This short article has been prepared by BURIL PARTNERS as a general summary for those wishing to pursue business and employ individuals in the Czech Republic.

Legislation and Main Labour Law Principles in the Czech Republic

  • Employment, i.e. performance of dependent work, and legal relations between employees and employers are regulated by Czech Act No. 262/2006 Sb., the Labour Code, as amended (the “Labour Code”), which complies with mandatory EU legislation.
  • The legal protection of employees and the employment relationship, fair remuneration, equal treatment of employees and prohibition against discrimination, as well as safe working conditions, are the main principles of the labour law.

Work and Residence Permits

  • Czech citizens and other legal residents in the Czech Republic do not require employment permission.
  • Foreigners that are EU, Swiss, or EEA citizens need neither employment permission nor a residence permit.
  • Foreigners from third countries need a work permit, an employee card, or blue card and a residence permit depending on the length and nature of work (employment relationship).

Employment and Agreements Outside Employment Relationship

  • An employment relationship based on an employment contract is preferred; a written form is required.
  • An employment contract may be concluded for a definite period, however only fora maximum of three years with a possibility of at most two extensions of the term.
  • Work may be further performed based on agreements on work performed outside an employment relationship, i.e. either an agreement to complete a job if the scope of work does not exceed 300 hours in a calendar year or an agreement to perform work if the scope of work does not exceed ½ of standard weekly working hours (see below).

Working Hours and Vacation

  • Standard weekly working hours are 40 hours per week.
  • Minimum vacation for employees is four weeks per calendar year.

Termination

  • Employees may terminate employment with a notice of termination for any reason or even without stating a reason. Employers may terminate employment with a notice of termination only due to reasons explicitly stipulated in the Labour Code. The notice period is the same for both and must be at least two months.
  • Immediate termination of employment is possible, for both employees and employers, only due to reasons explicitly stipulated in the Labour Code.

Contributions and Taxation

  • Both employers and employees contribute to the Czech social security and public health insurance system.
  • Employees contribute 6.5% of gross earnings to the social security system and 4.5% of gross earnings to the system of public health insurance.
  • Employers contribute 24.8% of gross earnings to the social security system and 9% of gross earnings to the system of public health insurance.
  • Employees pay personal income tax at a flat rate of 15% applicable on a super-gross salary (gross salary increased by the above obligatory social security and health insurance contributions by employers). A further solidarity tax of 7% applies on gross earnings over CZK 1,672,080.00.
  • Employees’ contributions and advances on employees’ income taxes are deducted by employers from the employees’ salary.

BURIL PARTNERS