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On January 1, 2025, an amendment to the Employment Act in the Czech Republic came into effect. The most significant modification brought by this amendment is a conceptual change in the area of employment of persons with disabilities. The new rules aim to encourage employers to directly employ these persons and at the same time simplify the administration associated with substitute performance (in Czech: náhradní plnění).
Furthermore, on April 29, 2025, an amendment to the Czech Labour Code, known as the Flexinovela, was published in the Czech collection of laws. Although it is an amendment to the Labour Code, it contains several changes relating to the Employment Act, with most of them set to take effect on January 1, 2026.
The new regulations focus primarily on unemployment benefits in connection with retraining, while improving conditions for older job seekers as well. The changes mainly concern an increase in unemployment benefits, an extension of the support period, and adjustments to the rules for people who have terminated their employment without serious reasons. The main objective of these new rules is to ensure fairer and better financial support for job seekers in different life situations. For clarity, this article is divided into two parts. The first part deals with changes that are already in effect – i.e., the most significant amendments to the Employment Act contained in the amendment effective from January 1, 2025. The second part summarizes the changes that will take effect on January 1, 2026.
The Employment Act requires employers with more than 25 employees to employ persons with disabilities to the extent specified as a mandatory quota. According to the Employment Act, persons with disabilities should make up 4% of the total number of employees of a given employer. In practice, this means that if an employer has 100 employees, they are required to ensure that 4 of those 100 employees are persons with disabilities. If employers do not meet the mandatory quota, the Employment Act offers them three ways of so-called substitute performance:
Purchasing products, services, or placing orders with employers operating in the protected labour market, i.e., employers who employ more than 50% of persons with disabilities out of their total number of employees and with whom the Czech Labour Office has concluded a written agreement on their recognition on the protected labour market.
A contribution to the state budget, which until January 1, 2025 was equal to 2.5 times the average monthly wage for each person with a disability that the employer was required to employ.
A combination of purchasing products, services, or placing orders and making payments to the state budget.
The amendment in question changes the concept of contributions to the state budget. Specifically, a new mechanism for calculating contributions applies from January 1, 2025. The legislator hopes that the change will motivate employers to fulfil the mandatory quota by directly employing persons with disabilities. The amendment seeks to achieve this, among other things, by tightening the conditions for substitute performance. The main objective of the amendment is to create a fairer and more effective system that can truly contribute to the better integration of persons with disabilities into the labour market.
The basis for calculating contributions remains the average wage, with the amount continuing to be paid for each person with a disability that the employer should employ. What is changing, however, is the coefficient. It is no longer uniform for all employers below the 4% mandatory quota limit, but the average wage is multiplied by coefficients corresponding to a certain percentage of persons with disabilities employed:
This change in the calculation of contributions is most evident in situations where an employer decides to fulfil the mandatory quota by combining the options offered by law. The following examples illustrate the various situations that may arise when combining the possible options and how to proceed when calculating contributions to the state budget in each case.
The employer employs 100 employees in total and is therefore required to meet the 4% mandatory quota by employing 4 persons with disabilities. The employer decides to fulfil the mandatory quota by means of substitute performance:
How many employees will the employer be required to pay contributions for in this situation, and how will the amount be determined? According to the law, the employer is required to pay contributions for each person with a disability whom they should employ. In this case, contributions will be paid for two employees, as the remaining two employees correspond to the scope of products purchased.
However, when determining the amount of contributions, it is necessary to base the calculation solely on the number of persons with disabilities directly employed by the employer. The calculation of contributions does not take into account the proportional amount of the mandatory quota fulfilled through the purchase of products. This means that it is not possible to optimize the amount of contributions by purchasing products, as was previously the case.
In the example above, the employer will pay contributions for 2 persons with disabilities whom it was supposed to employ. The amount of the contribution will then correspond to the average wage in the national economy for the first to third quarters of the calendar year multiplied by a coefficient of 3.5, as it employs less than 1% of persons with disabilities out of its total number of employees.
The employer employs a total of 100 employees in total and is therefore required to meet the 4% mandatory quota, which means employing 4 persons with disabilities.
In this case, the employer will pay contributions for 1 person with a disability whom they should have employed, in an amount corresponding to the average wage in the national economy for the first to third quarters of the calendar year multiplied by a coefficient of 2, as they employ at least 1% of persons with disabilities out of their total number of employees.
Legislative changes effective from 2025 will alter the rules for companies regarding their responsibilities towards persons with disabilities. The new system of sanctions will depend on how well companies fulfil their inclusion obligations. Companies that actively strive to comply will be rewarded, while those that shirk their responsibilities will feel the consequences of their passivity in the form of higher levies. The aim is to achieve genuine inclusion of persons with disabilities, not just formal compliance with the rules.
However, the success of the amendment will depend primarily on its practical application and whether it actually leads to the desired transformation of the working environment in favour of greater diversity and equal opportunities.
The most significant change brought about by the amendment, effective from January 1, 2026, is an increase in unemployment benefits. Unemployment benefits are paid to persons who are registered with the Czech Labour Office as job seekers and have completed the period of employment necessary to be eligible for unemployment benefits. This period is 12 months in the last two years, and the employment must also be subject to pension insurance contributions.
The length of time for which unemployment benefits are provided to job seekers depends on the age of the job seeker. The amendment does not change this concept, but it does modify the age limit. The new length of the support period will be as follows:
The amount of benefit depends on the applicant’s previous income. Specifically, it is determined using a percentage rate of the average monthly earnings in the last completed employment during the decisive period, i.e., the last two years. However, the reference period also includes so-called substitute insurance periods, i.e. periods during which the applicant did not work but which are nevertheless counted towards his/her pension. Substitute insurance periods typically include receiving maternity benefits, parental benefits, disability pensions for third-degree disability, etc.
However, the amount of benefit is not unlimited. The limit is represented by the so-called upper limit or maximum amount of benefit. Currently, the maximum amount of benefit is 0.58 times the average wage in the national economy for the first to third quarters of the calendar year preceding the calendar year in which the job seeker applied for unemployment benefits. In practice, this restriction means that if the percentage rate of the average monthly earnings exceeds the maximum amount of benefit, the benefit provided is equal to the amount corresponding to the maximum amount of benefit, not the amount determined by the percentage rate.
The amendment will increase the maximum amount of benefit from 0.58 times to 0.8 times the average wage in the national economy for the first to third quarters of the calendar year preceding the calendar year in which the application for unemployment benefits was submitted.
Currently, the law stipulates a uniform scheme for receiving unemployment benefits for all persons in the event of termination of employment for serious reasons. This scheme determines the amount of benefits, which is 65% of the average monthly earnings of the job seeker or the assessment base for the first two months, 50% for the next two months, and 45% for the remaining support period.
The amendment will bring about some pretty big changes in this area. First, there’ll be an overall increase in the percentage rate, and second, the scheme will be split up based on the age of the applicant on the day they apply for support:
For applicants for unemployment benefits, these changes mean that there will be a big difference between applying for benefits in December 2025 or in January 2026. In some cases, the difference can be as much as thousands of crowns per month.
If an applicant for benefits does not meet the employment duration requirement and is therefore not entitled to full unemployment benefits, he/she may apply for reduced unemployment benefits known as zero-earnings benefits. These benefits are granted to applicants if they:
As with full unemployment benefits, the amendment will increase benefits for those with zero income and divide the scheme for providing them:
Among other things, this change means that applicants under the age of 52 will receive benefits for zero earnings for only 4 months.
The current version of the Employment Act contains provisions penalizing job seekers who left their previous employment voluntarily or whose previous employment was terminated by agreement without serious cause. The penalty for these job seekers consists of reduced unemployment benefits, which amount to 45% of the job seeker’s average monthly earnings or assessment base for the entire support period.
The amendment repeals the provision containing the penalty.
There will also be changes to the amount of benefits during retraining, which will again be increased.
Benefits during retraining will increase from 60% to 80% of the average monthly net earnings or assessment base, and its maximum amount will be increased from 0.58 times to 0.8 times the average wage in the national economy for the first to third quarters of the calendar year preceding the calendar year in which the job seeker began retraining.
Benefits during retraining as part of zero-income benefits will also be increased from 0.14 times to 0.4 times the average wage in the national economy for the first to third quarters of the calendar year preceding the calendar year in which the job seeker began retraining.
The final change brought about by the amendment is an extension of the minimum period of pension insurance required to be eligible for full benefits from 6 months to 9 months.
After the amendment comes into effect, job seekers who have drawn benefits in the last two years but have not exhausted them due to employment or other gainful activity will have to meet the condition of at least 9 months of pension insurance in the given period in order to be eligible for the entire support period. If the period of pension insurance is shorter, the applicants will only be entitled to the remaining part of the support period that they did not use up during their previous claim.
The amendment brings fundamental changes to the unemployment benefits system, effective from January 1, 2026. Key changes include an increase in benefits and an extension of the support period for older job seekers. At the same time, the rules are changing for job seekers who were dismissed from their previous job without serious cause or who left of their own accord.
This comprehensive approach takes into account the different needs of job seekers at different stages of their lives and seeks to offer better financial security during periods of job search. Higher unemployment benefits in the initial months are intended to motivate job seekers to find new employment quickly.
There are quite a lot of changes in employment law in the Czech Republic and it is not easy to navigate through them. Do not hesitate to contact our Czech team of labour law specialists, who will be happy to assist you in employment law matters.
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