Employment Law News

We would like to inform you about the latest changes affecting employment law. We provide an overview of the main changes effective as of 1 July 2024 below:

• An employer who has heretofore employed and employs only uninsured workers based on an Agreement on Performance of Work (hereinafter an “APW”) must register with the Employer Register maintained by the Czech Social Security Administration (CSSA) no later than 31 July 2024.
• Said employer will be obliged to keep records of all agreements on performance of work. Every month, said employer will be obliged to provide the competent social security administration with a list of all employees working under an APW, including the amount of their income, by the 20th day of the following month, through a Statement of Income Settled by Employer to Employees Active Based on the APW. Employees who started working for an employer before 1 July 2024 will have to be registered no later than 20 August 2024 if their APW continues in July.
• In the end, deductions of insurance premiums as well as the application of withholding tax will remain unchanged for APWs until the end of 2024. From 1 January 2025, an APW will be treated with regard to insurance as either classic employment or small-scale employment. It will depend on the amount of agreed income per calendar month.
• The sole exception will be (also with effect from January 2025) APWs in the notified agreement scheme. This scheme can only be applicable to an APW for one employer. However, the employer will have to “reserve” an employee first. In addition, an employer will be able to check in the CSSA ePortal whether an employee is using this scheme with someone else.
• In the notified agreement scheme, the decisive amount for participation in insurance will correspond to 25% of the average salary set in accordance with the Act on Premiums for Social Security and Contributions to the State Employment Policy. It is highly likely to be an amount higher than the current limit of CZK 10,000. This is because the average salary will be higher than CZK 40,000. More detailed information, including the precise amount of the limit, will be published in the autumn.
• From 1 July 2024, amendments to the Employment Act will also come into force and will influence, in particular, the employment of foreigners in the Czech Republic. The Labour Office will now be entitled to remove an unfilled vacancy notified in the vacancy records six (6) months after the announcement of the vacancy and, in cases where an employer should fail to provide the necessary cooperation, to fill said notified vacancy. The aim of this measure is to keep the records up-to-date and ensure they correspond to the labour market’s actual needs.
• In this context, the information obligation of the employer concerning the employment of foreigners in the Czech Republic will be performed electronically, where the only acceptable form will be notification via the employer’s data box or the employer’s authorised representative. In contrast to current practice, where it is possible to submit notification of the commencement or termination of a foreigner’s employment in electronic or paper form on the prescribed form, it will now be necessary to submit the above information in the form of an .xml data file that contains all the necessary information.
• In principle, the labour market test for employment cards is cancelled. Until now, an employer who wanted to employ a foreigner was obliged to notify the Labour Office of the vacancy. The Labour Office took 10 to 30 days to verify whether it was possible to employ a Czech citizen in the same position. Under the new regulations, from July 2024 it will be sufficient if the employer only announces the vacancy for a foreigner, without having to wait for additional steps from the Labour Office. This will markedly accelerate the employment of foreigners. However, this does not mean that the labour market test will be abandoned entirely, as the Employment Act allows for the test to be performed in the event of high unemployment and to determine its duration. In other words, if the local regional labour office has enough suitable job applicants or seekers for a job, the labour market test can be performed in case of high unemployment.

In case of specific questions, please do not hesitate to contact us, we are always at your disposal.

Team WTS Alfery, Alfery Hrdina Advokáti