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

Taxes

Employer tax:

34%

Social insurance: 25%

Health insurance 9%

Employee tax:

26.6%-34.6%

Social insurance 6.5%

Health insurance 4.5%

Sickness insurance 0.6%

Income tax:


GROSS INCOME	PROGRESSIVE TAX RATE
Up to CZK 1,582,812	15%
Over CZK 1,582,812	23%

Czech Republic Employment Cost Calculator

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

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record in Czech Republic

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.

the employer of Record is responsible for:

Ensuring their employment is compliant with local employment laws

Processing local payroll

Filing employment related taxes and returns

Issuing payslips to the employee

Distributing salary payments

How the employment model 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 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 Czech Republic

Additional days off

Meal vouchers

Public transportation allowance

Work flexibility

Sports and cultural activities support

Supplementary pension

Supplementary health insurance

Language classes

Bonuses

Employee Rights and Protections Czech Republic

Written employment contract signed by both the employer and the employee

Payslip

Equal treatment

Reasonable accommodation

Whistleblower protection

Health & Safety

Unemployment funds

Protection against dismissal

Data protection

Leave

Paid time off: 20 days + 13 public holidays

Paternity: 2 weeks

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

Parental: The length of parental leave is not stipulated in Czech employment law. However, an allowance is stipulated, which is CZK 300,000 (CZK 450,000 in case of multiple children). Since the Czech Republic is a European Union member, all Czech Republic employers have to make sure that employees get at least two months of parental leave.

Maternity: 22 weeks for the birth or adoption of one child, 31 weeks for multiple

Probationary Period

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 three months (six months for managerial roles).

Payment Frequency

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

End of Employment

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.

Frequently Asked Questions

What are my options if I want to hire a worker in Czech Republic?

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.

How long does it take to set up a company in Czech Republic?

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. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in Czech Republic?

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 on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, 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.

What does HR compliance mean in Czech Republic, and why does it matter?

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.

How much does it cost to employ someone in Czech Republic?

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.

What does Employer of Record mean in Czech Republic?

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

Who is responsible for filing and paying employees' taxes and social insurance contributions in Czech Republic if employing through a temp agency?

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.

How does Boundless as a temp agency ensure HR compliance in Czech Republic?

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.

What are the legal responsibilities of a company when they use an Employer of Record service like Boundless in Czech Republic?

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.

Do employees get all their rights and benefits when employed through an temp agency in Czech Republic?

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.

What taxes do I need to pay in Czech Republic?

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, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in Czech Republic

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