Payroll compliance in the Czech Republic
The Czech Republic is a prosperous, well-regulated country, which has seen steadily rising GDP, relatively low unemployment and rising levels of foreign direct investment over the past decade or so. The country ranks 63rd for the complexity of its business environment, according to TMF Group’s 2022 Global Business Complexity Index, making it one of the easier countries to do business in.
- The Czech Republic’s labour laws are enshrined in the Labour Code of 2006, which applies to all employees in the country regardless of their nationality. The Code governs employment-related issues such as working hours, holidays and rest periods, wages, overtime, occupational health and safety, and termination of employment.
- When either the employer or employee are a foreign entity or national, another jurisdiction’s law may be chosen as the governing law for the employment relationship. However, this cannot result in the employee being deprived of the protections offered by Czech labour laws.
- Employees in the Czech Republic are generally paid monthly, and payment must be made on the same day of each month, no later than in the calendar month following the month in which the work was performed.
- The Czech Republic has a mandatory social security system that provides pension, sickness, unemployment and health benefits. Contributions towards these schemes must be made by both the employer (33.8% of gross salary) and the employee (11% of gross salary).
If you’re doing business in the Czech Republic and are looking to learn more about the country’s labour laws, incorporation procedures, tax implications and compliance requirements, request a copy of our full country profile, Doing business in Czech Republic.