Employee Capital Plans (PPK): a good time to start preparing for implementation

Although the new law will formally affect the largest businesses as of 1 July 2019, it is a good time now to evaluate the impact of the new regulations and specify the measures that have to be undertaken prior to its implementation. Similarly, entities which will fall under the requirement to establish a PPK at a later date should assess their situation and consider their decisions in light of the voluntary employee pension programme which constitutes an alternative to the PPK. 

Our experience shows that in both cases, the actions for the required internal and external processes are time consuming, especially regarding, as the case may be, election of employee representatives (if there are no trade unions operating at the employer), conducting the required internal discussions in order to select the financial institution and ultimately conducting negotiations with the financial institution in order to execute the PPK management contract and contract for its operation. Delaying the negotiations with the financial institution may result in increasingly difficult discussions due to the potential of work overload and the need to execute the contract prior to the lapse of the statutory deadlines, which is subject to severe sanctions if exceeded.

It should also be noted that State Labour Inspection controls are already planned for the end of 2019 to audit employers’ compliance with the new law.

The first entities that should prepare for the implementation of the PPK are those employing at least 250 people (as of December 2018). The headcount referred to does not only include employees but also individuals rendering work under agency agreements, contracts of mandate, other contracts for the provision of services as well as remunerated members of supervisory boards - it applies to all individuals for whom contributions for pension and disability insurance are withheld by the employing entity.

An appropriate action plan should include, in particular: (i) identification of when the new law will start applying based on the headcount as on the statutorily specified date, (ii) listing the required actions and their timing as required for a given business, (iii) if there are no trade unions operating, preparing documentation and organising elections of representatives of all employed individuals, including the pertinent non-employees, (iv) conducting discussions with either the representatives or union(s), as applicable, regarding the choice of the financial institution and preparing documentation that reflects all points of agreement or disagreement, (v) negotiating PPK management contracts and contracts for operation with a selected financial institution, including the legal and business assessment of the terms included therein, (vi) preparing other documents related to the daily operation of the PPK, (vii) assessing the required internal administrative workload for the PPK, (viii) nominating responsible employees as well as introducing pertinent procedures to properly manage the processes and minimise risks