 520 = PLN 1 270, PLN 1 270 : PLN 3 = PLN 423.33).

Mr Wojciech will receive compensation for a reduced period of announcement of PLN 8 846.66 (PLN 4 000 + PLN 423.33) = PLN 4,423.33, PLN 4,423.33 x 2 months = PLN 8,846.66).

Dear reader, we remind you that all legal matters in this substance we compose about can be complicated and frequently require the aid of a lawyer. It's worth discussing it with a lawyer before taking legal action.

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