While compensation and benefits may not be the first items on your list, they’re important to your employees. Providing the statutory minimums — then going above and beyond — will attract the right kind of talent to your positions and encourage them to stay for years to come. Plus, meeting Czech Republic compensation laws will ensure that you remain compliant without any fines or delays.
Globalization Partners understands that sourcing benefits is a time-consuming, expensive, complex process. We provide Czech Republic benefits and compensation outsourcing to help companies expand without worrying about compliance. When you choose us, you can run your company and feel confident knowing your employees are getting the best benefits.
Czech Republic Compensation Laws
The Czech Republic’s compensation laws changed in January 2021 to raise the minimum wage to CZK 15,200 per month. However, these laws could differ if your industry or company is under a collective bargaining agreement (CBA). Employees typically work 40 hours a week but can work overtime if you have serious operational reasons. Overtime can’t exceed eight hours a week or 150 hours per calendar year and must get paid at a rate of at least 25% over the employee’s regular salary.
Guaranteed Benefits in the Czech Republic
Your Czech Republic benefits management plan needs to include paid time off for the country’s 13 public holidays, plus a minimum of four weeks of paid vacation each year. Female employees should get 28 weeks of maternity leave for one birth and 37 weeks for multiple births. The Social Security Administration must pay maternity benefits up to 70% of an employee’s assessed salary.
Other statutory benefits include:
- Parental leave: One parent can receive parental leave until a child turns three.
- Care leave: Employees should get up to nine days of care leave if they’re responsible for a child under 10 or a sick family member.
- Parental allowance: The Labor Office pays a maximum benefit claim of 300,000 CZK per child until they’re four, regardless of income. The parental allowance is designed to support families caring for small children full-time.
Czech Republic Benefits Management
When you’re ready to disperse the benefits involved in your Czech Republic benefits management plan, we recommend adding other benefits to this plan that employees may expect. For example, a 13th-month bonus isn’t required by local law, but it’s considered a gratuity. Performance-based bonuses are also common.
The Czech health care system is considered high-quality, but some employers still choose to offer private health insurance. If you don’t want to source a private health care plan, you can always offer employees a stipend. Another common benefit employers provide is meal vouchers.
Restrictions for Benefits and Compensation
You can’t create a Czech Republic benefits management plan until you set up a subsidiary in the country or work with a global PEO. We have subsidiaries around the world that we can use to help you start working faster. Plus, we’ll be the ones responsible for compliance instead of you.
Czech Republic Competitive Benefits Planning
When you begin employee benefits planning in the Czech Republic, you should consider the labor laws and the market standards to create competitive packages.
About your Czech Republic employee benefits plans
A well-developed benefits plan can help set your company up for success in a new country. When you start recruiting, your benefits can persuade more job seekers to apply for your open roles.
Within the workplace, benefits plans can boost morale and retention rates. With improved retention, you can reduce training expenses and work with a more experienced team.
Fringe benefits are optional employee provisions; however, these amenities will set your company apart. Possible provisions include:
- Transportation allowances
- Company cars
- Supplemental health insurance
- Education opportunities
- Holiday bonuses
- Telecommuting facilities
Required benefits in the Czech Republic
Before you make your plan competitive with fringe benefits, you must consider compliance. The country’s labor laws require a series of minimum provisions:
- Paid annual leave
- Public holidays off
- Social security contributions
- Parental leave and allowance
- Maternity leave
Designing Czech Republic employee benefits plans
Designing your benefits plans can be challenging without the right approach; however, you can follow a few fundamental steps to create a compliant and competitive plan in any country.
1. Evaluate your finances and goals
Consider your company’s projected revenue and determine how much you’re willing to spend on benefits. You can also use this initial stage to evaluate how your benefits plans can contribute to larger company goals.
2. Learn about the market
Researching benefits packages from other companies can teach you about the market standards and guide your planning. The fringe benefits you see frequently shape job seekers’ expectations.
3. Start the design process
With everything you’ve learned, you can balance your financial abilities with the market standards. Keep an eye on your budget and make sure you factor in the cost of required benefits first.
Average cost of benefits
Factors such as industry, size, and location can affect how much a company pays for its benefits plans. Instead of aligning with an average, it’s best to determine a budget around your business’s unique needs. If you set a percentage of your revenue as your benefits spending, your budget will scale with your company as it grows.
How to calculate employee benefits
Benefits calculations will look different for each provision. Many calculations are straightforward, such as setting a holiday bonus amount or determining a transportation allowance.
You can find more information about calculating the required benefits in the labor laws. For example, social security requires a percentage contribution from employers and employees. Employers pay 24.8 percent, and employees pay 6.5 percent.
How are employee benefits taxed in the Czech Republic?
Taxable income includes salaries, wages, bonuses, and benefits in kind. Generally, you should value benefits in kind with open market prices. In the instance of a company car, the vehicle is valued at 12 percent of the purchase price per year.
There are some exceptions to taxable benefits based on specific conditions. Some non-monetary educational and health benefits are tax-exempt. Reimbursements for travel expenses are nontaxable until you meet the threshold set in the income tax laws.
Employee health benefits
The Czech Republic’s healthcare system provides low-cost and free care to citizens, permanent residents, and nonnationals working within the country. Employers are not required to provide supplemental health insurance for their employees, but they can offer it as a fringe benefit.
Work with Globalization Partners to build your global team
Globalization Partners’ global employment platform helps you build and scale an international team quickly and easily, ensuring all benefits offered to candidates are compliant and in line with local regulations. Contact us to learn more.