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General Guidelines

Termination procedure

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). The following are recognized termination reasons:

Employment termination doesn’t require any special approval, except in cases involving members of a trade union, which requires the approval of the trade union first. Terminations that don’t follow the correct procedure are considered invalid. Employers may withdraw the termination with the employee’s consent, which must be done in writing (the consent to withdraw the notice must also be in writing).

Upon termination, employers must de-register employees with the Social Security Administration and the Health Insurance company within eight days. Employees must receive their final pay on the nearest agreed payment date following the end of employment. Companies that do not follow the correct termination procedure may be brought to court by the dismissed employee within two months of the last day of work. If the courts rule that a company is guilty of wrongful termination, the termination may be overturned and the employee reinstated, with compensation for salary.

In the event that the court finds that the employment relationship has been terminated invalidly, the employer would have to pay the employee compensation for the period from the date of invalid termination of employment until the court’s decision on invalidity. In addition, following the decision on the invalidity of the dismissal, the employer would be obliged to reassign the employee and integrate them back into the workforce, in which case the employment relationship could be terminated again only under the same conditions as at present. Further, the employer would also pay the costs of the civil proceedings.

Disciplinary procedure

If a company 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.

Disciplinary procedure can also be applied by companies in case of systematic misconducts that do not give rise to immediate termination because they are not extremely serious. In such situations, companies can notify the employee in writing of the possibility of having their contract terminated if the employee breaches their work duty at least three times within six months.

Resignation

Employees can unilaterally terminate their employment for any reason, which does not need to be disclosed to their employer. The resignation must still be in writing and respect the appropriate notice period in order to be valid.

Notice period

In case of employment termination or resignation, employers and employees must respect the notice period of two months, which can be extended if agreed to in writing by both parties. Notice periods start on the first day of the month following the delivery of the notice and end on the last day of the relevant calendar month. The notice period must be the same for both employers and employees.

Pay in lieu of serving the notice period is not allowed, but garden leave is a common alternative.

Dismissal without notice is applicable only in situations involving a gross misconduct or criminal offence by the employee. On the other hand, employees do not have to give notice in case of health restrictions (which requires having a medical certificate stating that work poses a serious threat to the employee’s health), or if the employer has outstanding wage payments that are more than 15 days overdue.

Redundancy

Redundancy is applicable when one or more employees are terminated because the company is being liquidated, relocated or because the employee’s role becomes redundant as a result of the company’s restructuring or re-organisation.

Employees made redundant are entitled to severance pay based on the length of employment:

Employees who suffer a work accident, an occupational disease, or the threat of an occupational disease can also be dismissed based on redundancy, but such employees are entitled to a statutory redundancy pay of at least 12 times the employee’s average monthly salary. Severance pay is paid out by the employer on the nearest agreed payment date and is free of social and health insurance contributions. (Contributions are paid only if the severance pay was agreed on for a reason other than stipulated by the Labour Code.)

Before serving the notice of termination due to redundancy, the employer must adopt a decision on organisational changes and consult employee representatives on the notice. The notice must then be served so that the notice period ends on the effective date of the organisational changes. If the organisational changes take effect before the notice period ends, employees affected by the changes must be sent on garden leave and paid average earnings until the end of the notice period.

In the case of collective redundancies, employers must inform and consult employee representatives (or individual employees if there are no representatives) of the proposed collective dismissals at the latest 30 days before any notices of termination are given. Employers must also notify the Labour Office in writing of the collective redundancy, both 30 days before giving notices (initial report) and after a final decision on collective redundancies has been made (final report). Employment may be terminated by notice not earlier than 30 days after the final report has been delivered to the Labour Office.

Employee termination protection

Employees are protected from having their employment contract terminated during the following periods:

If an employee has been given notice before the start of the protection period so that the notice period should expire within the protection period, this protection period shall not be included in the notice period; the employment relationship shall terminate only upon the expiry of the remaining part of the notice period after the end of the protection period except when the employee informs their employer that they will not insist upon prolongation of their employment relationship.

The only exception is in situations where the company is shutting down, relocating, or transferring the employee, or the employee commits a gross misconduct, unless it concerns a pregnant female employee, a female employee on maternity leave, or a male or female employee on parental leave.

Unemployment funds

Individuals who are dismissed from work and are seeking a new job are entitled to unemployment benefits from the social security authorities if they have made Social Security contributions for the last two years. Regardless of the reason for the employment termination, individuals younger than 50 years of age are entitled to up to five months of unemployment benefits.

The unemployment benefits pay schedule is as follows:

The benefits amount is set at 45% for the entire period if the individual voluntarily and without a serious reason leaves their job, or if the termination is mutually agreed on by both the employer and the employee.The benefit is extended to individuals older than 50 years of age. Those aged 50 to 55 are entitled to 8 months of unemployment benefits, and those over the age of 55 are entitled to 11 months.

Holiday Entitlement in Czech Republic

Full-time employees are entitled to four weeks (20 days) of paid leave annually after four weeks of employment. The leave is accrued progressively in equal parts of 1/52 for each week worked. Leave should be availed in the year it is accrued, but employers and employees can agree to carry the unused leave over, but it must be used by the end of the subsequent year. Employees can be paid for unused leave only upon end of employment.

At least one part of the leave must be taken as a two-week block unless agreed differently by the employer and the employee. Unexcused absences can be deducted from the employee’s holiday entitlement. It is common for employers to give employees five weeks (25 days) off instead of the statutory minimum.

Bank holiday

There are 13 public holidays in the Czech Republic. If an employer requires an employee to work on a holiday, they are should double the wage for the day or a different day off (should be within three months).

Holidays are observed on the day on which they fall and are not moved to the closest weekday.

Czech Republic 2022 Holiday Calendar

DATEWEEKDAYHOLIDAY
1/1/2021SaturdayRestoration Day of the Independent Czech State
15/4/2021FridayGood Friday
18/4/2021MondayEaster Monday
1/5/2021SundayLabour Day
8/5/2021SundayLiberation Day
5/7/2021TuesdaySt Cyril and Methodius Day
6/7/2021WednesdayJan Hus Day
28/9/2021WednesdayCzech Statehood Day
28/10/2021FridayIndependence Day
17/11/2021ThursdayStruggle for Freedom and Democracy Day
24/12/2021SaturdayChristmas Eve
25/12/2021SundayChristmas Day
26/12/2021MondaySt. Stephen’s Day

Types of Leave in Czech Republic

Sick leave

Employees who fall ill are entitled to up to 380 calendar days of sick leave. The first 14 calendar days of illness are paid by the employer; from the 15th day onwards, the Social Security benefit provides the coverage.

Sick pay is 60% of the employee’s average pay for the first 30 days of incapacity (inclusive of the days the employer is responsible for), 66% from the 31st to the 60th day of incapacity, and 72% from the 61st day onwards. Illness is considered to be the time when the employee is temporarily incapable to work or in quarantine.

Employers have the right to check by themselves and/or hire a third party to check whether the employee complies with the illness regime imposed by the doctor, such as resting at home or recovering in the hospital.

Maternity leave

Mothers may choose to share their maternity leave with their partner (as long as both are employed) from the 7th week after the child’s birth. Employees benefit from additional job protection from the beginning of the pregnancy until one year after the maternity leave ends.

Paternity leave

Male employees are entitled to one week of paternity leave (two weeks starting in 2022) paid by the Social Security at a rate of 70% of the employee’s gross salary. The paternity leave must start within six weeks of the child’s birth and must be used all at once. In the case of foster care, the child must be under the age of seven for paternity leave to apply, and the leave must start at the beginning of the fostering period. Employees must have made contributions to the Social Security for 270 days in the past two years to be eligible to paternity leave. Employees cannot be terminated during the leave.

Mothers can choose to transfer the remainder of their maternity leave to the father after the child reaches seven weeks of age, and the father will receive parental pay during the time.

Adoption leave

Adoptive parents are entitled to the same maternity (22 weeks for a single birth, 31 weeks for multiple births) and paternity leaves and pay as biological parents.

Parental leave

Once the maternity and paternity leaves are exhausted, parents are entitled to take parental leave. The leave must take place before the child turns three years old (four years old if the employer agrees). Parents are given a joint parental allowance of CZK 300,000 for the entire period of the leave (CZK 450,000 in case of multiple children from the same pregnancy) regardless of how long they take the leave for. Adoptive parents and guardians are entitled to the same benefit. Upon employees’ return, companies must give them the same position that they had before going on leave.

Parents are free to decide how they would like to receive the parental allowance — as (1) a lump sum or (2) monthly instalments over a certain number of months. The beneficiary of parental benefit can alter the amount once every three months. The monthly benefit cannot exceed CZK 42,720 if parents have a higher assessment base based on their earnings.

Parents who have not contributed to the Social Security are eligible for a monthly amount of parental allowance up to CZK 10,000.

Carer's leave

Employees are entitled to time off, known as attendance allowance, when unable to work due to their taking care of a sick family member in the same household or a healthy child under the age of 10 because their school is closed. The leave is paid by the Social Security at a rate of 60% of the employee’s gross salary for the first 16 days for single-parent employees who are caring for a child up to the age of 16, and for 9 days in all other cases.
Employees are not eligible for attendance allowance if their partner is receiving maternity benefits or the parental allowance for the child concerned. An exception is granted if the other parent is sick and cannot care for the child.

In case of long-term attendance to a family member in the same household, employees are entitled to long-term attendance allowance and require a written consent from the person who is cared for. Long-term attendance allowance happens when a family member spends at least 7 days in the hospital and requires daycare for at least 30 days more. The benefit pay equals 60% of their gross salary and lasts for up to 90 calendar days. Claims can be renewed after one year.

To qualify for the leave, the employee must have made contributions to the Social Security for at least 90 days in the four months preceding the need for the leave.

Childcare leave

Employees caring for a child under the age of 15 or another dependent are entitled to a request for short working days or a different reasonable adjustment to their working hours from their employers, and employers must comply with the request unless there is a serious operational reason that prevents them from doing so.

Further, employers must get prior consent from pregnant employees, female employees, and male employees taking care of children of up to the age of eight may before asking them to go on a business trip outside the municipality (locality) of their workplace or home address. They can be transferred to another location (municipality) only if they requested that.

This similarly applies to a single female employee or a single male employee taking care of a child until they reach the age of 15, and further to an employee who proves that they, mostly on their own, take long-term care of a person considered dependent on another individual’s assistance.

Civil duty leave

Employees are entitled to unpaid leave to fulfil their civic duty.

Service leave

Employees who choose to take part in the military service training are entitled to service leave. The leave is paid by the military authorities.

Personal leave

Employees are entitled to paid time off during certain important life events, as listed below:

The following situations are also seen as time off from work:

General Employee Pay Regulations in Czech Republic

Minimum wage 

There are eight different paygrade levels of guaranteed minimum wage according to an individual’s qualification, responsibilities, and strenuousness. As of 2021, the minimum gross salary ranges from CZK 15,200 monthly (for unqualified work) to CZK 30,400 (for managerial or scientific roles). Salaries are always rounded to whole crowns.

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).

General

Standard hours

Typical working hours are Monday through Friday, 9 a.m. to 6 p.m., with one hour of unpaid break for lunch.

The number of weekly working hours is 40 (8 hours per day, five days a week). Hours worked beyond this quota must be paid for as overtime.

Maximum hours

Employees who work a consistent shift can work for a maximum of 40 hours weekly. Employees in regimes involving multiple shifts that may overlap within 24 hours can work a maximum of 37.5 ( in multiple shift of continuously) or 38.75 (two shifts) hours weekly. Daily shifts cannot exceed 12 hours.

Opt-out option

It is not possible to opt out of the maximum working hours established by the Czech Labour Code. However, it can be agreed in the employment contract that the remuneration for overtime work is already included in the salary, as long as such agreement respects the minimum wage and the maximum of overtime allowed (8 hours weekly for managerial roles within 26 consecutive weeks; 150 hours yearly for other employees).

Overtime compensation

Work performed beyond the 40 hours weekly is considered overtime. Employers can require employees to work overtime in only exceptional circumstances. Unless agreed otherwise, overtime cannot exceed 8 hours in a week within 26 consecutive weeks or 150 hours in a calendar year. With the employee’s consent, overtime can exceed the annual limit as long as it doesn’t average more than 8 hours weekly over a consecutive period of 26 weeks, which amounts to approximately 416 hours per year.

Employees working overtime are entitled to an additional 25% of their wage. Employers and employees can also agree to provide additional time off in lieu of compensation for overtime. Employees working night shifts and on weekends are entitled to an additional 10% of their wage, while those working on a public holiday are entitled to an additional 100% of their wage or a compensatory day off.

Break rights

Employees who work continuously for 6 hours are entitled to an unpaid daily break of at least 30 minutes. Employees are also entitled to an uninterrupted rest of at least 11 hours between shifts within each consecutive 24 hours (which can be shortened to 8 hours in certain circumstances) and an uninterrupted weekly rest of at least 35 hours within every seven calendar days (which can be shortened to 24 hours in certain circumstances). If work permits, the weekly

Night workers

Night work is any work performed between 10 p.m. and 6 a.m. Employees working night shifts are entitled to an additional 10% of their wage for the hours of work performed at night (unless agreed otherwise). Night shifts cannot exceed 8 hours in a period of 24 consecutive hours.

Time Tracking Obligations

Companies must keep track of every employee’s worked hours, including overtime, night work, and work emergencies. The record must contain the start and end hours of work.

At the request of the employee, the employer must allow the employee to check the records of working hours and the renumeration account and to obtain statements or duplicates at the expense of the employer. Violation of the obligation to keep records can be sanctioned by a fine of up to CZK 400,000.

Penalties:

Companies that are found guilty of not tracking or keeping records of employees’ overtime hours can be fined up to CZK 400,000 for the offence, with penalties of up to CZK 2,000,000 if the permitted overtime is exceeded.

The Labour Code does not have any specific provisions on home office and on employee’s working from home; therefore, all of the stipulations of the Labour Code and related obligations apply to such work.
The only exception is Section 317 of the Labour Code, stipulating that if the employer and the employee agree that the employee does not work at the employer’s workplace and that they have their own schedule, the following does not apply to the performance of such work:

The parties can reach a teleworking or homeworking agreement by mutual agreement only and should do it in writing while further specifying the conditions. Employers should be also mindful of setting objective and fair eligibility criteria for home working to avoid potential unequal treatment claims.

Although those are not mandatory, companies are encouraged to also create internal policies regarding (1) health and safety of home-based workers and (2) regulations on data protection for remote workers.

Work from home (WFH)

Companies with employees working from home must reflect the work set-up and location on the employee’s contract. If the employee that is already working for the company simply changes job locations from the office to home, their employer can create a separate legal framework covering the terms and conditions for home working. The following terms and conditions have to be included in the document:

Employers have a few additional responsibilities with WFH set-up:

Since calculating utility and depreciation costs may be difficult, the parties can also agree on a fixed (monthly) regular payment or allowance to cover all expenses. Employer’s reimbursement is tax deductible from corporate income tax.

For employees working from home, it’s the employer’s responsibility to set their working hours (unless the employment agreement is under Section 317). There may be a level of flexibility in that, and the employer is free to suggest core hours or something similar. However, to avoid the obligation to pay extra for work performed on weekends, at night, and/or on holidays, the employer should instruct the employees not to distribute flexible working hours to those periods. The employer should also agree with the employee on the rules specifying time tracking and reporting, as it is mandatory for employers to have this information on employees.

Employees are also responsible for quantifying and justifying any costs incurred at their home office in order to get a reimbursement from the employer for their expenses, which is not subject to personal income tax. If the employer provides a lump sum allowance instead, the amount is subject to taxation.

Health & safety at home

The same health and safety regulations imposed on employers with office workers are applicable in the work-from-home scenario. Employers are responsible for occupational health and safety and are liable in the event of an injury that happens while work is performed from home.
Here are some of the responsibilities that companies employing remote workers have:

Employers may choose to visit the employee’s home office to perform the occupational health and safety compliance checks, which may often be impractical. In order to do so, employers must first obtain the employee’s consent. It is therefore important to agree with the home-based employee on the way compliance with health and safety requirements will be ensured. A suitable solution may be a workstation assessment performed by the employee, a confirmation that their workplace meets the health and safety requirements, or an agreement specifying the terms under which the employer may enter the employee’s workplace for the health and safety check.

Employees who suffer an injury while performing work tasks from home have the duty to report the accident to their employer and must allow the employer to carry out an investigation. The home office should also be equipped with a first aid kit paid for by the employer.

Security of information

The same data protection rules that apply at the office apply at the home office. Employers are responsible for ensuring that the company’s, their clients’, and their employees’ data is protected and secure at all times, regardless of the place of work. Employers should pay even closer attention to situations when employees use their own equipment for work and take documents out of the office.

Workspace Guidelines

Employers must take all reasonable steps to ensure the employee’s workstation is correctly set up, safe, comfortable, and easy to use in order to reduce potential injuries, while the employee must also care for their own health and safety and follow any reasonable policies or directions their employer gives them.
To ensure the employee’s workstation set-up is safe, employers should do the following:

While working remotely, workers must inform employers of any work-related incidents or injuries that occur.
An appropriate workstation will include the following:

Working conditions

Employees working from home are entitled to the same statutory rights as employees who go to the company’s office (unless the employment agreement is under Section 317, and employees are not entitled to overtime).

Employers are allowed to use various methods to monitor their employees, such as installing video cameras to supervise remote employees or installing GPS in company cars. However, companies must protect and respect the privacy of their employees and should conduct this type of monitoring in only certain circumstances:

Employment contract

The Labour Code requires employers to provide employees with a written employment contract in order for the employment to be valid. Employment contracts can be in any language and must be agreed before the commencement of work. Employers should give a copy to the employee and keep a copy for themselves.
Employment contracts must cover the following details:

It’s not mandatory to include the employee’s remuneration in the contract (although the amount must be agreed on before the beginning of work). If not included, there has to be a separate agreement stating the monthly gross income in Czech Koruna. Employment agreements that don’t specify the rights and obligations of employees must be presented to them in writing within a month of commencing employment, which includes any data changes and the following details concerning the employment:

On the commencement of employment, the employee must be acquainted with the statutory provisions and other rules concerning the safeguarding of occupational safety and health, which he/she must observe during performance of work. The employee must also be acquainted with the collective agreement and internal regulations.
The consent may be required only exceptionally, such as in the case when the employer wishes to process personal data that isn’t necessary to process in order to fulfil legal or contractual obligations.The conditions for termination, the employer’s obligation to assign work to the employee and ensure health and safety at work are all implied terms in every employment contract, which don’t need to be spelled out to be biding.

Terms and conditions of an employment contract may be amended in writing only and by mutual agreement between the employer and the employee. Companies that don’t provide employees with an employment contract in writing may be subject to a fine of up to CZK 10,000,000 by the Czech labour inspection authorities.

Payslip

Employees are entitled to receive an itemised pay slip by the end of the following month after the work was carried out, stating their pay rate, grade, and pay date. Pay slips must also break down any deductions from the employee’s pay. The pay slip can be delivered in a digital or physical form, and wages must be rounded up.
In the absence of an agreement, wages must be paid at the workplace during working hours.

Anti-discrimination

Employees have the right to be protected from discrimination at work and during all stages of the employment cycle, from interviews to termination. If an employee brings the discrimination concern to the court, the burden of proof passes exclusively to the employer.

Employees are protected from being discriminated based on gender; racial, social, or ethnic origin; nationality; age; sexual orientation; marital and family status or obligations to the family; union membership; language; property; religious and political beliefs; and physical or mental disability.

First, the employee can file a complaint, and the employer is obliged to discuss it with the employee. Otherwise, they’re exposed to the risk of a fine of up to CZK 400,000.

Subsequently, the employee may notify the labour inspection, and the labour inspection may impose a fine of up to CZK 1,000,000 on the employer, and up to CZK 500,000 in the case of discrimination in the field of a renumeration.

Equal treatment

All employees have the right to be treated equally at work with respect to the working conditions, regardless of gender, disability, or any other grounds for discrimination. Employers should give the same benefits, training, and promotion opportunities to all employees and pay the same for work of the same value and conditions.

Probation period

Probationary periods 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 three months (six months for managerial roles).

During this period, the employer can cancel the contract without being bound by dismissal protection laws.
For fixed-term contracts, the probationary period cannot be longer than half of the agreed employment period.

Reasonable accommodation

Employees with a disability have a right to reasonable accommodation of their workplace. Employers have the obligation to secure, at their own expense and by means of technical and organisational measures, the necessary adjustment of the working conditions, adjustment of workplaces, establishment of sheltered working sites, training or instruction of such employees and increase in their qualifications in the performance of their regular employment.

Whistleblower

There are no special regulations protecting whistle-blowers at the moment, but a recent European directive has been adopted, which must be implemented by the end of 2021. An employer must not put an employee at a disadvantage merely because they have lawfully claimed rights arising from the employment relationship. An employee who submits a genuinely held complaint in good faith cannot be dismissed or subjected to any detriment as a result of that action.

Business transfer

During a business transfer, employees are transferred automatically to the new employer and cannot be dismissed before or after the transfer. The rights and obligations of the employment relationship are automatically retained if:

a) the activity is performed after the transfer in the same or similar manner and scope;

b) the activity does not consist wholly or mainly in the supply of goods;

c) immediately prior to the transfer, there is a group of employees which was deliberately created by the employer for providing this activity;

d) the activity is not intended to be short-term or does not consist of a one-off task; and

e) property is transferred, or the right to use it, if such property is essential for the performance of this activity, or a substantial part of employees used by the current employer to perform the activity is taken over, if this activity depends substantially on employees, not on assets.

If all these are fulfilled, the new employer inherits the same responsibilities and must uphold the same employment conditions as stipulated on the employee’s employment agreement with the transferor, while the transfer has no legal consequence for the employee.

Employers must inform and consult with all employees being transferred directly, at least 30 days before the transfer takes place. In case of companies with trade unions or work councils, the employer must inform and consult with them instead (breaches lead to a fine of up to CZK 200,000). The legal, economic, and social consequences of the transfer must be discussed — together with the reasons, date of transfer, and the likely effect of the transfer on the workforce.

Employees who give their notice upon learning about the transfer must have their employment terminated at the latest on the day preceding the day when the transfer enters into effect. The employee may seek a determination at the court that the employment relationship was terminated on the grounds of considerable impairment of working conditions in connection with the transfer. In such a case, the employee may be awarded with severance payment in the same amount as in the case of notice due to organisational changes.

Unemployment funds

Individuals who are dismissed from work (except in cases of gross misconduct) and are seeking a new job are entitled to unemployment benefits from the social security authorities if they have made Social Security contributions for a minimum of 12 months in the last two years. Regardless of the reason for the employment termination, individuals younger than 50 years of age are entitled to up to 5 months of unemployment benefits. Those aged 50 to 55 are entitled to 8 months of unemployment benefits, and those over 55 are entitled to 11 months.

Data protection

The European General Data Protection Regulation (GDPR) rules apply in the Czech Republic, granting the right to privacy and the right to determine who is to receive personal data.

The employer may process personal data for

  1. the purposes of the employment relationship if it is necessary for the decision on whether to establish an employment relationship,
  2. the performance or termination of the employment relationship, or
  3. compliance with information duties regarding employee representatives under statutory law, a collective bargaining agreement, or a works agreement. Any further use of personal data requires the employee’s direct consent.

Employers controlling data have the duty to keep records of their data-processing activities, particularly with respect to personal data processed systematically and with respect to all employees’ personal data. Companies must also inform employees about the processing taking place and secure the processed data by implementing appropriate technical and organisational measures depending on the type of data processed and its extent.

Companies can transfer personal data within the members of the European Union and the European Economic Area, which adhere to the GDPR rules, if they have legal reasons to do so. For data to be transferred outside these parameters, the recipient of the data must ensure an adequate level of protection.

Time off

Employees are entitled to paid time off either by the employer or the social security authorities (see the Leave section for more details) in different circumstances:

Protection against dismissal

Employers need to have a valid and recognised reason to terminate the employment of an employee. The reasons recognized by the Labour Code are as follows:

Protected employees

Some employees are protected from being dismissed during certain periods of their lives, as follows:

Health and safety

Employers have the duty to care for the employees’ health and safety at work, regardless of whether the employee works in office or from home. Companies have the following duties to comply with:

Non-competition clause

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. Employers can impose in writing a non-competition clause that prevents employees from engaging in a gainful activity in a similar industry for a certain period after termination of employment. Non-competition clauses are valid for a maximum of one year from the end of employment, and employees are entitled to employer-provided compensation of at least half of the employee’s average monthly salary for each month of adhering to the clause.

Employees may engage in a gainful activity similar to the business activities of the employer during employment only with the company’s prior written approval. The employer may withdraw from a non-compete agreement only during the existence of the employment relationship. The employee may terminate the non-compete agreement if the employer fails them with compensation within 15 days of its due date. In that case, the agreement ceases to be valid on the first day of the calendar month following the delivery of the notice.

A penalty can be applied in case an employee breaches the non-competition clause. The amount of the contractual penalty must be reasonable in connection with the conditions of the non-competition clause. Generally, the penalty will be considered reasonable where it equals a maximum of the amount of the total remuneration paid for not competing multiplied by two.

Severance pay

Employees are entitled to severance pay in situations where the company is being liquidated or relocated, or because the employee’s role becomes redundant as a result of the company’s re-organisation.

Severance pay is based on the length of employment. Employees with less than one year of employment are entitled to one month’s average salary; those with one to two years of employment are entitled to two months; those with more than two years of employment are entitled to three months.

Employees who suffer a work accident, get an occupational disease, or are exposed to the threat of an occupational disease are also entitled to severance pay. The pay must be at least 12 times the employee’s average month salary. Severance pay is paid out by the employer on the nearest agreed payment date and doesn’t include any social and health insurance contribution.

Intellectual Property

While companies have the economic rights to their employees’ work created during employment, employees retain personal rights to their creations. It is, however, presumed that the employee has given their consent to the work being altered, made public, or marketed under the employer’s name. It is recommended to include consent in the employment contract so that it cannot be challenged by the employee.

Employees are entitled to additional remuneration in situations where the salary paid to the employee responsible for the creation is obviously disproportionate to the profit gained from using rights to the employee’s work.

In the case of inventions, if an inventor has made an invention as part of their work deriving from an employment relationship, the right to the patent passes to the employer. The employee must notify the employer and hand over the relevant documents to the employer, and the employer then has three months to exercise their right to the patent. Where the employer does not claim the right to the patent, the right reverts to the inventor. Any inventor who has made an invention under an employment relationship is entitled, where the employer claims the right to the patent, to appropriate remuneration from the employer for that patent right.

Mandatory Employee Benefits in Czech Republic

In the Czech Republic, mandatory benefits are those covered under the Social Security Insurance, funded by contributions made during employment by employers and employees.

Retirement pension

Employers and employees must contribute into the compulsory pension benefit administered by the Czech Administration of Social Security (CSSZ). Employers contribute 21.5% of the employee’s gross remuneration (part of the 25% employers contribute into Social Security), while employees contribute 6.5%.

There are two parts to the monthly retirement pension. The first is a monthly payment of 10% of the average wage (around CZK 1,700). The second element is earnings related, which is calculated on 1.5% of the personal assessment base per year of coverage. People who are not permanent residents of the Czech Republic are still entitled to a pension, which corresponds to the time they spent in employment in the country.

Unemployment insurance

Individuals seeking a job are entitled to unemployment benefits from the social security authorities, funded by employer and employee contributions. Regardless of the reason for the employment termination, individuals younger than 50 years of age are entitled to up to five months of unemployment benefits.The unemployment benefits pay schedule is as follows:

The benefits are extended to individuals older than 50 years of age. Those aged 50 to 55 are entitled to 8 months of unemployment benefits, and those over 55 are entitled to 11 months. The benefits amount is set at 45% for the entire period.

Non-Mandatory Employee Benefits in Czech Republic

Additional time off

It’s very common for companies to offer one week (5 days) of additional time off above the statutory four weeks (20 days); some even offer company-wide days off.

Meal vouchers

While only large companies provide on-site canteens for employees, most employers in the Czech Republic offer meal vouchers instead. Many employers cover meal vouchers, often up to a 100%. However, only 55% is tax deductible (capped at CZK 75.60 per shift). No taxation for the employee. Some companies cover 55% of the meal voucher, while the remaining 45% is covered by employees.

As of 2021, employers may provide a cash catering allowance, which is tax deductible up to a limit of CZK 75.60 per work shift. This benefit is being introduced as alternative forms of tax-advantaged catering support.

Public transportation allowance

Employers in larger cities often cover an annual public transportation pass for employees who commute to work.

Work flexibility

Many tech employers in the Czech Republic give employees time and location flexibility, either fully async or with flexibility respecting core hours. Some companies are fully remote, while others implement a hybrid model where employees go to the office once to thrice a week. Many employers who allow employees to work from home often provide employees with the home office workstation.

Sports and cultural activities support

Most employers in the Czech Republic provide employees with an annual stipend to be spent on cultural and sports activities. The stipend is usually CZK 2,400 per year and kicks in after the probationary period is completed. Some employers provide gym memberships to employees, especially in companies where the average employee age is low.

Stipends

Many tech companies in the Czech Republic give employees a monthly stipend of CZK 2,400 to be spent on their benefits of choice. Some companies have various benefits that employees can choose from.

Training

Most tech companies assign an annual budget to provide a certain level of training and education for employees to contribute to their personal development and growth. Some employers fully cover the cost of training and certifications in the tech sector, while others contribute to further their employees’ education.

Language classes

Multinational companies often provide expats with Czech language classes, and employees in need of a foreign language at work with language classes.

Bonuses

Annual bonuses are becoming more common in tech companies, usually dependent on how the company performs for the year. Some bonuses go up to an additional month’s wage, also known as the 13th salary.

Supplementary pension

Some tech and large companies provide employees with a supplementary retirement pension. Contribution amounts are at the discretion of the employer, but it’s common to contribute 1.5 times the employee’s contribution, capped at 3% of the employee’s salary. Employer contributions are capped at CZK 50,000 annually, fully tax deductible for the employer and aren’t considered a benefit-in-kind (BIK) for the employee.

Life and accident insurance

Large multinationals and some tech companies provide group insurance coverage in case of death from any cause, Accidental death and dismemberment (AD&D), and total permanent disability. Typically, the amount of insurance is once or twice the employee’s annual salary. The premium for the benefit is paid by the employer and is considered taxable income for employees.

Supplementary health insurance

The Czech public health care system offers a comprehensive coverage, which makes supplementary health insurance uncommon.

Employer Contributions in Czech Republic

Social insurance

Employers must make monthly contributions into the social security insurance of each employee at a rate of 25% of their gross salary, including benefits and allowances. The social security system funds pension (21.5%), unemployment benefits (1.2%), and sickness (2.3%).The maximum annual cap for the assessment base for calculation of contributions into the social security system is 48 multiplied by the average monthly wage per year (CZK 1,701,168 for 2021).

Health insurance

Employers must also make monthly contributions to the health insurance for each employee, at a rate of 9% of the employee’s gross salary, including benefits and allowances, with no cap existing. Minimum monthly base for employees is CZK 15,200 in 2021. This applies typically to employees with low or no renumeration, usually on a sabbatical.

Employee Contributions in Czech Republic

Residents of the Czech Republic are subject to tax on their worldwide income, whereas non-residents are subject to tax on the income generated only within the country. To be considered a resident, a person must spend more than 183 days a year in the country or have a home in the Czech Republic, in which they intend to stay permanently. According to Double Taxation Treaties, the permanent home available to the individual is essential. If the individual has a permanent home in both countries, DTT gives preference to the state with which the personal and economic relations are closer. Then the application of the habitual abode (183 days) applies. The tax domicile may change during the year, immediately after moving to the Czech Republic, with no need to stay 183 days in the Czech Republic.

Income tax

As of 2021, individuals are taxed a progressive tax rate based on all their types of income combined, including employment and passive incomes such as capital gains and rental income. Employers must withhold each employee’s employment income tax monthly and remit it to the tax authorities. Couples cannot file their income tax jointly.

Czech income tax 2021

Monthly Gross IncomeProgressive Tax Rate (%)
Up to CZK 1,701,16815
Over CZK 1,701,16823

In the Czech Republic, individuals employed get tax credits instead of allowances. You can find more information in the Tax-Free Allowance section.

Social insurance

During payroll, employers withhold and remit the employee’s mandatory contributions to the social security insurance monthly. The social security system finances old-age pension, sickness, and unemployment benefits. Employees contribute at a rate of 6.5% of their gross salary, including benefits and allowances, capped at CZK 1,701,168 annually. The maximum annual assessment base of CZK 1,701,168 for 2021 applies.

Health insurance

Employers are also responsible for withholding and remitting the employee’s mandatory contributions to the health insurance monthly. Employees contribute at a rate of 4.5% of their gross salary, including benefits and allowances. No cap. However, the minimum monthly base of CZK 15,200 in 2021 applies.

Benefits in kind

Benefits in kind are taxable income, except for a few minor exceptions. Benefits in kind are valued at open-market values, although a fixed rate of 12% per year applies to cars specifically, regardless if it’s for business or personal use.The provision of a car for both business and private use is considered a gross taxable income that equals 1% of the purchase price monthly.

Travel expense reimbursement in excess of a fairly low statutory limit (determined by the length of the trip and varying between CZK 91 and CZK 259) is also a taxable benefit for the employee. Minimum statutory limits in 2021 are CZK 91 for local business trips 5–12 hours long, CZK 138 for trips 12–18 hours long, and CZK 217 for trips exceeding 18 hours per day. The amounts of CZK 91 – CZK 108 for local business trips 5–12 hours long, CZK 138 – CZK 167 for trips 12–18 hours long, and CZK 217֪–259 for trips exceeding 18 hours per day are tax exempt (no employment income tax and no social security/health insurance contributions) and tax-deductible costs for the employer.

Certain non-monetary educational, cultural, sporting, and health benefits are non-taxable, with an annual limit of CZK 20,000.

The 2021 minimum statutory limits are CZK 91 for local business trips 5–12 hours long, CZK 138 for trips 12–18 hours long, and CZK 217 for trips exceeding 18 hours per day. The amounts of CZK 91 – CZK 108 for local business trips 5–12 hours long, CZK 138 – CZK 167 for trips 12–18 hours long, and CZK 217 – CZK 259 for trips exceeding 18 hours per day are tax exempt (no employment income tax and no social security/health insurance contributions) and tax-deductible costs for the employer.

If an employer provides an employee with temporary accommodation, it’s not taxable up to CZK 3,500 per month as long as the arrangement is structured well. If however, the benefit comes as a cash allowance, it is taxable.

As of 2021, employers may provide tax-exempt cash catering allowance up to CZK 75.60 per work shift. This benefit comes in addition to already existing meal vouchers or a company canteen as alternative forms of tax-advantaged catering support.

Tax-Free Allowance in Czech Republic

Tax credits and incentives

Unlike most countries, the Czech Republic has adopted a system of tax credits rather than tax-free allowances, as follows (2021):

These tax credits lower the tax liability. Tax deductions modify the tax base only (reducing the liability by 15%–23% of the deduction only).

Employment expenses

No deductions are provided for expenses connected to taxable income from employment. However, reimbursements for travel expenses are exempt from tax, as long as they don’t exceed certain limits.

Personal deductions

Charitable contributions

Donations that finance science, education, culture, etc., are deductible for an individual if it’s between 2% (or minimum CZK 1,000) and 15% of the tax base (for 2021, the max limit was temporarily increased to 30% of the tax base).
Donating blood in the Czech Republic is also seen as a form of charitable donation. It’s valued at CZK 3,000 per collection.

Mortgage interest deduction

A deduction for the interest paid on mortgages is applicable under several strict conditions and is up to CZK 150,000 per year for housing needs “procured” after 1 January 2021, calculated on a monthly basis.

Life insurance premiums

A deduction for private contributions made on life insurance is applicable under certain conditions and is up to CZK 24,000 per year.

Private pension insurance

A deduction for private contributions made to a private pension insurance fund is applicable under certain conditions and is up to CZK 24,000 per year.

Overview

CURRENCY
Czech Koruna (CZK)
WORKING HOURS
40 hours / week
PUBLIC/BANK HOLIDAYS
13 National Holidays
CAPITAL
Prague
LANGUAGE
Czech
REMOTE WORKERS
372,312
MINIMUM monthly SALARY
CZK 16,200
TAX YEAR
1 January - 31 December
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.
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