Against the background of other European legal systems Polish regulation of the social support of workers by their employers differs significantly. This difference is manifested mainly by two aspects of the Polish legal system. First, is the imposition on certain employers of an absolute legal obligation of social support for their employees from the funds of the employing entity. Second, is the fact that the obligation stems not only from regulations based on a basic labor market law, which is the Act of Law of 26 June 1974, the Labour Code (Dz. U. [OJ] 1974 No. 24, item 141 as amended.) but also from functional interpretations of the highest ranking law of the land, which is the Polish Constitution of 2 April 1997 (Dziennik Ustaw – hereinafter also referred to as the Dz.U. – of 1997, No. 78, item 483).
The shaping of the legal relationship between the parties to an employment relationship by Polish legislation in this respect is closely linked with the history of Poland as a country that was formerly a part of the so-called bloc of socialist countries. A characteristic feature of these countries was, inter alia, the creation of social and economic life according to the ideology of communism that is a dictatorship of the proletariat, the centrally controlled economy and the idea of social justice. In addition, even though after 1989 Poland formally regained sovereignty, the influence of communist ideology can be seen to this day, as evidenced by, inter alia, the maintenance of the obligation of employers to pay social support for workers as part of the new socio-economic and political reality.
This state of affairs is sometimes criticized in the Polish literature, but it is only possible to completely understand it after taking into account the history of the country, as well as the fairly strong influence of the teachings of the Catholic Church on Polish societal views. It must not be forgotten that one of the largest advocates of social solidarity and the fair distribution of wealth in the economy (including in employment) was a great Pole – Pope John Paul II. His encyclical Laborem Exercens, as a complement to and an extension of the views enunciated by other popes (especially Leo XIII in his encyclical Rerum Novarum), certainly exerted some influence on the shape of the Polish legal system, proclaiming not only the duty to pay fair wages but also the need to introduce various forms of co-ownership of the instruments of labor, workers’ participation in the management of the workplace or in the profits of the company.
If to the above we add the fact that during the Polish transition period, “solidarity” was significant to the power of trade unions, in particular of the Independent Self-Governing Trade Union “Solidarity”, it should not be surprising that the legislation has imposed on employers a relatively high standard of social care for workers compared to the so-called capitalist countries.
In light of the above comments, there is no doubt that the presentation of the Polish regulation of employers’ obligation of social support for workers must be preceded by a brief historical sketch showing the evolution of the regulations governing this issue as well as some comments of an axiological nature. Only then will it be appropriate to present the categories of employers who are liable for the social support of their employees, the types and scope of this obligation, as well as the recipients of the support. Due to the limitations of publishing and the extent of the material to be discussed, the arguments regarding this subject, for reasons independent of the author, will not be too detailed.
Brief Historical Overview
The organization of social activities by employers in Poland began its dynamic development in the post-war period. The necessity of having the Polish state organize mechanisms of social support at that time stemmed from the need to rebuild the social morale that was at a low after the experience of the war and stemmed from the need to eliminate poverty, which affected a number of Polish citizens during the military action. However, due to the fact that in socialist countries such as Poland at that time the role of classic social assistance was undervalued,
1 the burden of the social support of citizens was passed on to workplaces. Employers’ main task, as stressed by the literature (Zarychta
1995; Wiktor
1993; Wróblewski
1991), included, inter alia, the implementation of the social welfare function, which was manifested in three parts. The first of these included provisions designed to ensure safe and healthy working conditions for employees. The second consisted of all sorts of benefits derived from collective agreements with employers (such as coal allowances, benefits for new employees, and prophylactic feeding); while the third part, called the “social action”, consisted of benefits and services of a social nature to which uniformly and universally all employees were entitled. The rest of this article will focus on this last group of benefits.
The obligation to organize “social action” was first introduced by order of the Minister of Industry on 12 December 1946 (DES19/1358/21191, not published) and concerned only a limited group of employers who were generally entrepreneurs from the sectors of industry and trade. It thus did not include, for example, the units of state government, local government and cooperative administration. It was not until the resolution of the Economic Committee of the Council of Ministers on 28 September 1948 on social action in the budget for 1949 (not published) that a recommendation was made to extend this obligation to employers operating in all sectors of the national economy. However, it is worth pointing out that among the persons entitled to the use of this kind of social support from the very beginning were not only employees but also their families, and over time, many other groups of citizens were also included.
In the late 1940s, quite uniform types of social benefits were already in place in workplaces, which could include provisions related to the care of mothers and children, workers’ holidays, social health protections, social material provisions, cultural and educational actions, and the training of employees about “social action” (the order of the State Commission of Economic Planning of 15 October 1949 on the preparation of Social Action budget estimates for the year 1950, SO-1/VB/01/9, not published).
Initially, the amount of funding for various types of social benefits to be realized in the workplace was not defined; instead, it depended on the discretion of the employer, which was obliged to cover expenses associated with “social action” from its own current assets (for more see Hanusz
1985/1986). In a short time, however, this led to social discontent due to the large differences in the amount of individual social benefits in various workplaces. Due to this, among other reasons, first, an upper limit to the amount of expenses allocated to “ social action “ was introduced (even up to 7% of the total wage fund – the Economic and Social Department of Ministry of Industry of 17 April 1947, DES / IIIA / 01/1, unpublished, and the Minister of Industry of 12 December 1946 referred to). This was followed by the establishment of social action funds (Instruction of the Minister of Industry and Trade of 30 October 1947 on establishment of the Social Action Fund in the enterprises subordinated to the Ministry of Industry and Trade and on execution of this action budgets in 1948 (ESF-8), Dz. Urz. Ministerstwa Przemysłu i Handlu No. 17, item 257), aiming to isolate and secure resources for the social activities of each employer (the basis for the disbursement of the funds by the workplace was the annual financial plan of “social action”, which had to be approved by the so-called Central Board of the particular industry, and then, collectively, had to be approved by the Economic and Social Department of the Ministry of Industry and Trade).
It was not until the resolution of the Council of Ministers on the separation of funds for the Social Fund on 29 January 1950 (Monitor Polski No. A-17, item 178) that led, for the first time, to the creation of the so-called social fund for all sectors of the socialized economy. This made clear, at the same time, that the fund will arise from the tax write-off incurred by the primary operations of the individual employers, constituting a specific percentage of the annual wage fund. The fund financed the workers’ holidays, Sunday holidays, sanatoria, sports, benefits associated with the care of mothers and children, as well as cultural and educational activities (Tendera
1984).
This state of affairs did not last long though, and already in 1951, as a result of the resolution of the Council of Ministers of 17 April 1950 on initial guidelines to the principles of the state budget for 1951 (Monitor Polski No. A-55, item 631), the entire fund used for implementing employers’ social activities was transferred to the state budget and the social funds were liquidated. Not abandoned, however, was the active development of “social action” in workplaces. In addition to providing employees with classic social benefits in the form of financing or organizing holiday packages or activities of a cultural and educational nature, some employers offered accommodations in the company’s residential homes, workers’ hotels and “young worker” hostels. What is more, some companies were obligated to provide partial financing for in-plant vocational schools, dormitories for students, kindergartens and child care centers, and children’s playgrounds. Additionally, a network of canteens and cafeterias developed, and the health care of workers was entrusted to a health care service attached to the company. The state also organized occupational rehabilitation centers and laboratories studying the psychology and physiology of labor, which employers were required to partially finance (manifestations of social activity by employers in the years 1951–1963 indicated here are given by Tendera
1984).
Generally, the 1950s and 1960s of the last century was a turbulent period in the history of the evolution of the regulations on companies’ social benefits, which was characterized by an unsuccessful attempt to create an effective, universal, uniform and planned system for satisfying the social needs of employees through workplaces in Poland (see in particular the Act of Law of 28 March 1958 on company funding of state-owned enterprises, i.e., Dz.U. 1960, No. 13, item 78 and the Resolution of the Council of Ministers of 10 December 1963 on non-operating activities of a socio-living nature of state-owned enterprises, Monitor Polski No. 95, item 444). Funds for social activities, as shown by the above arguments, were flowing through multiple channels, which caused chaos in the organization of the system of financing the social support for workers.
A breakthrough in this area came only in the 1970s when the first order of the institution of the social fund in state-owned enterprises was restored and companies’ social activities and welfare (livelihood) activities were clearly distinguished from each other (resolution No. 180 of the Council of Ministers of 9 November 1970 on the social fund in the state-owned enterprises, Monitor Polski No. 40, item 297). This was followed by a thorough reform of the system going back, in part, to the solutions adopted in 1950 (Act of Law of 23 June 1973 on the principles of the creation and distribution of the company bonus fund and the company social and housing funds, Dz.U. No. 27, item 150).
The abovementioned reform of workplace social activities in 1974, was based on the following assumptions (principles). First, it introduced a uniform way to create a social fund for all working people, for all workplaces and for a uniform range of benefits financed by the companies’ social fund. Second, a company’s social fund was the sole and exclusive source of financing social activities organized through the workplace. Third, the primary source of financing the company’s social fund was a tax write-off (with a target range of 2% of a total wage fund) charged to the costs of the primary operations of the company. Fourth, details specifying of the kinds and types of provided social services (as part of the already mentioned uniform range of services) was left to the workplaces (more on the reform of 1974 was written by Hanusz
1984).
The most popular benefits included the organization and financing of workers’ holiday packages – in 1977 4.2 million citizens used these, summer holiday camps, winter holiday camps and other forms of recreational activities for children – in 1977 1.7 million children used them, the provision of subsidies to cultural and educational activities – 600 million PLN in 1979 on a national scale, and non-repayable material and financial aid, such as grants for the purchase of medicine, clothing, and fuel – approx. 500 million PLN per year nationwide (Komorniczak
1979). The granting of financial aid to young couples for the repayment of a housing loan also became popular – in 1978 approx. 54,000 young couples benefited from this kind of support (Komorniczak
1979). In addition, in order to better satisfy the individual and social needs of workers and their families in the workplaces, so-called employee services were also established (Resolution No. 250 of the Council of Ministers of 9 November 1973 on the workers service in the state organizational units, Monitor Polski No. 53, item 287).
It is also worth noting the wide circle of people entitled to benefit from companies’ social activities. This kind of support could be used equally not only by workers and their families but also by former employees of the particular workplace – pensioners. Additionally, the possibility of obtaining social support also extended to home workers (work under contract) and members of their families, as well as to students and family members of employees who died in the workplace (§ 15 of the regulation of the Council of Ministers of 2 November 1973 on the company social funds and company social activities, Dz.U. No. 43, item 260). In 1981, this opportunity was extended again to those who were working in the agency-commission system, to women benefiting from unpaid leave to care for a small child, as well as to conscripts performing alternative service in the workplace (see the regulation of the Council of Ministers of 24 April 1981 amending the regulation on the company social fund and social activity, Dz.U. No. 13, item 63).
The last major reforms of company social activities in Poland, before the fall of the communist regime, came into force in 1983 (which introduced, among other things, the principle that the size of the tax write-off to the fund incurred by a company’s primary business will be the product of 50% of the lowest monthly salary in the national economy and the number of people employed in a workplace) and in 1987 (which was stated, inter alia, that the granting of services and benefits and the amount of subsidies from the company social fund should be conditional upon the life, family and financial situation of the person entitled to these services and benefits) (see The Act of Law of 26 February 1982 on financial management of state-owned enterprises, Dz.U. No. 7, item 54; The Act of Law of 24 October 1986 on company social and housing funds in the units in the socialized economy, Dz.U. of 1990, No. 58, item 343).
On 6 February 1989, so-called round table talks (including representatives of the communist leadership, Solidarity opposition and representatives of Christian Churches) were launched, which resulted, inter alia, in the establishment of the post of the President, the appointment of the upper house of parliament (Senate) and the implementation of partially (35%) free elections to the Sejm and completely free elections to the Senate. From that moment, the socialist system began to openly fall, and at the end of 1989, the traditional name of the country (the Republic of Poland) and national emblem (an eagle with a crown) were restored. Gradually, reforms were introduced in all spheres of life, including regarding companies’ social activities. In April of 1990, censorship was abolished; in May, the Security Service was dissolved (the repressive apparatus of the state towards its own citizens); in November, the common presidential elections were announced (won by Lech Walesa); and in October 1991, free parliamentary elections were held. The process of the recovery of independence by Poland was symbolically completed with the withdrawal, in 1993, of the last troops of the Russian army from the territory of the country.
Against the background of the macroscopic events above, the Act of Law of 4 March 1994 on the company social benefits fund (Dz.U. of 2016, item 800, hereinafter also referred to as the ZFŚS) entered into force; the law is still currently valid and has been repeatedly amended. Like the reforms in other areas of life, the social benefits law had to match the new assumptions of the political system and, most of all, to express a certain balance between the requirements of the market economy and the principles of social justice. Therefore, in the period preceding its introduction, not only was its content discussed but, above all, so was its need for existence. During the trilateral talks between representatives of the government, trade unions and employers, a dispute occurred in this field. Representatives of employers’ organizations preferred that rules related to the social support of workers by companies be mainly derived from the so-called autonomous sources of law (especially collective bargaining and collective agreements), which followed the traditions of foreign countries with long experience of the market economy. In turn, representatives of trade unions sought comprehensive regulation of these issues in the statutory law, thereby further expanding the circle of entities obliged to provide social support for workers (for more on this topic see Rączka
1994).
The government, while acknowledging that the employers’ approach would better reflect the essence of a market economy, instead submitted to the pressure from the trade unions. Efforts were made to find a compromise between the extreme positions of the social partners, and finally, it was accepted that the issues in question would be regulated by statute but with the possibility of disabling its application if trade unions and the employer decide to do so in their collective agreement. For the entities obliged to apply the law, its regulation covered essentially all employers, with some exceptions for the education and higher education systems for which the rules of social support for workers have been regulated in separate acts of law.
Presenting the full evolution of the changes in the 1994 Act of Law does not seem appropriate. More information about its current version will be given in further parts of the article.
Axiological Basis of Employers’ Obligation to Provide Social Support for Workers
As appears from the legal historical analysis presented so far, an obligation to promote the welfare of workers by companies has always been strongly enshrined in the law. Additionally, it seemed to be anchored in the axiology of a legal system where societal values were expected to be protected by the legislature by the setting of legal standards (for more on the perception of this issue by the employees see Wróblewski
1991; Wiktor
1993). The main objective of the social fund was the elimination of wealth inequalities between the individual social classes, motivating employees to be more conscientious, diligent and efficient workers and leading to the implementation of various specific objectives of the political system, such as an increase of the cultural level “of the people’s masses” (see e.g., Article 3 the Polish People’s Republic Constitution of 22 July 1952, Dz.U. No. 33, item. 232).
Through the adoption, in 1997, of the Constitution of the Republic of Poland, which is currently in force, however, some fundamental assumptions about the Polish socio-economic system were changed. Additionally, the public’s expectations that accumulated over the years, which were mentioned above, slightly decreased, as indicated by studies conducted after the political system’s transition period.
2 Added to this is the fact that, since 1 January 2017, the range of employers obliged to create company social funds has narrowed because, according to the data cited by the Ministry of Development, up to 41.2% of companies indicated that the abolition of this obligation would contribute the most to the improvement of their company’s functioning.
3
Therefore, the question returns about the relevance of maintaining a statutory obligation to promote the welfare of workers (and even their families) by employers in Poland. Its axiological basis could be found in the regulations derived from the Constitution of the Republic of Poland, although attention is also drawn to the controversial nature of this thesis (see Sobczyk
2007).
Employers’ obligation to provide social support to workers can be seen as a sign of the principle of social justice referred to in Article 2 of the Constitution (“The Republic of Poland shall be a democratic state ruled by law and implementing the principles of social justice”), which emphasizes wealth distribution as formulated in a number of commonly accepted theories of justice in the world (see e.g., Rawls
2009; Ziembiński
1992). The principle of social justice can be understood as a factor leading to the right (fair) balance between the public interest (common good) and the interests of the individual (the Constitutional Court’s judgment of 12 April 2000, K 8/98, “Orzecznictwo Trybunału Konstytucyjnego” 2000, No. 3, item 87) and is bound to concepts such as equality before the law, social solidarity, a minimum of social security and the protection of basic living conditions for people who are out of work not of their own volition (the Constitutional Court’s decision of 25 February 1997, K 21/95, “Orzecznictwo Trybunału Konstytucyjnego. Zbiór Urzędowy” 1997, No. 1, item 7). Balancing the interests and expectations of the potential recipients of social benefits with the interests of those who ultimately finance them is difficult, and additionally, redistribution of national income through employers entails certain general public costs.
The employer controls certain scarce resources, in this case employment (in Poland, the unemployment rate is approx. 8%
4), and has economic and psychological advantages over the worker in the negotiation process. Very often, therefore, it is the employer who in Polish business practice sets the conditions of employment that the weaker party to the contract either must accept or refrain from taking up the employment. The result is that potential employees do not work under fully voluntary conditions (as preached even by the libertarians), which in turn causes employees to decide to perform work that often does not satisfy their justified social and livelihood needs.
To align the negotiating position of the labor relationship, legislation has introduced a number of legal mechanisms, including primarily the semi-imperative standards of labor laws that guarantee workers a minimum of legal protection against the stronger party to the contract (e.g., Article 18 of the Labour Code). While employers’ obligation of providing social support to workers seems to be intended not only to equalize the economic inequality between the parties to the employment relationship, or more broadly – between members of society – but above all also to ensure that the beneficiary of human labor is not guided solely by the idea of maximizing profit; employers must also care about the satisfaction of the justified social needs of the people whose work he uses. This approach of the legislation may be considered controversial, but at the present time, it seems to be a needed and effective mechanism to prevent the phenomenon of the dehumanization of labor relations where the human is perceived only as a means of production and not as having the dignity of the entity involved in the work process. This also fulfills a function that is basically undisputed in the Polish legal literature, the obligation to ensure to workers a wage level that is specified in the law.
These observations allow for a smooth transition to the next constitutional regulation to which the justification for the employer’s obligations discussed in this article can be traced. The discussion here references Article 20 of the Constitution of the Republic of Poland, which states that the “social market economy, based on the freedom of economic activity, private ownership, and solidarity, dialogue and cooperation between social partners, shall be the basis of the economic system of the Republic of Poland”. From the wording of that provision it becomes clear that the Polish economic system is based on the combination of two ideas: the market economy and the social state (the Constitutional Court’s judgement of 30 January 2001, K 17/00, “Orzecznictwo Trybunału Konstytucyjnego” 2001, No. 1, item 4; social market economy model is sometimes criticized – see e.g., Hayek
1988). Thus, on one hand, the state should not interfere in the sphere of business activity, and on the other, certain state activity is possible in this area, such as organizational regulation, intervention, redistribution and supervisory actions (Zaradkiewicz
2016). In addition, A. Müller-Armack, considered the founder of the concept of the “social market economy”, stated explicitly that the state should create a “social enterprise structure, in which the dignity of the employee as a human being and a co-worker is recognized, and the right to co-decision is granted to him without limiting the initiative and the responsibility of the entrepreneur” (quoted from Zaradkiewicz
2016).
Worth emphasizing is the fact that the foundation of the social market economy, as has been mentioned, is the principle of social solidarity, which assumes the compatibility and common interests of all individuals and social groups within the community, a mutual understanding of needs, and the duty to participate in the burdens for the benefit of society. In the context of the labor market, attention should be directed to the Constitutional Court’s judgment of 30 January 2001 (K 17/00, “Orzecznictwo Trybunału Konstytucyjnego” 2001, No. 1, item 4), which found that social solidarity means, inter alia, a constitutional duty “for social partners, and therefore also employers, to bear the costs of social transformation”. One of the tools for including employers in the circle of those who bear these costs is undoubtedly the statutory obligation to establish the social benefit funds by some employing entities (the opposite view is presented by Sobczyk
2007; for more on the realization of the idea of a social market economy in the Polish labor system, see Skąpski
2014).
It is worth noting that many Polish constitutionalists see the source of the principle of social solidarity as the social teachings of the Catholic Church (see e.g., Domańska
2001; Strzyczkowski
2006; Zaradkiewicz
2016). The most important church documents in this regard, in addition to the aforementioned, include the encyclical
Quadragesimo Anno, in which Pius XI stressed that the real and effective principle of managing economic life should be considered social justice and charity, which can prevent the dictatorship of a small group of people gathering substantial capital in their hands. A very important papal document is also the encyclical
Centesimus Annus, in which John Paul II devoted a great deal of space to the principle of social solidarity. Finally, we should mention the Pastoral Constitution
Gaudium et Spes, of 1965, which stressed that private property “has by its nature a social character, based on the law of the universal destination of goods”. This law means that “a man using these goods should consider external things, which he has not only as his own but also as common in the sense that not only he but also others benefit from them. Possession of any property makes its holder a steward of Providence; he should multiply and distribute its fruits to others, and above all to his whole family “(Catechism of the Catholic Church, 2404).
Of course, partnership and solidarity need to take into account not only the interests of workers but also the interests of employers, including taking into account employers’ economic situation when determining the scope of the statutory benefits for employees (the Constitutional Court judgement of 24 February 2004, K 54/02, “Orzecznictwo Trybunału Konstytucyjnego. Zeszyt A” 2004, No. 2, item 10). After all, without employers there would not be the employees. At this point, it should be stressed that an absolute obligation of social support for workers in Poland has been dependent upon, among other things, the size of the employer (employment level), which is a factor of the economic condition of the employing entity.
Recapitulation
This article’s analysis of the regulations of the Polish legal system regarding employers’ obligation to promote the welfare of workers employers requires a short summary..
First, the aforementioned obligation arises from a statute and concerns a very large portion of employers operating in the current Polish economy. The scope of the obligation to provide social support to employees, however, is diverse and mainly dependent on the size of the employer and the sector in which it operates (the public or non-public sector).
Second, among the mandatory beneficiaries of social support, Polish legislation included a very wide range of people, including those who do not fall under the term “employee” or even “former employee”. This applies to family members of the employee and family members of the former employee who is a pensioner, which most authors have stated includes at least the spouse and children of the employee /retiree/pensioner.
Third, the term “social activities”, the provision of which the employer is obliged to provide, covers a fairly wide range of services provided for various forms of leisure, cultural and educational activities, sports and recreation, child care in nurseries, clubs for children, daily caretakers or nannies, kindergartens and other forms of preschool education, and the provision of material assistance – in kind or financial, as well as payable or non-repayable grants for housing purposes. The legislature, however, has left a great deal of freedom to employers in determining the specific manifestations of this social activity in the particular workplace, which is reflected in the social benefits fund provisions issued by the employers.
Fourth, the legislature has equipped trade unions with fairly wide powers of control in terms of not only organizing the social activities in the workplace (which is reflected in the need to have unions agree with them and with the contents of the ZFŚS provisions) but also regarding the scope of current expenditures from the social fund (Article 27 (Domańska
2001) of the Law on trade unions).
Fifth, as presented in this article, the shape of the Polish legal system seems to stem from both the socialist history of Poland as well as the impact of the Catholic Church’s social doctrine on the design and interpretation of the regulations of the Constitution of the Republic of Poland and is reflected in the values that society considered worthy of protection by the standards of the legal system. The most important “carriers” of these values include the constitutional principle of a social market economy and the principle of social solidarity. Also significant is the basic principles of labor law expressed in Article 16 of the Labour Code.