Employment Laws in the Czech Republic

Contractual Agreements

The contract employment law in the Czech Republic establishes legal obligations between employers and employees, including independent contractors or freelancers.   

The contractual agreements must be drafted in writing with the following information: 

• The employee's job title and the specific type of work they will be doing
• The workplace(s) where the employee will perform their duties
• The official start date of the employment relationship

Also, signing a separate Data Processing Agreement alongside the employment contract is a usual practice. 

Types of employment contracts in the Czech Republic

Czech Republic labor law calls for two types of contract agreements: 

• Fixed-term contracts: You may conclude this contract for a maximum of three years. It is commonly applied when hiring an independent contractor. It may be renewed twice.  
• Indefinite term contracts: You may hire full-time employees with no fixed termination date, offering more stability throughout the term of employment. 

Obligations and rights for both parties

The following responsibilities arise from employment relationships:  

• Assigning tasks according to the employment contract.
• Paying the agreed-upon wage/salary.
• Providing the necessary conditions for performing the job effectively.
• Following all relevant legal requirements and internal regulations.
• Further, you must push new employees through a mandatory probationary period based on their job title: 
  • Regular employees: Maximum three months
  • Managerial positions: Maximum six months

Working Hours and Overtime

The employment laws in the Czech Republic regulate working hours, rest periods, and overtime as follows: 

Regular working hours

• You may schedule a standard weekly work period at 40 hours.
• You may offer a rest period of at least 30 minutes after six hours of continuous work and at least 35 hours during the week. 
• You shall not reduce the employee pay for scheduling working hours below the statutory limit unless required by any collective agreement or an internal company policy. 

Overtime regulations and compensation

• You may schedule overtime work for not more than eight hours per week, calculated over 26 consecutive weeks. Only a collective agreement allows extending this period to a maximum of 52 consecutive weeks.
• You shall not seek overtime from employees with shorter working hours. 
• You must compensate for overtime work in the Czech Republic at 125% of the average monthly hourly wage. 

Learn more about managing compensation and benefits for your remote teams.

Minimum Wage and Compensation

Czech Republic labor law provides for minimum wage and payout conditions concerning full-time employees (also includes remote employees). 

The minimum wage rate in 2024

• You may have minimum salary ranges based on the type of work: 
  • Unqualified work: CZK 17,300 monthly
  • Managerial or scientific role: CZK 34,600 monthly

Factors affecting wage determination

• You must negotiate, calculate, and pay salaries to full-time employees in Czech koruna (CZK, Kč). 
• Scheduling work at night, on regular rest days, or on public holidays calls for additional payouts.
• You may ensure monthly payouts and, at the latest, by the 15th of the following month. 
• You may choose to extend the 13th-month pay in the Czech Republic.

Further, a mix of individual skills and experience, the nature of the job itself, or societal factors like gender influence wages. 

Learn more effective ways to pay your remote employees here.

Employee Benefits and Social Security

You must extend the following employee benefits and make suitable contributions to the social scheme under the employment laws in the Czech Republic:

Statutory benefits

• You must extend 60% of usual pay during sick leave for the first 14 days, followed by benefits from the government.
• You may make suitable contributions towards old-age pension (retirement), disability pension, and survivor's pension.
• You must provide comprehensive access to healthcare through regular employer-employee contributions. 
• You must ensure income support during maternity leave and subsequent parental leave through regular social security contributions. 
• You must offer end-of-service benefits in terms of severance pay (more on this later). 

Additional perks and benefits

• You may grant paid time off every year and for some personal reasons (more on this later). 
• You may allow five days or more of unused leave to be carried over to the following year.

Social Security contributions and requirements

• The assessment base is calculated depending on the role:
  • Employees: Earnings subject to income tax
  • Employers: The sum of their employees' contributions

• Further, the employment laws in the Czech Republic place an annual cap on the assessment base at 48 times the monthly average wage. 

• You can save extra (5% discount) on social security contributions for specific part-time workers and employees under 21 years old.
• Further, the labor law in the Czech Republic mandates you to pay social contributions before the 20th day of the following month to avoid a penalty of 0.05% per day on the outstanding amount.

Vacations and Paid Time Off

The employment laws in the Czech Republic require you to extend the following paid and unpaid leave benefits:

Annual leave entitlement

• You must offer at least 20 days of paid privilege leaves per year. 
• You may allow employees to avail of their entitlements anytime throughout the year. 

Public holidays and special leaves

• In addition to privilege leaves, you must observe the following 14 days of paid public holidays: 
  • January: Day of the Restoration of the Czech State, New Year
  • March-April: Good Friday, Easter Monday 
  • May: Labor Day, the Day of Victory
  • July: Cyril and Methodius, Jan Hus
  • September: Czech Statehood Day 
  • October: The emergence of an independent Czechoslovak state 
  • November: Day of struggle for freedom and democracy
  • December: Christmas Eve, Christmas Days (2)

• The labor laws of the Czech Republic call for several special leave entitlements, including:
  • Maternity leave: You must provide for 28 weeks, out of which 14 weeks is obligatory, including at least six weeks after the birth.
    The general practice in the Czech Republic is to divide total maternity leave as six to eight weeks before the birth and 20 to 22 weeks after.
  • Paternity leave: You may offer a maximum of two weeks or alter it based on the company policy. 
  • Parental leave: You may grant leave following the seventh week after childbirth till the child turns three.
  • Sick leave: You may extend 380 calendar days of sick leave.
  • Compassionate leave: You must offer one or two days of paid leave(s) to attend the death rituals of a family member. 

• Further, your company policy can provide one or two days of paid or unpaid leave(s) for weddings. 

Termination and Severance

The employment laws in the Czech Republic regulate termination by employers and end-of-service benefits in the following ways:

Grounds for termination

• Termination during probation period: You can terminate the contract during the probation period for reasons like skills or expectations mismatch, unsatisfactory work output,  unprofessional conduct, or unreliable attendance. 

• Termination due to poor performance: You must terminate the contract only after properly documenting weekly evaluations and feedback sessions. 

• Termination with cause: You may terminate the employment contract immediately for reasons like intentional misconduct, employee defiance or disobedience, negligence of work, showing dishonesty and committing fraud, or being caught doing substance abuse. 

• Termination due to business redundancy: You may terminate the contract in the event of shutting down your operations in the Czech Republic, company restructuring, or going through a cash crunch.

Notice period and severance pay

• Czech Republic labor law prescribes a minimum notice period of two months. 
• While a termination can be without notice during the probationary period, it is a usual practice in the Czech Republic to extend a written notice seven days in advance.

• Further, the labor laws of the Czech Republic apply severance pay obligations based on the employment tenure: 
  • Less than one year: One-month severance pay
  • One to two years: Two months severance pay
  • More than two years: Three months severance pay 

Discrimination and Equal Opportunity

You must strive for a fair workplace. However, there are narrow exceptions under the employment laws in the Czech Republic. Let’s discuss them further. 

Prohibitions against workplace discrimination

• You must not encourage unfair treatment based on race, gender, age, religion, etc. 
• You may not terminate the employment contract solely based on pregnancy or sickness. 
• You must treat all employees equally regarding pay, benefits, training, and promotion opportunities.
• Moreover, treating someone differently to meet specific job requirements may not be considered discrimination under the law.
• The labor law in the Czech Republic calls for proactive steps to create workplace equality.

You may partner with suitable Employer-of-Record (EOR) solutions to navigate the complexities and comply with labor laws. 

Health and Safety Regulations

Here's a simplified summary of your responsibilities prescribed by the employment laws in the Czech Republic:

• You must inform employees about the risk classification of their job role. 
• You must avoid using pay systems that encourage work in ways that compromise their health and safety.
• You cannot schedule overtime work for pregnant employees or adolescent workers. 
• You must ensure first aid is available on-site.
• You may ensure employees meet health requirements (vaccinations, certificates) for specific jobs. 
• You may allow employees to view their occupational safety and health records.
• You are required to uphold smoking bans in the workplace. 

The Czech Republic labor law prohibits passing on all the costs related to making the workplace safe and healthy to employees, either directly or indirectly.

Stay Compliant with Skuad

Skuad helps businesses build and manage globally distributed teams in 160+ countries. As a leading EOR solution in the Czech Republic, we help onboard new employees and administer payroll, taxes, and statutory benefits while eliminating the need to set up a local entity.

‍Talk to our experts for tailored labor law compliance solutions when hiring in the Czech Republic.

FAQs

Q1. What are the labor laws in the Czech Republic?

A1. Czech labor law is the foundation, supplemented by the Anti-Discrimination Act and the Sickness Insurance Act and aligning with EU directives. Key areas like contracts, working hours, compensation, holidays, and health & safety are clearly defined. 

Q2. What are the minimum working hours in the Czech Republic?

A2. The minimum working hours in the Czech Republic are defined weekly. You may set a standard work week at 40 hours. 

Q3. What are the mandatory employee benefits in the Czech Republic?

A3. Mandatory employee benefits in the Czech Republic involve social insurance contributions. Additionally, you must provide paid vacation time (20 days a year) and cover a portion of sick leave costs (up to 14 days).

Q4. Is there a 13th month's pay in the Czech Republic?

A4. No, there is no mandatory employer obligation to extend the 13th month’s pay in the Czech Republic.