Labour Law and Employment in the Czech Republic – 2021 Guide

For Czech nationals

No employment permission needed.

For foreigners

• foreigners from the EU, Switzerland and EEA and their family members do not need an employment permit
• foreigners from third countries (except some special categories of employees, such as holders of long-term residency permits, students etc.) need one of the following:
  • Work Permit – most common in cases of seasonal work, or applicants for international protection etc.
  • Employee Card – for long-term stay in the territory of the Czech Republic where the purpose of the stay (longer than 3 months) is employment
  • Blue Card – for a long-term stay involving the performance of a highly skilled job
  • Intra-Company Transfer Card – for transfer within a group of companies (from a group company outside the EU into Czech Republic), where the purpose of the stay is work (longer than 3 months) as a manager, specialist or employed intern

Regular employment

There are two types of regular employment contracts in the Czech Republic:

• Employment Contract for a definite period – generally, it can be concluded for a maximum of 3 years and it is possible to prolong such contract only twice (maximum length 3×3 years)
• Employment Contract for an indefinite period – an employment relationship shall last for an indefinite period unless a definite period has been expressly agreed

Work outside employment relationship

Furthermore, an employee may perform work outside employment relationship on the ground of two agreements:

• Agreement to complete a job – the scope of work for which an agreement is concluded may not exceed 300 hours in one calendar year.
• Agreement to perform work – the scope of work shall not exceed a maximum of one half of determined weekly working hours (20 hours)

Probationary period

In regular Czech employment contracts, the probationary period, with the maximum of 3 consecutive months for regular employees and up to 6 consecutive months for managers, may be concluded.

A probationary period may not be longer than one half of the agreed period of the employment relationship and must be agreed in writing on the day of commencement of employment at the latest.

Cases

Employment relationship may be terminated with the Czech employee:

• by agreement between the parties in writing
• by notice of termination
  • the notice of termination shall be made in writing and delivered to the other party
  • the employee may give his employer notice of termination for any reason or without stating a reason
  • the employer must specify the reason based on a list of reasons provided by law
  • the Czech law prohibits giving notice to an employee during the protection period (while the female employee is pregnant or is on maternity or parental leave, the employee is unfit for work, the employee is released to exercise a public office, etc., given that other conditions are met)
• by immediate termination only for reasons specified in the Labour Code
• by termination within a probationary period
• on the expiry of agreed period in case of employment contract for a definite period
• upon lapse of validity of a work permit of a foreign employee
• upon death of the employee

In some specific cases, an employee is entitled to severance pay upon termination of employment.

Notice period

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.

Contributions paid by employers for each employee

• Social security contribution: 24.8% 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

Personal income tax

The personal income tax in the Czech Republic is paid by the employee at a flat rate of 15% applicable on a gross salary.

However, the yearly income exceeding 48x the average salary (i.e. CZK 1,701,168.00) is taxed at a higher flat rate of 23%.

Working time

• The length of standard weekly working hours shall be 40 hours per week except for some employees
• Part-time work may be agreed between the employer and employee
• The employer shall distribute working hours and determine the start and end of shifts
• Working hours are distributed over five-day working week and the length of a shift may not exceed 12 hours
• For the work performed in excess of the working-time standards, an employee is entitled to the attained wage and to a premium of at least 25% of his average earnings or compensatory time off
• If it is justified by the type of work or the organization thereof, an employer can introduce the other working-time systems which allow the extension of the daily amount of working time. Specific requirements related to this matter are indicated in the Czech Labour Code

Time off

Regarding the vacation and other circumstances under which the Czech employee can take time off, the main cases are:

Annual leave

The legislation governing annual leave has been significantly amended with effect as of 1 January 2021. The employee who performed work for the employer for 52 weeks in the extent of the weekly working hours (standard or shorter part-time working time) in one calendar year is entitled to annual leave.

The basic statutory period of leave is 4 weeks.

Proportional part of annual leave

The employee who worked for the employer in the extent of the weekly working hours for at least 4 weeks, is entitled to 1/52 of the leave entitlement for each fully worked weekly working time.

Additional leave

The length of additional leave in the Czech Republic is 1 week and it is provided for specific groups of employees engaged in particularly hard work when an employee performs such work for the entire calendar year. In case that this type of work was not performed during the whole calendar year, a proportional part of the additional leave is provided (1/52 of the yearly entitlement for each work week).

Unpaid leave

Under family circumstances or for other especially personal reasons the employee may be given a leave without pay, the duration of which is determined usually under the agreement between the employee and the employer. It is applicable upon request, but in certain cases prescribed by law. For example, the employer is obliged to provide the leave for performance of a public office or military trainings; in other cases, it depends on the agreement with the employer.

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 aspects

General aspects

An employment agency temporarily assigns its employee to perform work for a client on the basis of a temporary assignment agreement entered into by and between the agency and the client.

The agreement must be in writing. The employment agency assigns an employee to perform temporary work with the client on the basis of a written order.

The employment agency and the client are obliged to secure that the working and wage conditions for the temporarily assigned employee are not or would not be worse than those under which a comparable employee works or would work.

The time of temporary assignment to perform work for the same client shall not exceed 12 consecutive calendar months.

Posting of employees

In case an employee of an employer based in one of the EU member states is sent to work within the framework of the posting of employees in the territory of the Czech Republic, such an employment must comply with the legislation of the Czech Republic.

If the posting is short-term (i.e. up to 12 months), the employment must comply with the following Czech basic work conditions:

• maximum length of working hours and minimum length of breaks and rest
• minimum holiday entitlement in a calendar year or its adequate portion
• minimum wage, relevant minimum rate of guaranteed wage and bonuses for overtime work
• occupational safety and health
• working conditions for pregnant employees, breastfeeding employees and employees up to the end of the ninth month after giving birth and minors
• equal treatment of male and female employees, ban on discrimination
• working conditions for agency employment
• conditions of employee accommodation
• travel allowances

In case of long-term postings (i.e. exceeding 12 months), it is necessary to ensure that also any other local work conditions are applicable to the posted employee.

Local legislation is not applicable if the legislation of the posting country is more favourable to the employee, which is to be considered individually.

The main sources of the labour law are three acts:

• Act No. 262/2006 Coll., the Labour Code, as amended
• Act No. 2/1991 Coll., the Collective Bargaining Act, as amended
• No. 435/2004 Coll., the Employment Act, as amended

However, the area of labour law is governed by other important regulations, such as:

• Act No. 309/2006 Coll., the Act Stipulating Further Requirements for Health and Safety at Work, as amended
• No. 251/2005 Coll., the Labour Inspection Act, as amended
• No. 73/2011 Coll., the Labour Office Act, as amended
• Act No. 187/2006 Coll., the Sickness Insurance Act, as amended
• Act No. 329/2011 Coll., on benefits for people with disabilities, as amended
• Act No. 589/1992 Coll., on social security insurance and state employment policy, as amended
• Act No. 48/1997 Coll., on public health insurance, as amended
• Act No. 592/1992 Coll., on premiums for general health insurance, as amended
• Act No. 326/1999 Coll., on the Residence of Foreigners in the Territory of the Czech Republic, as amended
• Act No. 118/2000 Coll., on protection of employees against the employer’s insolvency, as amended