Country Guides

Czech Republic

Quick Find

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Capital

Prague

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Language

Czech

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Remote workers

373,312

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Currency

Kč Czech Koruna (CZK)

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Working hours

40 hours per week

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Public holidays

13 days per year

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Minimum monthly salary

CZK 20,800

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Tax year

Jan 1 - Dec 31

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Date format

DD/MM/YYYY

Misclassification penalties

Fines between CZK 50,000 and CZK 10,000,000, plus retroactive employment tax, health insurance, and social security contributions, including a duty of payment of overhead surcharges, related interests, and sanctions.

Fun fact

The Czech Republic is one of the least religious countries in the world

Employer contributions

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    Employer tax: 34%
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    Social insurance: 25%
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    Health insurance: 9%

Employee contributions

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    Employee tax: 26.6%-34.6%
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    Social insurance: 6.5%
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    Health insurance: 4.5%
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    Sickness insurance: 0.6%

Income tax

Gross income: Up to CZK 1,676,052

Tax rate: 15%

Gross income: Over CZK 1,676,052

Tax rate: 23%

Looking for a quick cost estimate?

Use our calculator to understand what are all the employment costs you have to consider in the Czech Republic.

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Employer of Record in the Czech Republic

What is an EOR?

An Employer of Record (requiring a temp agency licence in Czech Republic) is the legal employer of a worker in Czech Republic. As such, the temp agency takes care of all compliance aspects of employment, including payroll, taxes, statutory benefits, employment contracts and more.

EOR responsibilities

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    Ensuring their employment is compliant with local employment laws
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    Processing local payroll
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    Filing employment related taxes and returns
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    Issuing payslips to the employee
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    Distributing salary payments

How it works

  • Company

    Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

  • Boundless

    Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

  • Employee

    The third party to the agreement, the employee, fulfils all of their obligations as a worker for the company.

Statutory benefits in the Czech Republic

  • Pension

    Employers and employees must contribute to the compulsory pension benefit administered by the Czech Administration of Social Security (CSSZ).

  • Unemployment insurance

    Individuals seeking a job are entitled to unemployment benefits from the social security authorities, for up to five months.

Common non-mandatory benefits in the Czech Republic

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    Additional days off
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    Meal vouchers
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    Public transportation allowance
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    Work flexibility
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    Sports and cultural activities support
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    Supplementary pension
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    Supplementary health insurance
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    Language classes
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    Bonuses
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Written employment contract signed by both the employer and the employee

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Payslip

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Equal treatment

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Reasonable accommodation

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Whistleblower protection

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Health & Safety

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Unemployment funds

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Protection against dismissal

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Data protection

Paid time off

20 days + 13 public holidays

Sick leave

380 days. The first 14 calendar days of illness are paid by the employer; from the 15th day onwards, the Czech Republic Social Security benefit provides the coverage

Maternity leave

28 weeks for the birth or adoption of one child, 37 weeks for multiple births

Paternity leave

2 weeks

Parental leave

The length of parental leave is not stipulated in Czech employment law. However, an allowance is stipulated, which is CZK 350,000 (CZK 525,000 in case of multiple children). Since the Czech Republic is a member of the European Union, all Czech Republic employers have to make sure that employees get at least two months of parental leave.

Non-compete

Non-competition clauses are valid and regulated by the Labour Code in the Czech Republic only if adherence to them can be justly required from the employee with regard to the nature of information, knowledge, and operational and technological know-how that the employee acquired during the employment relationship — i.e., this applies to managerial and key employees only.

Probation

Probationary periods in Czech Republic are not mandatory, but they are very common for all levels of employment. For probationary periods to be valid, they must be specified in the employment agreement and agreed on before the commencement of work. They cannot last longer than four months (eight months for managerial roles).

Payment frequency

The most common payment frequency is monthly, although biweekly and weekly are also allowed.

Payday

Salaries are paid in the month following the performance of work, usually by the 15th of the following month, but it is up to the company to decide on a date (no later than by the end of the month following the month for which the employee became entitled to the remuneration).

At-will termination is not recognized in the Czech Republic. Instead, employers must have a valid and recognized reason to terminate an employee, which must be stated in writing, signed by the employer, delivered in person (preferably at the workplace), and respect the appropriate notice period. If it is not possible to deliver the notice in person at the workplace, the employer may deliver the notice wherever the employer finds the employee, or through a postal service provider, or by electronic means, if the employee has agreed to it (email, data box).

Upon termination, employers must de-register employees with the Social Security Administration and the Health Insurance company within eight days.

If a Czech Republic employer wants to terminate an employee who underperforms, they must first notify the employee about their unsatisfactory work result and give them a chance to improve their performance. If the employee underperforms again within 12 months of the disciplinary notice, the employer has a valid ground to terminate the employment.

The social security administration pays unemployment benefits to Czech Republic employees who are dismissed from work and are seeking a new job as long as they have made Social Security contributions for the last two years.

FAQs

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of how to employ a worker in Czech Republic, outlining the potential cons.

HQ country employment & payroll

While the person is in Czech Republic, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn’t legal in the long term. HQ payroll won’t be possible if the person is not a tax resident in the HQ country.

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Czech Republic and invoice for their work. There is no direct employment relationship.
Cons: In Czech Republic, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.

Direct local employer setup

The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

Partnering with an Employer of Record Czech Republic (temp agency licenced)

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The Employer of Record helps to hire and pay employees.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work.

Setting up a local company in the Czech Republic can be time-consuming. Furthermore, the time and monetary commitment increase on a monthly basis since payroll needs to be calculated and run every month, taxes filed, benefits extended, and changes of rules and regulations followed.

While many employers practice employing remote workers as independent contractors, it’s a bad practice. If an individual is giving their full and undivided attention to your company in Czech Republic, treating them as an independent contractor is a likely breach of Czech employment laws and of those in your country.
Your company could be liable for fines for owed holiday pay, sick pay, social welfare payments, paternity benefits, maternity benefits, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.

When you hire employees in Czech Republic, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with local employment law in Czech Republic is fundamental for the correct running of your business – not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

As with every other country, there are certain costs associated with employing a worker in Czech Republic that come on top of the gross salary you are offering. A Czech Republic employer must contribute to social insurance, which covers pension, unemployment benefits and sickness, as well as health insurance. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

In Czech Republic, the model for employing a worker on behalf of another requires a temp agency licence. Employing someone through this temp agency means that Boundless is the legal employer of the individual, as far as the Czech government, tax, and employment authorities are concerned. We are responsible for:

  • informing you about any pre-employment requirements
  • ensuring their employment is compliant with Czech employment law
  • informing you about the length of the maternity leave, paternity leave, public holidays, illness benefits, medical benefits
  • providing a locally compliant employment contract
  • processing local payroll
  • filing employment-related tax returns
  • issuing payslips to the employee
  • distributing salary payments
  • payments to the local tax authorities

Customers that work with a temp agency for employment purposes in Czech Republic are responsible for:

  • sourcing and recruiting their own workers
  • managing the employee’s day-to-day work load
  • contributing to the personal / professional development of the employee through their work
  • following any guidance we give on employment and HR best practices or legal obligations in Czech Republic, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
  • ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Boundless as the Employer of Record Czech Republic (temp agency) files all pertinent taxes and social contributions as they relate to the compliant employment of an individual in their home country.

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Czech Republic. They ensure the Czech employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Czech Republic, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.
Boundless ensures compliance with Czech-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Any new employee that is locally employed through a temp agency gets full employment rights and benefits as specified in Czech employment law. They get a locally compliant employment contract, statutory maternity leave, annual leave, illness benefits, any relevant tax credit, and many more. All Czech-based employees receive healthcare through the public healthcare system.

Both Czech Republic employers and Czech Republic employees have to pay taxes. For employers, these include social insurance, which covers pension, unemployment benefits and sickness, as well as health insurance. For employees, these are social insurance and health insurance contributions, as well as income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator.

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