As your EOR in the Czech Republic, we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
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Your candidate is hired by a PEO in the Czech Republic provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.
The Czech Republic is a landlocked country in central Europe, with a population of around 10.7 million people with its capital city is Prague. It has a rich history and culture, with a diverse economy that includes manufacturing, automotive and services. The official language is Czech, the currency is the Czech koruna. As we wrote previously, it is a magnetic place for immigration.
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In the Czech Republic, employment contracts can be either fixed-term or indefinite. Fixed-term contracts are limited to a maximum of three years, with the possibility of extension for up to two more years. Indefinite contracts have no set end date.
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Starting January 1st, 2024, it will be feasible to electronically sign the comprehensive list of documents using the email address specified in the employment agreement.
Employers in the Czech Republic can set a probation period for new employees. The maximum length of this period is three months for non-managerial positions and six months for managerial positions.
When it comes to working hours, the standard workweek is 40 hours, but it can be spread over 5 or 6 days, depending on the company’s policy. Overtime should be at most 8 hours per week or 150 hours per year and it must be compensated with additional pay or time off.
Employees get a minimum of four weeks (20 days) of paid vacation per year. This amount can increase with years of service or based on the employee’s specific collective bargaining agreement.
Employees take up to 14 days of annual sick leave with full pay. After that – the employer can reduce the payment to 60% of the employee’s average earnings for up to 380 days.
In terms of salary payment, employers or Czech Republic EOR must pay their employees at least once a month and provide a payslip that includes all deductions and contributions.
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In 2024, the minimum wage was increased to CZK 18,900, equivalent to approximately 766.12 euro per month for category 1.
In the Czech Republic, employees have day off to 13 public holidays annually. Main holidays include New Year’s Day, Easter Monday, Labor Day, Victory Day, and Christmas Day.
The employer’s contribution rates encompass 24.8% for social security pensions, unemployment benefits, sickness, and other associated benefits, alongside 9% for health insurance.
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Additionally, the employer is obligated to maintain statutory liability insurance at a rate of 0.84%. This insurance is designed to address claims by employees for damages sustained while executing work duties, encompassing occurrences during business-related travel without local limitations.
The tax rates for employees persist at either 15% or 23%, contingent upon their total income, with amendments slated for 2024.
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Notably, the criterion for determining individuals subject to the higher Czech tax rate of 23% will shift from an average gross salary multiplied by 4 to a multiplication factor of 3.
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Additionally, the maximum annual assessment base for social security contributions in 2024 will stand at CZK 2,110,416, equivalent to 48 times the average wage.
The notice period for terminating an employment contract in the Czech Republic depends on the length of the employee’s work. For example, an employee hired for less than 2 years is entitled to a notice of at least 2 months, while an employee who has been employed for more than 2 years is authorized to at least 3 months.
In the Czech Republic, an employer can terminate an employment contract for various reasons, such as redundancy or breach of contract. Terminated employees are subject to severance, calculated based on their length of service and salary. The minimum pay is 1 month’s salary for each year of service.
