Knowing your labour laws in the Czech Republic
Article

Knowing your labour laws in the Czech Republic

08 December 2017

As the Czech Republic grows in appeal to both international and domestic employers alike, it is important that they familiarise themselves with its labour laws.

The Czech Republic, alongside Poland and Romania, is recording high economic growth. The country has the lowest unemployment rate in the European Union (2.9% in June, compared with 3.8% in Germany and 7.7% in the EU overall). The employment of foreign workers is likewise on the rise, with close to 400,000 recorded at the end of 2016.

But as the country grows in appeal to both international and domestic employers alike, it is important that they familiarise themselves with its labour laws. Here is a summary of the key points you need to know.

Social security

The Czech Republic has a mandatory social security system that provides pension, sickness, unemployment and health benefits. Both employer and employees are required to contribute towards the social security and health insurance schemes.

In 2017, the annual cap on the salary base on which total social security contributions (pension, sickness and unemployment) are calculated is CZK 1,355,136; there is no cap on health insurance.

 

Work permits

EU nationals and citizens of Iceland, Liechtenstein, Norway and Switzerland do not require a work permit or a visa to live and work in the Czech Republic, but they must be registered with the Labour Office.

An employer must first announce a vacant job position. If the position is not filled by a Czech or EU national within one month, the employer can apply for a work permit to employ a non-EU foreign national.

A work permit application must include a degree equivalency certificate, which confirms that the applicant’s foreign educational qualifications are equivalent to a certain standard of Czech qualification. The application must also include police clearance from the country of origin and/or from the country were the applicant used to live longer than 90 days.

All non-EU nationals who intend to work in the Czech Republic are required to obtain an Employee Card / Blue Card / Green Card before the commencement of their employment.

The Employee Card is a type of permit for long-term residence for the purpose of staying and working. This Employee Card is valid for the duration of the employment relationship, but not for more than two years, with an option to repeatedly extend its validity.

Non-EU foreign nationals must also register their place of residence with the local Foreigners’ Police Office within three days of their arrival in the Czech Republic. EU nationals intending to stay in the Czech Republic for more than 30 days must register their place of residence with the local Foreigners’ Police Office. EU nationals intending to stay in the Czech Republic for more than 90 days can apply for a Confirmation of Temporary Residence at the Office of the Ministry of Interior.

The EU’s Blue Card is a combined work and residence permit for highly qualified, non-EU foreign nationals working in an EU territory.

Payroll cycles and overtime rules

The minimum wage in the Czech Republic is currently CZK 11,000 per month or CZK 66 per hour. From January 2018, the minimum wage will increase to CZK 12,200 per month or CZK 73.20 per hour. Overtime is payable at a rate of at least 25% above the normal pay rate (or equivalent time-off). Night work and work on weekends is payable at a rate of at least 10% above the normal pay rate. Employees who work on public holidays are entitled to a compensatory day off, or to a 100% premium.

The Czech Republic has a five-day standard working week (Monday – Friday).  Normal business hours are between 8:00am and 6:00pm, and work between 10.00pm and 6.00am is considered night work. Maximum working hours cannot exceed 40 hours per week.

An employee is entitled to a daily rest break of at least 30 minutes after six hours of continuous work, an uninterrupted rest period of 11 hours between two consecutive work days, and an uninterrupted rest period of 35 hours in a week. Hours worked in excess of the normal working hours count as overtime, which cannot exceed 8 hours in a week and 150 hours in a year.

HR legislation

Employment in the Czech Republic is primarily governed by the Labour Code of 2006. The Labour Code governs the terms and conditions of employment such as working hours, holidays and rest periods, wages, overtime, occupational health and safety, and termination of employment. The Labour Code applies to all employees in the Czech Republic regardless of their nationality.

When one or both of the employer and the employee are foreign nationals, another jurisdiction's law may be chosen as the governing law for the employment relationship. However, the choice of law cannot result in the employee being deprived of the protections offered by the provisions of Czech employment law.

Talk to us

TMF Czech Republic’s HR and payroll experts can help you stay compliant with local rules, wherever you operate. We speak the local language and keep up-to-date with changes in local regulations. 

Find out more about how our services can help your companies reach new heights. 

A version of this article originally appeared in the December 2017 edition of Global Payroll Association magazine.

Written by

Frederic Labiche

Managing Director

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