An inclusive organization – growth, diversity and equality

The Pekao Group is the employer of first choice. It recruits the best candidates for work, and provides employees with working conditions conducive to increasing motivation, satisfaction and their commitment. An important goal of the Bank’s personnel policy is to invest in the development of skills of all employees. The priority of development programs at the Bank is to identify, review, verify and develop current and future leaders. The Pekao Group and the Bank create opportunities for individual professional development for employees by investing in training and improving the competences and skills of employees. By creating a friendly work environment, the Bank conducts employee satisfaction and opinion surveys in order to constantly improve working conditions, communication and employee relations. The Pekao Group and the Bank provide employees with equal treatment, personal and professional development and respect for civil liberties.

The terms and conditions of employment, work and social benefits at Bank Pekao are regulated by internal legal acts, including in particular: Company Collective Labour Agreement, individual employment contracts / managerial contracts, Labour Regulations and Regulations for Company Social Benefits Fund. Most companies of the Bank’s Group have introduced Labour Regulations, Remuneration Regulations and Regulations of Company Social Benefits Funds.

Labour Regulations of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter referred to as: „Labour Regulations”) establish the organization and order of the work process in Bank Pekao and define the related rights and obligations of the Bank and its employees. The Regulations apply to all employees of Bank Pekao S.A., regardless of the type of work and position held, and irrespective of the basis on which the employment relationship was established. Labour Regulations specifically:

Bank Pekao does not apply any additional, apart from the generally applicable, pension security systems. As an employer, the Bank fully complies with the obligations arising from the general pension system, not in arrears with contributions due from employees’ remuneration and with employer’s contributions. In the Bank, pursuant to the Company Collective Bargaining Agreement of Bank Pekao S.A. (hereinafter: „Company Collective Bargaining Agreement”, Collective Bargaining Agreement) additional retirement and disability severance payments are applied to employees who become entitled to benefits from the general pension insurance.

The Bank applies notice periods under the Labour Code or under provisions arising from employment contracts, which are no less favourable than those under the Labour Law. Consultations at the Bank with respect to termination of employment contracts are carried out in accordance with the applicable Polish laws. In 2021, the Bank usually used one or three months’ notice periods.

Pekao Group and the Bank, in accordance with the applicable laws, shall counteract discrimination in respect of establishing and terminating employment relationships, terms and conditions of employment, promotion and access to training to improve professional qualifications, in particular on the grounds of sex, age, disability, race, religion, nationality, political opinion, union membership, ethnic origin, creed, sexual orientation, and also on the grounds of employment for a definite or indefinite period of time, or full-time or part-time employment.

The Company Collective Bargaining Agreement defines the principles of the Bank’s HR and remuneration policy, including the principles and conditions of remunerating the Bank’s employees and granting other work-related benefits, among others:

The currently binding Company Collective Bargaining Agreement (ZUZP) was concluded on December 15, 2005 between Bank Polska Kasa Opieki S.A. and the trade unions operating at the Bank.

In the light of the labour law, Bank Pekao is a single employer where the remuneration conditions and the granting of other work-related benefits are regulated by the Collective Bargaining Agreement (ZUZP) and for the employees excluded from the Collective Bargaining Agreement, for whom the remuneration conditions and the granting of other work-related benefits are regulated on the basis of individual managerial contracts (employment contracts).

In 2021, at Bank Pekao, similar to the previous 12 months, the percentage of employees covered by the collective agreement was 77%. There are no collective agreements in Pekao Group companies.

The Bank’s social activity is organized in accordance with generally applicable legal regulations, and ensures social security for employees. The Regulations of the Company Social Benefits Fund specify the principles and conditions for the use of services and benefits financed from the Fund, as well as rules for the allocation of resources of the Fund for various purposes and types of social activities.

The Company Social Benefits Fund is created at the Bank from an annual basic contribution, in accordance with the provisions of the Company Collective Bargaining Agreement – per one employee the contribution amounts to 50% of the average monthly salary in the national economy in the previous year or in the second half of the previous year if the average salary in that period was higher. In 2021, the Bank applied the provisions of the Act on Special Arrangements for Preventing, Counteracting and Combating COVID-19, Other Infectious Diseases and Crisis Situations Caused by Them (Article 15ge (3)) in establishing the allowance for the Social Benefits Fund, according to which the allowance for the Social Benefits Fund was made at the rate of 37.5 per employee. The Bank does not charge a deduction for retirees; instead, it takes care of them. Social fund at Bank Pekao is intended for:

The Fund’s expenditure plan is agreed annually with trade unions in the manner and on the terms set out in the Regulations. Financing from the Company Social Benefits Fund is provided to employees of the Bank employed solely under employment contracts. The housing loan benefit may be applied for by persons with at least two years of work experience at the Bank.

Most of the Pekao Group companies offer employees various social benefits, incl. co-financing of a sports card and holiday leave, Christmas vouchers, financial support in difficult life situations, a wide range of insurance. The companies, with few exceptions, provided the same access to benefits to all employees, regardless of FTE.

The remuneration strategy, developed in line with the Bank’s business standards and values underlying its mission, is reflected in internal regulations and is a factor in building and protecting the Bank’s reputation and creating sustainable value for all stakeholders. The key regulation in this area is the Remuneration Policy of Bank Polska Kasa Opieki Spółka Akcyjna. This policy reflects the mission and values in the Bank’s approach to compensation systems, specifically:

• defines the pillars of compensation, structure management, corporate and organizational processes,
• confirms the requirements of compliance of the adopted remuneration systems with generally applicable law,
• sets out the principles for monitoring market practices and the approach to the issue of remuneration systems ensuring the sustainability of the Bank’s operations.

The remuneration structure ensures a direct link between remuneration and performance by guaranteeing financial stability and levels of variable remuneration appropriate to the Bank’s financial capacity, establishing performance-based remuneration caps and developing incentive schemes that provide for minimum levels of Bank performance below which no bonus is paid. Variable remuneration includes all remuneration components, the award of which depends on the result, and its payment is directly dependent on individual achievements and the Bank’s risk-adjusted performance.

Sustainable performance that contributes to the creation of long-term stakeholder value refers to the actual results achieved and how they are achieved, with a view to measuring performance consistent with shareholder interests and profitability principles based on a safe level of risk, sustainable risk management practices and multidimensional analysis of performance and quality of operations.

To ensure competitiveness of remuneration structures, as well as their transparency and an effective and fair remuneration system, the Bank monitors market trends in remuneration forms and the level of remuneration offered in the market. Decisions regarding the remuneration system in the Bank are made taking into account available data on market trends in the area of fixed remuneration and incentive systems. Such data is obtained from consulting firms offering financial sector analysis. At the level of the Bank’s organizational units, comparative analysis is additionally performed to ensure consistency of remuneration in particular areas. In 2021, attention was paid to the analysis of wage coherence between women and men in identical positions, in order to make efforts to compensate for the wage gap existing at the Bank.

As part of the remuneration system, employees are offered non-wage benefits that ensure fair treatment and the consistency of the remuneration system.

Each year, a report is prepared on the operation of the Remuneration Policy in the Bank, which is then presented at the Bank’s General Meeting to all shareholders in order to assess whether the operation of the Remuneration Policy in force in the Bank is conducive to the development and security of the Bank’s operations.

The companies of the Bank’s Pekao Group have remuneration policies adapted to the size and specific nature of their business and remuneration principles.

There are three main motivational systems at the Bank: The variable remuneration system for the Management Staff, the Management by Objectives (MBO) system and the system based on the provisions of the Company’s Collective Bargaining Agreement, which is based on a quarterly bonus and an incentive bonus.

The top management is covered by a variable remuneration system dedicated to people with a significant impact on the Bank’s risk profile. The purpose of the system is to support the implementation of the Bank’s strategy and to limit excessive risk and conflicts of interest. Under the scheme, a participant may receive variable remuneration based on a bonus pool concept. The system provides comprehensive performance measurement at the individual level, organizational unit level and the results of the entire Bank, including the participant’s compliance with the law and standards adopted by the Bank and risk assessment. In order to strengthen the care for building the Bank’s sustainable value in the long term, under the system, at least 50% of the bonus is realized in phantom shares based on the value of the Bank’s shares, and at least 40% of the bonus is deferred and paid after the end of the assessment period for which it is due.

The system of variable remuneration components is developed by the Human Resources Division with the involvement and participation of other organizational units of the Bank. This is to ensure compliance with regulations, the Bank’s Articles of Association and ethical or other standards of conduct applicable to the Bank, such that legal, compliance and reputation risks mostly related to customer relationships are properly controlled and managed.

The variable remuneration systems implemented in the Bank’s subsidiaries have analogous patterns of allocating remuneration to cash and financial instruments, taking into account the general provisions and guidelines of market regulators regarding the sectors in which the companies operate.

The MBO system covers employees employed under managerial contracts and applies in particular to sales positions and managerial positions having a significant impact on the achievement of the Bank’s planned commercial objectives. Under the MBO system, employees are given individual goals to achieve, which are based on the financial plan adopted for the year and the Bank’s key objectives. The amount of the annual bonus depends on the level of performance of these tasks as well as the result achieved by the Bank. Sales employees, cyclically in each quarter, can receive an advance payment towards the annual bonus in the implementation of the set goals.

The system based on the provisions of the Company Collective Bargaining Agreement (ZUZP) applies to all employees who are covered by it. Pursuant to the provisions of the Collective Bargaining Agreement, the basis of the system is a quarterly bonus, which is discretionary in nature and its amount depends on the assessment of the employee’s performance and the level of involvement and results achieved by the Bank in a given year, as well as an incentive award, which is granted for special achievements in professional work. In 2021, there were guidelines for variable remuneration, i.e., quarterly bonuses for sales network employees covered by the Collective Bargaining Agreement, which take into account both performance and quality targets.

In fulfilment of the obligation referred to in Article 9ca (5)(1) of the Banking Law Act of August 29, 1997, the Bank provides the PFSA with information for 2021 on the gender pay gap, using the ratio of the average remuneration of women to the average remuneration of men based on the GRI 405-2 reporting standard on the basis of the headcount as at December 31, 2021, based on the base salary as at December 31, 2021, and taking into account those classified as active and employed more than 0.1 FTE as at December 31, 2021:

• the gender pay gap for the entire Bank, understood as the ratio of the average remuneration of women to the average remuneration of men working at the Bank, is 37.9% for the total remuneration;
• the gender pay gap, calculated as a weighted average for employee subgroups, taking into account job levels, business lines and work at the Bank’s headquarters or in the network is 8.4% for total remuneration;
• the share of women in employment is 70.8%

The Bank respects employees’ freedom of association and maintains a dialogue with trade union organizations based on respect for the legitimate interests of the parties. The Bank documents social dialogue and provides trade union organizations with dedicated intranet pages for communication with employees.

In 2021, the Bank’s cooperation with trade union organizations with regard to consultations, negotiations and agreements was carried out in accordance with the procedure and principles laid down in the Labour Law, respecting the interests of the parties and the principles of social dialogue – 32 meetings were held between the Bank and trade union organizations. Meetings were held in-person as well as, due to the COVID-19 pandemic announcement, via teleconference. The topics of the meetings were mainly negotiations and agreements resulting from the intra-company labour law and generally binding regulations, changes in the intra-company labour law, agreements on the use of the company’s social benefits fund and other topics related to collective employee rights.

Additionally, in 2021, the Bank consulted with trade union organizations on the intention to carry out collective redundancies pursuant to Art. 2 of the Act of March 13, 2003 on special rules for terminating employment relationships with employees for reasons not related to employees. On March 23, 2021, the Bank entered into an agreement with seven trade unions operating at the Bank, setting out the principles of group layoffs. One of the Trade Unions did not sign up to this agreement. The parties to the agreement agreed, among other things, on the criteria for selecting employees whose employment contracts were terminated and whose terms of employment were changed, the terms of severance pay and additional benefits, and the scope of the assistance program for the dismissed employees.

It was also agreed that the group layoffs would cover, with respect to termination of employment contracts, a maximum of 1,110 employees and with respect to changes in employment conditions, a maximum of 1,250 employees of the Bank until June 30, 2021.

In 2021, there were three collective labour disputes initiated in 2016, 2019 and 2021 by one of the trade unions operating with the Bank, and a collective dispute initiated in 2021 by the other trade unions operating at the Bank.

Trade union organizations may publish their newsletters and information on important employee matters, including dialogue with the employer, on the Bank’s intranet sites.

In its mutual relations with the Trade Unions, the Bank was guided by the principle of good faith in developing the best collective labour law solutions for both employees and the Bank. The right to freedom of association and collective bargaining is not violated or threatened to be violated at any Pekao Group facility or location.

On February 22, 2021, pursuant to the Act of April 7, 2006 on informing employees and conducting consultations with them, the Bank’s employees in the second round of general elections elected Members of the Employee Council for the term of office of 2021-2025.

A total of 10 meetings/teleconferences were held with the Employee Council in 2021, which included consultation on the intention to make group layoffs in 2021, organizational changes in the Bank’s structure, and amendments to the Regulations. The Employee Council has an available intranet page where it publishes its messages addressed to the Bank’s employees.

The effect of caring for the formation of high quality principles of social coexistence in the workplace, as referred to in Article 94 point. 10 of the Labor Code, there is a function of the Ombudsperson for the Charter of Principles, which operates on the basis of Principles and mode of operation of the Principles Charter Ombudsperson when considering reports of the Bank’s employees for a breach of the Principle Charter value.

Employees may report to the Ombudsperson if they observe or experience personal behaviour inconsistent with the principles of social coexistence. The Ombudsperson is a shop steward for employees because he or she is bound by confidentiality and discretion. The Ombudsperson’s job is to help solve problems resulting from violations of values. Upon receipt of a notification, the Ombudsperson takes appropriate action to reconcile the conflicting parties and repair the relationship, determine the further course of action and its implications for the future.

The Bank has in force an Anti-harassment policy of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter: „Anti-harassment policy”). This regulation sets out the rules for counteracting actions and behaviours indicating harassment. In addition, the „Anti-Harassment Policy” is designed to support the implementation of labour laws regarding the duty to prevent harassment. The Bank shall in no way tolerate any actions or behaviour of harassment nature towards employees (including manifestations of sexual harassment), and perpetrators thereof shall be immediately subjected to appropriate consequences. According to the provisions of the „Anti-Harassment Policy”, each report is reviewed by the Anti-Harassment Committee, a collegial body appointed by the employer to investigate complaints of harassment. Some of the Bank’s subsidiaries have developed internal procedures regulating the issues of counteracting harassment, including Pekao Bank Hipoteczny S.A., Pekao Investment Banking S.A., Pekao TFI S.A. and Pekao Financial Services Sp. z o.o. In 2021, no cases of discrimination were recorded at the Bank and the Pekao Group’s companies.