Czech Republic

Czech Republic PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in the Czech Republic to companies willing to enter the Czech market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in the Czech Republic.  In spite of this, our solution allows you to start the operations in the Czech Republic within days hence save time and money.  WeHG would hire employees on your behalf when you maintain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Czech Republic fast facts

Population, million: 10
Land area: 78,866 km²
Capital: Prague
Local currency: Czech koruna (CZK)

GDP per capita:$ 40,585
GDP in currency:$ 432,346 billions

The Czech Republic is a landlocked country in Central Europe bordered by Germany to the west, Austria to the south, Slovakia to the east and Poland to the northeast. The Czech Republic covers an area of 78,866 square kilometres (30,450 sq mi) with a mostly temperate continental climate and oceanic climate. It is a unitary parliamentary republic, has 10.6 million inhabitants and the capital and largest city is Prague, with 1.3 million residents. The Czech Republic is a member of the European Union (EU), NATO, the OECD, the United Nations, the OSCE, and the Council of Europe.

 

Hiring, Negotiating and Doing Business in Czech Republic

Necessity of written employment contract

Employment relationship in the Czech Republic is based on an employment contract. An employment contract must describe the type of work the employee will provide for the employer, place or places where the work will be performed and the date of the day when the employment begins. The contract must be executed in writing. The contract may be cancelled by the employer until the employee starts working in writing.

Different forms of engagement: employment, contracting, work with private entrepreneur

For residents

No employment permission needed.

For non-residents
  1. foreigners from EU, Switzerland and EEA and their family
    members do not need the Employment permit neither the
    Residence permit
  2. foreigners from third parties (except some special categories of
    employees) need:
  • Work Permit – in cases of seasonal work, for holders of a long-term residency permit for the purpose of business or applicants for international protection etc.
  • Employee Card – for long-time residence in the territory of the Czech Republic where the purpose of the foreign national stay (longer than 3
    months) is employment
  • Green Card – for long-term residence for employment purposes in the Czech
    Republic under special circumstances
  • Blue Card – for a long-term stay involving the performance of a highly skilled job

Czech Republic Employment Contract

Types of employment agreements

The Czech law recognizes two types of full employment contracts:

  • Fixed-term employment contracts. The duration of the employment relationship based on fixed-term employment contract between  same contracting parties cannot exceed three years from the day that the employment relationship began and can be repeated twice at most. However, if it has been more than three years since the last fixed-term contract has been concluded between the same contracting parties, such employment relationship is not taken into account. The fixed-term employment expires on the agreed date.
  • Indefinite duration employment contracts. Indefinite duration employment contract is established if the duration of the employment relationship has not been expressly agreed. For both of the above described contract types a trial period employment is negotiable. The trial period employment cannot exceed a period of three months since the day when the employment relationship began  or the period of six months for the position of a supervisor. It cannot be additionally extended,  the only exceptions are all day lasting obstacles for which the employee is not able to work and all day lasting leave of absence.

Agreement on work activity. Based on the agreement on work activity it is not possible to work for a period of time exceeding half of the weekly working hours. The maximum permissible extent of the working hours is assessed for the entire period that the agreement has been concluded for, however, for a maximum of 52 weeks. The agreement on work activity must contain those types of work and working hours that has been agreed upon and also the duration of the agreement. Employees are social and health insurance payers if their income exceeds 2 500 CZK per month.

Agreement on work performance. The extent of work stated in the agreement on work performance cannot exceed 300 hours per one calendar year. The duration of employment must be stated in the agreement. Employees are social and health insurance payers only if their income exceeds 10 000 CZK per month.

Czech Republic working hours

A working week consists of 40 working hours. A scheduled shift cannot be longer than 12 hours. 

Overtime

The employer can demand a maximum of eight hours of overtime per week, but no more than 150 hours per year. Any additional overtime requires employee approval. Total overtime must not exceed an average of eight hours per week, which amounts to approximately 416 hours per year.

Vacation leave in Czech Republic

Each employee is entitled to a minimum of four weeks’ holiday per calendar year. Public sector employees have five weeks’ holiday while teaching and academic employees have eight weeks’ holiday.

Czech Republic Maternity Leave

Female employees are entitled to 28 weeks’ maternity leave (37 weeks for multiple births). During this period, maternity benefits are paid by the Social Security Administration calculated from the employee’s daily assessment basis, which is first reduced in accordance with the respective law and from the remaining amount 70% is paid. To qualify for maternity benefits, the employee must have a minimum of 270 days of sickness insurance participation during the last two years before maternity leave commences.

Czech Severance Laws

Where notice of termination has been given, the employment relationship will come to an end upon the expiry of the notice period. The notice period must be the same for both the employer and the employee, shall be at least 2 months and can be extended only by agreement between the employer
and the employee in writing. The notice period shall start to run on the first day of the calendar month following delivery of the notice. The Czech employer is obliged to pay monthly contributions to social and health insurance and advances on the income tax.

Czech Republic Tax

The Czech employer is obliged to pay monthly contributions to social and health insurance and advances on the income tax.

Contributions paid by employers for each employee:

  • Social security contribution: 25% of gross earnings
  • Health insurance: 9% of gross earnings

Contributions paid by employee:

  • Social security contribution: 6.5% of gross earnings
  • Health insurance: 4.5% of gross earnings

The personal income tax in the Czech Republic is paid by the employee at a flat rate of 15% applicable on a super-gross salary (gross salary increased by 34%of employer part of Czech obligatory social security and health insurance contributions).
Moreover, the amount over the amount of CZK 1,438,992.00 is taxed with an additional solidarity tax of 7%.

Health Insurance Benefits in Czech Republic

A person is eligible for sickness benefit if they:

  • are employed or self-employed in the Czech Republic;
  • pay sickness insurance contributions.

Employees’ participation in sickness insurance is compulsory by law if their monthly income is at least CZK 3,000. Persons working on the basis of a contract for work (see Jargon buster) can only participate in sickness insurance, if the amount of their monthly earnings is more than CZK 10,000.

A person who intentionally causes their incapacity for work is not entitled to sickness benefits.

Only half the sickness benefit is paid when the insured person’s incapacity to work has been caused by:

  • a brawl;
  • as a direct result of intoxication or the ingestion of psychotropic substances;
  • the commission of a crime of offence of culpable intent.

Participation in sickness insurance is voluntary for self-employed persons who, if interested, must apply to pay sickness insurance contributions themselves. Their minimum monthly insurance base is CZK 6,000.

Additional Benefits in Czech Republic

Employees who are sick are entitled to financial support from the first day of their sickness. Payments are made from sickness insurance beginning on the 15th day. The most common benefits for employees in the Czech
Republic are:

  • bonuses in terms of financial rewards
  • professional trainings
  • language courses and personal development
  • the option to work from home
  • additional days off (extra holidays, study leave, sick
    days)
  • discounts on company products
  • flexible working hours
  • meal vouchers
  • company phone
  • company car or transport allowance
  • insurance contributions
  • refreshment/beverages at workplace

Certain companies offer also temporary accommodation or housing
allowances, recreation in the company’s facilities or holiday allowances, or
free ticket by companies operating regular public transportation.

General market practice benefits/additional allowances

Some interesting facts according to the workforce in the Czech Republic:

  • Technical education has a long tradition and strong reputation around the world
  • Czech Technical University in Prague is one of the biggest and oldest technical universities in Europe
  • Roughly one-third of Czech students study economics, finance or IT
  • More than 300,000 university students and nearly 80,000 graduates-according to the Ministry of Education, Youth and Sport for academic year 2016/17

Czech Republic has a great geographical location in the middle of  Europe and according to that great access to both emerging eastern as well as established western markets. Advanced infrastructure which is one of the best in Central and Eastern Europe: direct highway connection to Germany, Poland and Slovakia, one of the densest railway networks in Europe and direct flights to most European cities and couple direct routes to Asia and North America. There is stable political and economic environment and EU Single Market. More, educated workforce and wages are some more reasons.

Czech Republic Holidays

The Czech Republic currently has 12 statutory public holidays, which are not included in the minimum holiday entitlement, including:

  • 1 January: New Year’s Day (Restoration Day of the Independent Czech State)
  • Easter Monday (floating holiday)
  • 1 May: Labour Day
  • 8 May: Liberation Day
  • 5 July: Day of Slavonic Apostles Cyril and Methodius
  • 6 July: Anniversary of the Martyrdom of Jan Hus
  • 28 September: Day of Czech Statehood
  • 28 October: Day of Founding the Independent Czechoslovak State
  • 17 November: Day of the Struggle for Freedom and Democracy
  • 24 December: Christmas Eve
  • 25 December: 1st Christmas Day
  • 26 December: 2nd Christmas Day

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.

 

FAQ Czech republic

  • Working hours in Czech republic

    A working week consists of 40 working hours. A scheduled shift cannot be longer than 12 hours. 

  • What are the main holidays in Czech republic?

    • 1 January: New Year’s Day (Restoration Day of the Independent Czech State)
    • Easter Monday (floating holiday)
    • 1 May: Labour Day
    • 8 May: Liberation Day
    • 5 July: Day of Slavonic Apostles Cyril and Methodius
    • 6 July: Anniversary of the Martyrdom of Jan Hus
    • 28 September: Day of Czech Statehood
    • 28 October: Day of Founding the Independent Czechoslovak State
    • 17 November: Day of the Struggle for Freedom and Democracy
    • 24 December: Christmas Eve
    • 25 December: 1st Christmas Day
    • 26 December: 2nd Christmas Day
  • What are payroll taxes in Czech republic?

    Contributions paid by employers for each employee:

    • Social security contribution: 25% of gross earnings
    • Health insurance: 9% of gross earnings

    Contributions paid by employee:

    • Social security contribution: 6.5% of gross earnings
    • Health insurance: 4.5% of gross earnings
  • Hannah Kohl
    Author:
    Hannah Kohl. Head of Customer Success. Has extensive experience in the HR and IT industries. Helped 100+ international clients to achieve their global goals.

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