Globalization Partners provides employer of record services for customers that want to hire employees and run payroll without first establishing a branch office or subsidiary in the Czech Republic. Your candidate is hired via Globalization Partners’ Czech Republic PEO in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. The individual is assigned to work on your team, working on your company’s behalf exactly as if he or she were your employee to fulfill your in-country requirements.
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Our solution enables customers to run payroll in the Czech Republic while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As a Global PEO expert, we manage employment contract best practices, statutory and market norm benefits, and employee expenses, as well as severance and termination if required. We also keep you apprised of changes to local employment laws in the Czech Republic.
Your new employee is productive sooner, has a better hiring experience and is 100% dedicated to your team. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. Globalization Partners allows you to harness the talent of the brightest people in more than 185 countries around the world, quickly and painlessly.
The Czech Republic is an Eastern European country which borders Germany, Slovakia, and Poland. The country is a member of the European Union and its 10 million people enjoy a relatively advanced economy with high living standards. Business in the Czech Republic often moves at a slow pace, so patience is required. Czechs tend to be non-confrontational and do not like back and forth negotiations. Presentations should include detailed data to back up claims. Punctuality is extremely important and meetings should be set up well in advance. Do not schedule business appointments for Friday afternoons as most people tend to take the afternoon off and head to the countryside. Avoid chatting about personal subjects with business partners. Better topics for light conversation are politics and sports.
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 standard benefits in the Czech Republic in mind:
Czech Republic Holidays
The Czech Republic celebrates 12 public holidays for which employees are given the day off, including:
- New Year’s Day
- 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 week day.
Bonus in the Czech Republic
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.
Czech Republic Working Hours
The standard work week in the Czech Republic consist of up to 40 hours per week. Employees can work overtime if ordered by the employer due to serious operational reasons. Overtime cannot exceed 8 hours per week over the next 26 weeks. A total of 150 overtime hours are included in annual remuneration — employees who worked more than 150 overtime hours must be paid at least 25% of their base salary.
Vacation 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 of sickness, the employer pays 60% of salary.
From the 15th day to the 380th day of sickness, the Social Security Administration bears the cost.
Czech Republic Maternity Leave
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 her assessed salary.
- Parental Leave: One of the parents is also entitled to parental leave until the child is 3 years of age.
- Care Leave: Employees are entitled to up to 9 days of care leave if caring for a child under the age of 10 or for providing care to a sick family member.
- Parental Allowance: A parental allowance is paid by the Labor Office and the amount paid is CZK 300,000 per child up to the age of 4 years, regardless of income.
Termination/Severance in the Czech Republic
The employer can set a probationary period of up to three or six months in the employment contract. The length of probationary period depends on the nature of the work performed.
An employment contract can be terminated by agreement, notice, immediate termination or termination within the probationary period, however, a notice period of at least two months must be given by either the employee or the employer.
Severance Pay: If an employee is terminated based on “organizational reasons” the following severance pay amounts apply:
- 1 month’s salary if an employment relationship to the employer lasted less than one year
- 2 month’s salary where an employment relationship to the employer lasted at least one year and less than two years
- 3 month’s salary where an employment relationship to the employer lasted at least two years.
Czech Republic Tax
There are two levels of tax: 15 % and 23%, depending on gross monthly income. Employees with a gross monthly income of more than CZK 141,764 pay 23%.
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 1,701,168 in 2021.
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.
Additional Benefits in the Czech Republic
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 Czech employers.
Employment Contracts in the Czech Republic
The general rule in the Czech Republic is that employment contracts are executed for an indefinite duration. Fixed-term contracts can be executed but they cannot exceed three 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 information about 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 a foreign currency.
This information is provided as generally accepted information and is not intended as advisory services.
Why Globalization Partners
Establishing a branch office or subsidiary in the Czech Republic to engage a small team is time-consuming, expensive and complex. The Czech Republic’s labor law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Globalization Partners makes it painless and easy to expand into the Czech Republic. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws, without the burden of setting up a foreign branch office or subsidiary. Our Czech Republic PEO and Employer of Record solution provides you peace of mind so that you can focus on running your business.
If you would like to discuss how Globalization Partners can provide a seamless employee leasing or PEO solution for hiring employees in the Czech Republic, please contact us.