08
Tue, Oct
102 New Articles

Czech Republic: New Employers Obligations Regarding Employees Working Under Agreements to Complete a Job

Czech Republic: New Employers Obligations Regarding Employees Working Under Agreements to Complete a Job

Czech Republic
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

New regulations governing agreements to complete a job (in Czech: dohoda o provedení práce) came into effect in the Czech Republic on 1 July 2024, with additional provisions set to be implemented on 1 January 2025. These amendments significantly modify the original provisions outlined in the Czech Consolidation Package (Act No. 349/2023 Coll.).

1. What changes were implemented on 1 July 2024?

1.1 Compulsory registration of all employees working under an agreement to complete a job

Until now, employers only had a duty to register employees working under agreements to complete a job if the employee was covered by sickness and pension insurance, i.e. in a given month their income was above CZK 10,000. In that case, a registration with a register of insured persons maintained by the Czech Social Security Administration was necessary.

From July, it’s compulsory for employers to register every employee working under the agreement to complete a job, regardless of their income.

All current employees must be registered by 20 August 2024. For the registration, employers will use forms published by the Czech Social Security Administration on their official website.

1.2 Employers must electronically report income of all employees working under an agreement to complete a job

Following the registration, every month employers must file a report containing a list of employees working under an agreement to complete a job and their income. The reporting can be done via this special form published by the Czech Social Security Administration.

The deadline for reporting for each month is the 20th day of the following month, i.e., the reporting for July 2024 must be completed by 20 August 2024.

2. What will change from 1 January 2025?

The current rule, under which a monthly remuneration below a fixed limit of CZK 10,000 (for each agreement to complete a job) is exempt from social security contributions, will be replaced from 1 January 2025 by a new system. It will be based on a new limit calculated as a percentage of the national average wage. Complex set of rules will apply on employees who work for several employers simultaneously based on multiple agreements to complete a job.

From 2025 the following rules will apply:

(a) Should the employee work for only one employer (regardless of the number of agreements to complete a job entered into), they will be exempt from social security contributions if their monthly remuneration does not exceed a limit of 25% of the national average wage (CZK 10,500 per month in 2024).

(b) Should the employee work for several employers under several agreements to complete a job, they may be exempt from paying social security contributions only regarding the work performed for one of the employers – the one who announced to the Czech Social Security Administration its will to use the newly introduced “regime of notified agreement” (in Czech: režim oznámené dohody). The first employer to make the announcement may use the regime of notified agreement.

The other employers must abide to the following:

  • Should the employee earn up to CZK 3,999 per month, they will be exempt from paying social security contributions.
  • Should the employee earn CZK 4,000 per month or more, the social security contributions must be paid.

Given the breadth and complexity of the changes, we will gladly answer any of your additional questions.

By Ondrej Benes, Counsel, and Nikola Hnojilova, Associate, Wolf Theiss

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

PRK Partners has one of the most experienced legal teams on the market. We are consistently rated as one of the leading law firms in the region. We have received many significant honours and awards for our work. We represent the interests of international clients operating in the Czech Republic in an efficient way, combining local knowledge with an understanding of their global requirements in a business-friendly approach. We are one of the largest law firms in the Czech Republic and Slovakia. Our specialised teams of lawyers and tax advisors advise major global corporations as well as local companies. We provide comprehensive legal advice drawing on our profound knowledge of local law and markets.

Our legal advice delivers tangible results – as proven by our strong track record. We are the only Czech member firm of Lex Mundi, the world's leading network of independent law firms. As one of the leading law firms in the region, we have received many national and international awards, in some cases several years in a row. Honours include the Chambers Europe Award for Excellence, The Lawyer and Czech and Slovak Law Firm of the Year. Thanks to our close cooperation with leading international law firms and strong local players, we can serve clients in multiple jurisdictions around the globe. Our strong network means that we can meet your needs, wherever you do business.

PRK Partners has been repeatedly voted among the most socially responsible firms in the category of small and mid-sized firms and was awarded the bronze certificate at the annual TOP Responsible Firm of the Year Awards.

Our work is not only “business”: we have participated on a longstanding basis in a wide variety of pro bono projects and supported our partners from the non-profit sector (Kaplicky Centre Endowment Fund, Tereza Maxová Foundation, Czech Donors Forum, etc.).

Firm's website: www.prkpartners.com

Our Latest Issue