Czech Republic

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KEY DEVELOPMENTS FOR 2025

Proposed Amendments to the Labour Code

A number of amendments to the labour code are anticipated to come into effect between April and July 2025 and include:

1. Maximum probationary period
   The maximum probationary period is to be extended from three to four months for standard employees and from six to eight months for managing employees.
2. Notice period
   The notice period will commence on the day after the notice is delivered, rather than the first day of the calendar month following delivery of the notice as it currently stands. Furthermore, where termination is on disciplinary or poor performance grounds, the notice period will be reduced from two months to one month.
3. Parental leave rights
   Employees returning from parental leave before the child is two years old must be provided with the same position they held before taking maternity or parental leave up to a maximum of 28 weeks.
4. Salary currency
   Salary may be permitted to be agreed in foreign currency other than the Czech crown.

In preparation, employers should review employment contracts and internal policies to implement any changes or additional requirements under the new legislation when it takes effect.

Abolition of Jury System in Labour Courts

With effect from 1 January 2025, the traditional jury system (consisting of one professional judge and two jury members from the public) in labour courts has been abolished. It is generally anticipated that the change will speed up litigation.

Employment Act: Zero-hour Contracts

Employers must continue to implement the reporting introduced under the legislative framework on 1 July 2024, but the additional obligations expected to be introduced on 1 January 2025 have been retracted and so no further steps need to be taken in relation to this. The monthly remuneration from a form of zero-hours contract, the DPP contract, will be increased to CZK 11,500 for the year 2025 and so as of 1 January 2025, employers may provide slightly higher remuneration based on the DPP agreement without having to pay the health and social security contributions.

KEY DEVELOPMENTS FOR 2024

Changes to Agency Employment

An amendment to the laws regulating agency employment has been discussed in the Czech Parliament and is expected to come into force in early 2024. The amendment will introduce various changes to agency employment. There will be changes impacting the possibility of unilateral termination of employee assignment by the user employer. The employers using agency employees should improve their familiarity with the new rules and review their services agreements with the agencies.

Significant Amendment to the Labour Code

In October 2023, an amendment to the Labour Code implementing the EU Directives on work-life balance (No. 2019/1158) and on transparent working conditions (No. 2019/1152) entered into force. This amendment requires employers to implement a multitude of new actions, some of which are set out as follows:

• Employers will be required to enter into remote working agreements with all employees working from home.
• Employers must additionally review templates of 'zero-hour' agreements (in Czech referred to as ‘DPP’ (agreement to complete a job) and ‘DPC’ (agreement to perform work)) and set new internal rules for cooperation with employees based on these agreements.
• Employers should also prepare new templates for the provision of mandatory information for newcomers, review internal polices for employees who are parents or caregivers, and review internal processes with respect to electronic delivery of documents.

Based on the amendment, effective 1 January 2024, employers will be further obliged to provide annual leave to employees working on the basis of Czech 'zero-hour' agreements.

Changes to Tax Laws

From 1 January 2024, significant changes have been introduced in the field of employee taxation, payments for social security and health insurance contributions. These changes impact the provision of employee benefits (like non-monetary contributions to sport or cultural activities), whose tax favourable regime will now be capped at approximately €800 per calendar year for all such benefits.

From 1 July 2024, changes to social security and health insurance payments from income from DPPs will be introduced. Currently, the cap for income, which is not subject to social security and health insurance payments, is calculated for each employer separately. Starting in July, there will be an additional cap introduced, which will apply to all DPPs agreed by one employee at all employers. Related administrative and notification duties will be introduced.

KEY DEVELOPMENTS FOR 2019

Increase of Minimum Salary

From 1 January 2019, the minimum wage increased to CZK 13,350 per month or CZK 79.80 per hour. In addition, the respective rates of minimum salaries for different categories of jobs also increased accordingly.

Compensation for First 3 Days of Sickness Leave Reintroduced

With effect from 1 July 2019, the 3-day “exclusion period” in relation to mandatory sickness insurance will be abolished. This means that employees on sick leave will be entitled to paid their salary from the first day of their sickness absence (which must be confirmed by a medical certificate). The rules regarding paid salary and entitlement to sickness benefits from the state from the 15th day of sickness remain unchanged.

Inspections of Cross-Border Posting of Employees Continue

The Labour Inspection Authority continues to conduct inspections of contractual relationships of Czech businesses where third-country nationals are posted to the Czech Republic by their employers to provide services to Czech companies. The inspections focus on whether the provision of services are in fact disguised hiring-out of labour, which have stricter immigration and work permit rules.