Severance pay (odprawa) is an important form of protection for employees when their employment ends for reasons beyond their control. It is a one-off compensatory payment meant to soften the financial effects of losing a job. The rules on severance pay are set out in detail in the Act of 13 March 2003 on special rules for terminating employment relationships for reasons not attributable to employees (consolidated text, Journal of Laws (Dz.U.) 2026 item 1195).
Severance pay under this Act is due only to employees of employers who employ at least 20 people. This applies to both collective and individual redundancies, provided that the employment ends for reasons not attributable to employees — and in an individual redundancy those reasons must be the sole reason. Retirement and disability severance pay (Article 92¹ of the Labour Code (Kodeks pracy, KP)) and death benefit severance (Article 93 KP) are due regardless of the number of employees
The right to severance pay can arise in two main ways. The first concerns employees dismissed in a collective redundancy procedure under Article 8 of the Act. The second covers individual redundancies, governed by Article 10(1) in conjunction with Article 8 of the same Act. Both require certain conditions to be met regarding the number of employees and the reasons for dismissal.
Basic conditions for severance pay
The fundamental criterion for receiving severance pay is that the employment ends for reasons beyond the employee's control. This means that the initiative to terminate the contract must come from the employer and be driven by factors on the employer's side. In addition, the employer must employ at least 20 people, which is the minimum threshold for applying the Collective Redundancies Act.
The Act applies where the employer needs to terminate employment relationships for reasons not attributable to employees. This can be done by notice given by the employer or by mutual agreement of the parties. The 30-day period within which the redundancies must cover a certain number of employees is crucial.
Collective redundancies have different thresholds depending on the size of the workplace. Where the employer has fewer than 100 employees, the threshold is 10 employees. For employers with 100 to 299 employees, the threshold is 10 per cent of the workforce. In the largest employers with 300 or more employees, the threshold is 30 employees
Under Article 10(1) of the Act, an employee is also entitled to severance pay in an individual redundancy. This applies where an employer with at least 20 employees terminates employment for reasons not attributable to employees and those reasons are the sole reason justifying the notice or termination by mutual agreement. What matters is that the redundancies within 30 days cover fewer employees than specified in Article 1 of the Act.
Reasons that give the right to severance pay
An employee acquires the right to severance pay only where the reasons for terminating the employment contract lie on the employer's side. The most common reasons are economic and organisational factors, restructuring of the workplace and elimination of the job position. Each of these reasons must be objectively justified, and in an individual redundancy — must be the sole reason for the dismissal decision (Article 10(1) of the Act).
Economic reasons include situations related to the company's worsening financial condition, the need to reduce operating costs or market changes affecting profitability. Organisational reasons concern changes in the company's organisational structure, introduction of new technologies, process automation or a change of business profile.
In its judgment of 6 December 2001 (I PKN 722/00, under the previous Act of 1989), the Supreme Court held that terminating employment in connection with a change in the organisational and legal model of a company's accounting function may be considered a dismissal for reasons relating to the workplace. This applies where the change brings the employer a significant reduction in labour costs, even if it does not reduce the number of employees
Restructuring of the workplace may involve merging departments, eliminating duplicated functions, introducing new management methods or changes in the ownership structure. Elimination of a job position means that a given type of work is abolished entirely, which may result from automation, outsourcing or a change in production technology.
Importantly, severance pay is also due to an employee who was not covered by a collective redundancy procedure and was the only person dismissed at the time. The condition is that the employer employs at least 20 people and the other conditions set out in the Act are met.
Termination by mutual agreement
Not only notice of termination for reasons beyond the employee's control gives the right to severance pay. Termination of the employment contract by mutual agreement can also do so, provided that the initiative to terminate came from the employer. In a claim for severance pay, the employee will have to prove that it was the employer who initiated the termination by mutual agreement. Parting with staff when a company winds up is described in our article on settling with employees when closing a business.
The Act also applies to employees who received notice of changed terms of employment, did not accept them, and whose employment contract was consequently terminated. This means that refusing worse terms of employment may lead to a right to severance pay if the other conditions are met.
In its judgment of 16 November 2000 (I PKN 79/00, under the previous Act of 1989), the Supreme Court held that terminating employment as a result of notice of changed pay terms leading to a radical reduction in pay may be considered to have been made for reasons relating to the workplace. Such a termination may justify a claim for severance pay
It is crucial to show that the reasons for termination by mutual agreement were identical to those that would have justified notice for reasons on the employer's side. The employee must prove that the agreement was concluded on the employer's initiative and that reasons not attributable to the employee (the employer's economic or organisational situation) were the sole reason for terminating the contract (Article 10(1) of the Act).
Amount of severance pay
The amount of severance pay depends on two main factors: length of service with the given employer and the pay received before the employment ended. Under Article 8 of the Act, the employee is entitled to severance pay in an amount that varies with the period of employment.
An employee employed by the given employer for less than 2 years receives severance pay equal to one month's pay. If length of service is from 2 to 8 years, severance pay equals two months' pay. The highest severance pay, equal to three months' pay, is due to employees employed by the given employer for more than 8 years. The period of employment with the given employer also includes employment with a previous employer if the change took place under Article 23¹ KP or the new employer is the legal successor (Article 8(2) of the Act in conjunction with Article 36 § 1¹ KP). Length of service can also be the basis for a jubilee award.
| Length of service with the employer | Amount of severance pay | Notes |
|---|---|---|
| Less than 2 years | 1 month's pay | Article 8(1)(1) |
| From 2 to 8 years | 2 months' pay | Article 8(1)(2) |
| More than 8 years | 3 months' pay | Article 8(1)(3) (cap: 15 times the minimum wage) |
Severance pay is calculated according to the rules for calculating cash compensation for unused annual leave (Article 8(3) of the Act). The basis is the average monthly pay from the period preceding the acquisition of the right to severance pay, determined under the Regulation of the Minister of Labour and Social Policy of 8 January 1997
An important limit is the maximum amount of severance pay, which may not exceed 15 times the minimum wage in force on the day the employment ends (Article 8(4) of the Act). In 2026, when the minimum wage is PLN 4,806, the maximum severance pay may not exceed PLN 72,090, and from 1 January 2027 (minimum wage PLN 4,950) — PLN 74,250.
Calculating the basis for severance pay
The basis for calculating severance pay is the average monthly pay from the period preceding the acquisition of the right to it. Under the Supreme Court resolution of 9 May 2000 (III ZP 12/00) — and now directly under Article 8(3) of the Act — this pay is determined according to the rules in the Regulation of the Minister of Labour and Social Policy on detailed rules for granting annual leave, determining and paying holiday pay and cash compensation for leave (§ 14–19).
The basis includes all pay components that would be taken into account when calculating compensation for unused annual leave. This includes base pay, fixed allowances, regular bonuses and other payments in the nature of remuneration for work.
The basis for severance pay is calculated in the following steps:
- Determine the fixed components (at a fixed monthly rate) in the amount due in the month in which the right to severance pay arises
- Add up the variable components from the preceding period — as a rule 3 months (components paid for periods longer than a month: 12 months)
- Divide these totals by the number of months from which they were determined
- Obtain the average monthly pay (fixed components + averages of variable components)
- Multiply by the appropriate factor according to length of service (1, 2 or 3) and check the cap of 15 times the minimum wage
One-off payments that are not directly related to the work performed are not taken into account when determining the basis for severance pay. Social benefits, reimbursement of business travel costs and other payments that are not remuneration are not included either
An employee who worked at a company for 6 years received a fixed monthly salary of PLN 4,700 gross. After their position was eliminated on 31 January 2025, they are entitled to severance pay equal to two months' pay, which gives PLN 9,400 gross.
When severance pay must be paid
Severance pay should be paid no later than the last day of the employment relationship — the employee is entitled to it from the moment the employment ends, and the employer should pay it without being asked (Supreme Court judgment of 9 February 2007, I BP 15/06). This means that if pay is paid by the 10th of the month following the month in which the work was done, paying severance only on that date is late. We calculate severance pay and include it in the payroll as part of our HR and payroll services.
After the payment deadline, the employee may claim interest for late payment. Interest is charged from the first day after the employment ends until the day the severance pay is actually paid. The interest equals statutory interest for late payment (Article 481 of the Civil Code in conjunction with Article 300 KP).
- Severance pay is paid as a one-off payment in connection with the end of employment
- The payment deadline is no later than the last day of the employment relationship
- Late payment gives the right to interest for late payment
- The employee can pursue their claims before a labour court
If the employer does not pay severance on time, the employee can take the case to a labour court. The court may award not only the severance pay due, but also interest for late payment and the costs of the proceedings
Payment of severance does not depend on the employee finding a new job or registering with a labour office. It is a payment due by operation of law once the conditions set out in the Act are met. The employer may not make severance pay conditional on additional requirements that do not follow from the law.
More favourable severance terms
The Collective Redundancies Act sets the minimum protection for employees, but employers may set more favourable severance terms in their internal labour regulations. This applies both to the amount of severance pay and to the conditions for granting it.
Employers may introduce rules providing for higher severance pay than under the Act, shorter periods of employment giving the right to severance pay, or a wider range of reasons justifying it. Such rules may be included in work regulations, a collective labour agreement or individual employment contracts.
Employers in small companies with fewer than 20 employees may set rules on severance pay in their internal regulations, even though the Collective Redundancies Act does not apply to them. They may set their own criteria regarding the reasons for dismissal, length of service or the number of employees dismissed
In its judgment of 19 September 2002 (I PKN 592/01), the Supreme Court confirmed that introducing, by an annex to the employment contract, the employee's right to severance pay if the employer terminates the employment by notice, as a rule cannot be treated as a legal act contrary to the principles of social coexistence.
Paying additional severance granted by the employer in connection with the end of employment for reasons not attributable to the employee is, as a rule, permissible. It does not violate the Collective Redundancies Act or the Labour Code, provided that the additional benefits do not worsen the employee's position compared with the statutory rules.
How to claim severance pay
If the employer refuses to pay severance or disputes the employee's right to it, the employee can pursue the claim in court. Severance pay cases fall within the jurisdiction of labour and social insurance courts.
The employee may first send the employer a written demand for payment of severance, stating the legal basis of the claim and the arguments justifying the right to severance pay. If the employer does not respond or refuses, the employee can file a claim with the labour court.
Claiming severance pay involves the following stages:
- A written demand to the employer to pay severance
- Waiting a reasonable time for the employer's response
- Preparing documents confirming the right to severance pay
- Filing a claim with the competent labour court
- Taking part in the court proceedings
- Enforcing the final court judgment
An employee claiming severance pay must show that all the conditions set out in the Act are met. This includes proving that the employment ended for reasons not attributable to the employee and that the employer employed at least 20 people
An employee of a 50-person company received notice because of a restructuring of their department. Even though all the conditions for severance pay were met, the employer refused to pay it. The employee took the case to a labour court, which awarded severance pay with interest for late payment and the costs of the proceedings.
Severance pay in different legal situations
The right to severance pay can arise in various situations connected with the end of employment. Each of them requires an individual assessment of whether the conditions set out in the Act are met. It is always crucial to show that the reasons for terminating the contract are not attributable to the employee, and in an individual redundancy — that they are the sole reason for terminating the contract.
Notice of changed terms that the employee did not accept may give the right to severance pay if the proposed changes were driven by organisational or economic reasons. This applies especially where the employer proposes a significant pay cut, a move to a distant place of work or a substantial change in duties.
Terminating a fixed-term contract before the end of its term may also give the right to severance pay. The condition is to show that the termination was for reasons not attributable to the employee and that those reasons were the sole reason for the employer's decision.
- Notice for economic or organisational reasons
- Termination by mutual agreement on the employer's initiative
- Refusal to accept notice of changed terms
- Early termination of a fixed-term contract
In its resolution of 4 April 2002 (III PZP 4/02, under the previous Act of 1989), the Supreme Court held that terminating employment under Article 10 of the Act does not lose its individual character because the employer started collective redundancies during the notice period. This means that the employee can receive severance pay regardless of whether their dismissal was part of a larger downsizing
