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Hiring in the Czech Republic
The Czech Republic is an Eastern European country which borders Germany, Slovakia, and Poland. When negotiating the terms of an employment contract and offer letter with an employee in the Czech Republic, it may be useful to keep the following in mind.
Employment contracts in the Czech Republic
The general rule in the Czech Republic is that employment contracts are for an indefinite duration. Fixed-term contracts can be executed but they cannot exceed 3 years.
It is legally required to put a strong, written employment contract in place in the Czech Republic. The contract should include a job description, start date, location, required notice periods, wage and salary information, collective bargaining information, and probationary periods (if applicable).
For a trial period to be valid, it must be put in writing and agreed to prior to the employee’s start date. An offer letter and employment contract in the Czech Republic should always state the salary and any compensation amounts in Czech koruna rather than another currency.
Working hours in the Czech Republic
The standard workweek in the Czech Republic consists of up to 40 hours. Employees can work overtime only exceptionally due to serious operational reasons, which have to be ordered or approved in advance. Overtime cannot exceed 8 hours per week in a 26-week period.
Holidays in the Czech Republic
The Czech Republic celebrates 13 public holidays for which employees are given the day off, including:
- New Year’s Day
- Good Friday
- Easter Monday
- May Day
- Liberation Day
- Cyril and St. Methodius
- Jan Hus Day
- Statehood Day
- Independence Day
- Freedom and Democracy Day
- Christmas Eve
- Christmas Day
- Second day of Christmas
If public holidays fall on the weekend, they are not transferred over to a weekday.
Vacation days in the Czech Republic
Employees in the Czech Republic are entitled to a minimum of 4 weeks off per year. Vacation is counted in hours. Therefore, employees can apply for a half day of leave.
Czech Republic sick leave
From the 1st day to the 14th day, sick pay is covered by the employer. Salary replacement for sickness is 60% of the reduced average gross hourly earnings.
From the 15th day to the 380th day of sickness, the Social Security Administration bears the cost. Sickness benefits are initially 60% of the reduced daily assessment base (from day 15 to day 30). Sick pay increases gradually:
- From day 31 to day 60: 66%
- From day 61 onwards: 72%
Sickness benefits are paid for all calendar days (including weekends or public holidays).
Maternity and paternity leave in the Czech Republic
Pregnant employees are entitled to 28 weeks of maternity leave or 37 weeks for multiple births. Leave can start 6-8 weeks prior to the expected due date. During this time, the Social Security Administration pays the maternity benefits to the employee amounting to 70% of the daily assessment base.
- Parental leave: One of the parents is also entitled to parental leave until the child is 4 years of age.
- Care leave: Employees are entitled to up to 9 days to care for a child under the age of 10 or tend to a sick family member.
- Parental allowance: A parental allowance of CZK 350,000 is paid by the Labor Office, which can be drawn until the child reaches the age of 3. In the case of twins or more children born at the same time, the total amount increases to CZK 525,000.
Health insurance in the Czech Republic
Employers contribute 9% of the employee’s salary to the state health insurance funds. There is no maximum salary base for health insurance.
Czech Republic supplementary benefits
Private health insurance is sometimes offered by employers; however, the Czech healthcare system is considered to offer high-quality services.
Meal vouchers are commonly offered by employers in the Czech Republic.
Bonuses
The 13th month bonus in the Czech Republic is considered a gratuity and is not required by local law. Performance-based bonuses are more common.
Termination/severance in the Czech Republic
Employers can set a probationary period of 3 to 6 months in the employment contract. The length of the probationary period depends on the nature of the work performed and the duration of the contract. If the contract is for a fixed term, the probation period cannot exceed half the total length of employment.
An employment contract can be terminated by agreement, notice, immediate termination, or termination within the probationary period, but a notice period of at least 2 months must be given by either the employee or the employer, unless agreed initially otherwise in the employment contract.
If an employee is terminated based on “organizational reasons,” the following severance pay amounts apply:
- 1 month’s salary if the employment relationship lasted less than 1 year
- 2 month’s salary if the employment relationship lasted more than 1 year but less than 2 years
- 3 month’s salary if the employment relationship lasted 2+ years
Paying taxes in the Czech Republic
There are 2 levels of tax in the Czech Republic: 15% and 23%, depending on gross monthly income. The income threshold for applying the 23% tax rate has been reduced to 36 times the average wage on an annual basis (CZK 1,582,812) and 3 times the average wage on a monthly basis (CZK 131,901).
A 15% rate will apply to income below this threshold.
Employers contribute 24.8% of the employee’s salary to the state social security funds. A cap is set for social security funds at 48 times the monthly average wage or CZK 2,110,416 in 2024.
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