Indemnity without social security contributions

In one of cases conducted by Law Office a client was wondering whether indemnity resulting from termination of an employment contractby agreement is subject to social security contributions.

Although regulation of a Ministry of Labor (Dz. U. No. 161, poz. 1106 ze zm.) contains a list of revenues exempt from contributions, it doesn’t expressly indicate on the indemnity in question.

Among revenues which are exempt from contributions are:  compensation for termination or expiration of employment contract, severance payment.

Excluded from contributions are also the benefits granted to the employees voluntarily by collective agreements, agreements, individual agreement or settlement concluded with employee or in case of expiration of employment contract. This is how Social Security Office has ruled on individual cases.

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