Running a business often means sending employees on business trips. Whether the trip is domestic or abroad, the employer must cover the costs of the trip. One of the most common solutions is to give the employee an advance to cover the expected expenses. But what happens when the employee does not settle the money received? What steps can the employer take?
An unsettled business trip advance is a problem many employers face. It may have various causes – from simple forgetfulness to deliberate action by the employee. Whatever the motives, the employer has specific legal tools for recovering the money due. Knowing these mechanisms is key to managing a company properly and avoiding financial losses.
Legal basis for covering business trip costs
The employer’s obligation to cover the costs of a business trip follows directly from the Labour Code (Kodeks pracy). Under Article 77⁵ § 1 of the Code, an employee who, on the employer’s instructions, performs a work task outside the town where the employer has its registered office, or outside their regular place of work, is entitled to payments covering the costs of the business trip.
The employer must cover the costs of a business trip regardless of whether the trip takes place in Poland or abroad. The employee is entitled to reimbursement of all justified expenses incurred while performing work duties outside their regular place of work
Detailed rules on covering business trip costs are set out in the Regulation of the Minister of Labour and Social Policy of 29 January 2013 on payments due to employees of state or local government budgetary units for business trips. This regulation also applies to employees of other employers if the collective labour agreement, remuneration regulations or employment contract do not contain the relevant provisions. The duty to travel on business is worth describing in the employee's scope of duties.
Employers outside the public budgetary sector may set their own rules for covering business trip costs in a collective labour agreement, remuneration regulations or an employment contract. However, the per diem allowance for a day of a business trip – both domestic and abroad – cannot be lower than the domestic trip allowance set in the regulation for budgetary sector employees (Article 77⁵ § 4 of the Labour Code)
It is worth stressing that business trip costs are borne by the employer and the employee is entitled to have them reimbursed. This means that any expenses incurred while performing work tasks outside the regular place of work should not be a burden on the employee. This is one of the basic principles of labour law, intended to protect the employee’s economic interests.
Payments due to an employee on a domestic business trip
An employee on a domestic business trip is entitled to a number of payments intended to cover the higher costs of being away from their regular place of work. The basic payment is the per diem allowance for the higher cost of meals, which is PLN 45 per day of the trip.
Accommodation costs are another important element. The employee is entitled to reimbursement of accommodation costs in a hotel-type establishment in the amount shown on the bill, but not more than 20 times the per diem rate for 1 hotel night. If the employer has not provided free accommodation and the employee has not presented a bill, they are entitled to a lump sum of 150% of the per diem for each night.
Accommodation costs may be reimbursed above the limit if the employer agrees. This may happen in justified cases, for example when there is no accommodation available at the destination at a price within the limit
The employee is also entitled to a lump sum covering local public transport costs of 20% of the per diem for each started day of the trip. This lump sum is not due if the employee does not incur local transport costs. In addition, on a domestic trip lasting at least 10 days, the employee is entitled to reimbursement of the cost of travelling on a day off work to their place of permanent or temporary residence and back.
All business trip payments are exempt from personal income tax (PIT) as long as they do not exceed the limits set by the rules. This means the employee receives the full amount without having to pay tax
Payments on a business trip abroad
Business trips abroad involve additional costs and specific requirements, so the system of payments for employees travelling outside Poland is more extensive. The basic payment is the per diem allowance for meals and other small expenses, the amount of which depends on the destination country.
Accommodation costs on a trip abroad are reimbursed in the amount shown on the bill, but within the limit set for each country in the annex to the regulation. As with domestic trips, the employer may agree to reimburse accommodation above the limit if the circumstances justify it. If no accommodation bill is presented, the employee is entitled to a lump sum of 25% of the limit for the country concerned.
An employee on a business trip abroad is entitled to a lump sum covering travel to and from the railway station, bus station, airport or seaport equal to 1 per diem in the destination town abroad and in every other town abroad where they stayed overnight
In addition, there is a lump sum covering local public transport costs of 10% of the per diem for each started day of the trip abroad. For trips abroad lasting more than 30 days or trips to non-European countries, the employee may be entitled to reimbursement of the cost of carrying personal luggage by air weighing up to 30 kg, if the employer agrees.
An important element of protecting an employee on a trip abroad is the right to reimbursement of documented necessary medical costs abroad. This does not, however, cover the cost of medicines that did not need to be bought abroad, plastic and cosmetic surgery, or orthopaedic or dental prostheses or glasses.
Rules for granting business trip advances
An advance to cover business trip costs is a cash payment made to the employee on account of the reimbursement of costs due to them. For domestic trips, under § 11 of the regulation, the employer grants an advance at the employee’s request, in the amount resulting from a preliminary calculation of the trip costs.
For trips abroad the rules are slightly different. The employee receives an advance in a foreign currency for the necessary costs of the trip abroad without having to apply for it. The amount of the advance results from a preliminary calculation of the trip costs. With the employee’s consent, the advance may be paid in Polish currency, in an amount equivalent to the advance due in the foreign currency.
The costs of a trip abroad may be settled in the currency of the advance received, in a convertible currency or in Polish currency, at the average National Bank of Poland exchange rate on the day the advance was paid. This flexibility in the choice of settlement currency makes it easier for the employee to settle correctly
An advance is property entrusted to the employee for settlement, which has important legal consequences. As the Supreme Court (Sąd Najwyższy) stated in its judgment of 24 July 2001 (case no. I PKN 552/00), a cash advance received by an employee is property entrusted to them to be accounted for within the meaning of Article 124 § 1(1) of the Labour Code.
The employee must show how they used the advance received. If the advance exceeds the actual trip costs, the employee must return to the employer the part of the advance exceeding those costs. Conversely, if the trip costs were higher than the advance, the employer must pay the employee the difference.
Employee’s obligations when settling business trip costs
The employee has clearly defined obligations relating to settling business trip costs. The basic obligation is to settle the costs of a domestic trip or a trip abroad no later than 14 days after the end of the trip. This deadline follows directly from § 5(1) of the regulation, and missing it may have serious consequences for the employee.
To settle the trip costs, the employee must attach the relevant documents, in particular bills, invoices or tickets confirming each expense. This requirement does not apply to per diems and expenses covered by lump sums, which are paid at a fixed rate regardless of the actual costs. If a document cannot be provided, the employee makes a written statement about the expense and the reasons why it is not documented.
In justified cases the employee may be required to make a written statement about circumstances affecting their entitlement to per diems, lump sums or reimbursement of other trip costs, or their amount. Such a statement may be required, for example, if the trip programme changes or unforeseen circumstances arise
The settlement should contain a detailed breakdown of all costs incurred, divided into categories of expenses. The employee should present:
- A breakdown of transport costs with tickets or other documents attached
- Documents confirming accommodation costs, together with bills
- A summary of the per diems and lump sums due for the trip
- A final calculation showing the overpayment or the amount still due
- Statements where expenses cannot be documented
Settling a business trip properly requires the employee not only to collect the relevant documents, but also to organise and present them so that the employer can verify the costs incurred.
Consequences of an employee failing to settle an advance
If an employee does not settle the costs of a domestic trip or a trip abroad on time and has previously received an advance to cover those costs, the employer gains certain rights. The most important is the ability to deduct the advance from the employee’s pay without the employee’s consent. For businesses using our payroll outsourcing, we include deductions of unsettled advances in the payroll.
The legal basis for this is Article 87 § 1(3) of the Labour Code, which gives the employer the right to deduct cash advances granted to the employee from their pay. The deduction is made after deducting social insurance contributions, the personal income tax advance and contributions to the employee capital plan (PPK), unless the employee has opted out of them.
The employer may deduct an advance from the employee’s pay without their consent, but must observe certain limits. The deduction cannot exceed half of the employee’s pay and must respect the amount exempt from deductions
There are, however, limits on the amount of the deduction. Advances may be deducted up to half of the employee’s pay. In addition, when advances are deducted, the amount exempt from deduction is pay equal to 75% of the minimum wage for full-time employees, after deducting social insurance contributions, the personal income tax advance and PPK contributions. An unsettled advance often comes up again when an employee leaves and the employer also determines the entitlement to severance pay and its amount.
The amount exempt from deductions is meant to protect the employee from being left without means of subsistence. This mechanism ensures the employee always keeps part of their pay, which should be enough to cover basic living needs
How to deduct an advance from pay
Deducting an unsettled advance from an employee’s pay requires the employer to follow certain procedures and limits. First of all, the employer must make sure that 14 days have passed since the end of the business trip and that the employee has indeed not settled the trip costs.
Before making the deduction, the employer should ask the employee to settle the costs, setting an additional, reasonable deadline. This serves as a warning and gives the employee a last chance to avoid the deduction from pay.
Calculating the maximum deduction involves several elements:
- Determine the pay after deducting ZUS (Social Insurance Institution) contributions and tax
- Calculate 50% of that amount as the maximum deduction
- Determine the amount exempt from deductions (75% of the minimum wage)
- Compare the two amounts and apply the one more favourable to the employee
- Determine the final amount of the deduction
If the unsettled advance exceeds the maximum monthly deduction, the employer may spread the deduction over several months. Each monthly deduction must, however, respect the applicable limits
If the employee earns the minimum wage or close to it, the amount exempt from deductions may effectively prevent the advance from being deducted. In such cases the employer must look for other ways to recover the money due, for example through an agreement with the employee or by using other available legal remedies.
Practical example of deducting an advance
To better understand how an unsettled advance is deducted, let us look at a specific example. Suppose an employee received an advance of PLN 3,000 for a domestic business trip but did not settle the costs within 14 days of the end of the trip. Despite reminders from the employer, the employee has still not submitted the required settlement.
The employee works full time, and their pay is taxed with the standard tax-deductible costs and the tax-reducing amount. They do not take part in PPK, which means that in 2026 the amount exempt from deductions is PLN 2,704.39 (75% of the minimum wage of PLN 4,806 after deducting contributions and the tax advance, i.e. 75% of PLN 3,605.85). From 1 January 2027 the minimum wage is PLN 4,950, so the amount exempt from deductions will rise — it then has to be recalculated using the same rules. The employee’s monthly pay after deducting social insurance contributions and the income tax advance is PLN 4,700.
When calculating the maximum deduction, two limits must be taken into account: half of the net pay and the difference between the pay and the amount exempt from deductions. The limit more favourable to the employee applies
In this case the maximum deduction is:
- Half of the pay: PLN 2,350 (4,700 ÷ 2)
- Amount above the minimum: PLN 1,995.61 (4,700 - 2,704.39)
Since PLN 1,995.61 is lower, it is the maximum monthly deduction. This means the employer may deduct PLN 1,995.61 from the employee’s pay for the first month, and the remaining part of the advance, PLN 1,004.39, from the pay for the following month.
| Month | Amount deducted | Advance outstanding | Pay to be paid out |
|---|---|---|---|
| 1 | PLN 1,995.61 | PLN 1,004.39 | PLN 2,704.39 |
| 2 | PLN 1,004.39 | PLN 0.00 | PLN 3,695.61 |
| Total | PLN 3,000.00 | - | - |
Other rights of the employer
Apart from the basic right to deduct the advance from pay, the employer has other legal tools for recovering unsettled money. It may rely on the general civil law rules on unjust enrichment or pursue the claim in civil proceedings.
The employer may also take disciplinary measures against an employee who persistently fails to settle an advance. Failure to settle business trip costs may constitute a breach of basic employee duties, for which the Labour Code provides sanctions.
Before taking disciplinary measures, the employer should carry out an explanatory procedure to establish why the employee has not settled the advance. It may turn out that the employee has objective reasons that make timely settlement difficult
In extreme cases, where an employee systematically fails to settle advances, the employer may consider terminating the employment contract with notice for reasons attributable to the employee. Such action requires particular care and thorough documentation of all the circumstances of the case.
The employer may also introduce additional internal procedures to prevent problems with unsettled advances. These may include:
- Regular reminders of the approaching settlement deadline
- A system for monitoring business trip settlement deadlines
- Procedures for checking documents before an advance is paid
- Training for employees on settling business trip costs correctly
- Clear settlement rules in the business travel regulations (without contractual penalties – the Labour Code allows only the disciplinary penalties under Article 108 against an employee)
Employee’s rights in disputes
An employee whose pay has been subject to a deduction has certain rights and ways to defend their interests. First of all, they may settle the business trip costs at any time, which should result in the refund of amounts overpaid or a correction of the amount deducted.
If the employee disagrees with the amount deducted or believes that the employer has breached the rules, they may take the matter to the labour court. The court will examine whether the deduction was lawful and whether its amount is correct.
It is good practice to give the employee detailed information about the legal basis for the deduction and how its amount was calculated. It is best to do this in writing, in a way that allows the employee to check that the deduction is correct
If the employee has objective difficulties settling on time, they may ask the employer to extend the deadline or to help prepare the settlement. The employer should consider such a request, particularly if the delay is due to reasons beyond the employee’s control.
The employee may also seek help from trade unions or other organisations representing employees’ interests. These organisations may provide legal advice and represent the employee in a dispute with the employer.
Preventing problems with unsettled advances
The best way to avoid problems with unsettled advances is for the employer to introduce appropriate preventive procedures. It is crucial to inform employees properly about their obligations relating to settling business trip costs.
The employer should provide employees with:
- Detailed information on the rules for settling business trip costs
- Settlement document templates
- A list of required attachments
- Information on settlement deadlines
- Contact details of the person responsible for settlements
It is worth introducing a system that reminds employees of approaching business trip settlement deadlines. This may be an automatic e-mail system or another technical solution that sends notifications a few days before the deadline
It is also good practice to train employees who travel frequently on business. Training should cover the practical aspects of settling costs, including how to fill in documents and collect the required attachments.
The employer may consider introducing an electronic system for settling business trips, which will make it easier for employees to fill in documents and automatically remind them of approaching deadlines. Such solutions can significantly reduce the number of unsettled advances.
Good practice example: A manufacturing company introduced a system in which every employee on a business trip receives a text message 3 days before the settlement deadline. In addition, the HR system automatically generates reports on late settlements, allowing the HR department to react quickly.
