Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll services and hire new talent in the Czech Republic.
Overview
The Czech Republic prides itself on being one of the countries with the most number of castles, with over 2000 castles scattered throughout the country. Some of these castles date back to the 9th century, and the Prague Castle Complex is said to be the largest castle complex in the world, spanning over 70,000 square meters. Abundance in the Czech Republic isn’t limited to just castles but also to a talented and skilled workforce that can be found everywhere in Czechia.
Do your organization's expansion plans require hiring employees in the Czech Republic? Do you lack a physical entity in the country – a key requisite to hire local talent? Neeyamo – one of the top Global payroll providers, assists organizations worldwide with onboarding and managing employees in the Czech Republic- processing payroll, payroll and tax solutions, managing local compliance requirements, benefits, and more.
Our Presence
Facts And Stats
Capital
Prague
Currency
Czech Koruna (CZK)
Official Language
Czech
Fiscal Year
1 January - 31 December
Date Format
DD/MM/YYYY
Country Calling Code
+420
Other Languages
Slovak, Russian, Polish, Ukrainian, Vietnamese
Time Zone
Central European Time Zone (UTC +01:00)
Global Payroll
Overview
What is Global Payroll?
Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity. The solution to this is using a global payroll outsourcing company such as Neeyamo.
What is a Payroll System?
A payroll system is software that is used to manage employee payments, inclusive of their wages, deductions, bonuses, etc. Global payroll processing is typically done with the assistance of an outsourced payroll provider.
Over the years, Neeyamo – Global Payroll Services has observed these complexities and strived to provide global payroll solutions through a single technology platform – Neeyamo Payroll. Neeyamos global payroll systems ease the process for companies looking to outsource their global payroll requirements and aid them in maneuvering the tricky payroll system in the Czech Republic. Neeyamos payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.
How is payroll calculated?
Neeyamo acts as your personalized Payroll Calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered.
Payroll Taxes
Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.
Employee Taxes
In the Czech Republic, the following contributions for employee taxes are made:
Employee Payroll Contributions
| Social Security / Pension (gross income exceeding the annual maximum 1,867,728 CZK) | 6.50% |
| Health Insurance | 4.50% |
| Total Employee Cost | 11.00% |
Employer Taxes
For Employer Taxes, the following contributions are made:
Employer Payroll Contributions
| Social Security / Pension (gross income exceeding the annual maximum 1,867,728 CZK) | 24.80% |
| Sickness | 2.10% |
| Unemployment | 1.20% |
| Health Insurance | 9.00% |
| Total Employee Cost | 33.80% |
Payroll Cycle
Overview
Undoubtedly, payroll is a critical process for any organization. The pay cycle in the Czech Republic refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.
Frequency
The payroll cycle in the Czech Republic is monthly, and the employer must set a regular payment date. Salaries must be paid by the end of the calendar month following the month in which the work was completed.
13th Month Cycle
Payroll Cycle Frequency 13th Month Cycle In the Czech Republic, there is no legal requirement to pay a 13th-month salary. However, many employers pay a 13th-month salary bonus, which is typically performance-based.
Global Work
Overview
EOR/Employer of Record: Meaning
An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.
An EOR service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.
This allows organizations to focus on collaborating with the employees in the Czech Republic for operational tasks, with the knowledge that they have a cost-effective solution to support their global payroll & HR requirements, as they continue their global expansion.
Neeyamo, a global payroll provider, using its Cloud-based HR and Payroll software, strives to provide its customers with a seamless employee management experience and offers global payroll and tax services as well as EOR services with our Global Payroll Technology Stack.
HR Mandates and Practices
Mininum wage
The minimum wage for 2024 is 112.50 Czech koruna per hour and 18,900 koruna per month.
Overtime
Generally, overtime must be paid for work in excess of 40 hours per week. Employers may not require more than an average of eight overtime hours in a 26-week period, and 150 hours of overtime in a calendar year.
Employees under the age of 18 should not work overtime. Overtime pay is 125% of the usual wage rate. If worked on a weekend, an employee should be paid 110% of their usual wage rate.
Employers may give extra time off instead of money in exchange for overtime work. In case overtime falls on a holiday, then an employee is entitled to time off as well as wage.
Data Retention Policy
In the Czech Republic, employers must keep records of employees, which should include employees' names, positions, hours worked, wage payments and deductions, and other supporting documents for at least ten years.
Employers should also keep a log of related accidents and deaths as prescribed by the Social Security Administration. They must maintain all documents relating to prior workers' compensation claims for 30 years after the relevant incident.
Tax records must generally be kept for a minimum of three years.
The statute of limitations for retaining health insurance records is five years but may be extended to 10 years in some situations.
Hiring and Onboarding Requirements
Hiring
Czech law prohibits hiring and employment discrimination based on protected characteristics such as race, ethnicity, nationality, gender, age, sexual orientation, religion, disability, and beliefs.
Companies must refrain from relying on these characteristics in hiring, and avoid these topics in interviews to prevent unconscious bias.
Onboarding
The following documents are needed when onboarding an employee in the Czech Republic:
- Candidate Full Name
- Address, City, and Municipality
- Nationality
- Email Address
- Contact Number
- Passport Number
- Bank Name
- Bank Account Number
- Copy of Valid Identification Card
Probation
The Czech Republic’s probationary period depends on the type of role and is stipulated within the employment agreement. In general, probation periods for regular salaried employees are between two and three consecutive months, whereas for chief officers, the probation period can be up to six months.
Leave
National Holidays
An employee is entitled to receive compensatory payment during sickness from the employer for the working days during the first 14 calendar days of sickness. After this period, the employee receives payment from the Social Security system for up to 380 calendar days.
- January 1: Restoration Day of the Independent Czech State
- April 7: Good Friday
- April 10: Easter Monday
- May 1: Labor Day
- May 8: Liberation Day
- July 5: Day of the Slavic Apostles Cyril and Methodius
- July 6: Jan Hus Day
- September 28: St. Wenceslas Day
- October 28: Czechoslovak Independence Day
- November 17: Struggle for Freedom and Democracy Day
- December 24: Christmas Eve
- December 25: Christmas Day
- December 26: St. Stephen's Day
Sick Leave
An employee is entitled to receive compensatory payment during sickness from the employer for the working days during the first 14 calendar days of sickness. After this period, the employee receives payment from the Social Security system for up to 380 calendar days.
Maternity Leave
Expecting mothers are entitled to a leave of 28 weeks (37 weeks in case of multiple births), which can start 8 to 6 weeks prior to the expected date of birth, depending on the mother´s decision.
The maternity leave pay is fully covered by the social security system.
Paternity Leave
New fathers are entitled to 7 calendar days of leave, which must be taken during the first 6 weeks following the child´s birth.
The respective pay is fully covered by the social security system.
Other Leave
An employee can take “other leave,” for which the law specifically mentions the conditions of when and to what extent such leave is covered by compensatory pay and when it is unpaid.
- Medical treatment at the medical facility
- Wedding
- Birth of the child
- Death of a family relative
- Civic duty leave
Situations when the employer cannot assign work to an employee for operational or other reasons
Termination
Notice Period
When notice of termination is given, the employment relationship will come to an end upon the expiry of the notice period. The notice period must be the same for both the employer and the employee.
The notice period shall be at least 2 months and can be extended only by agreement between the employer and the employee in writing. The notice period shall start to run on the first day of the calendar month following delivery of the notice.
Severance Pay
On termination of an employment relationship, an employee whose employment relationship is terminated by notice given by his employer for one of the reasons stipulated by the Labour Code (e.g. the employer's undertaking, or its part, is closed down or relocated, the employee becomes redundant) or by agreement for the same reasons is entitled to receive from the employer severance pay at least in the amount equal to:
- Once his/her average (monthly) earnings where an employment relationship with the employer lasted less than one year
- twice his/her average earnings where an employment relationship with the employer lasted at least one year and less than two years
- triple his/her average earnings where an employment relationship with the employer lasted at least two years.
An employee whose employment relationship is terminated by notice given by his/her employer because the employee is not allowed to perform his current work due to an industrial injury, an occupational disease, or due to threat of occupational disease; or by agreement for the same reasons is entitled to receive severance pay in the amount of at least twelve times his/her average earnings upon termination of the employment relationship.
Visa
Overview
The Czech Republic issues Employee Cards that allow employees intending to work in the country for more than three months to reside in the country for up to two years, with the option to apply to extend the applicability of the residence period.
An Employee Card also allows its recipient to work in the aspect of employment for which the card was issued. An Employee Card can be applied for at the Ministry of the Interior in the Czech Republic or at a Czech embassy in the foreign national's country of origin.
Employees may also obtain Blue Cards, which are a combination of work permits and residence permits. Blue cards are designated for highly skilled foreign workers, who are working in positions requiring high qualifications for a period of at least one year at wages at least 1.5 times the average gross wage in the Czech Republic.
Employers do not need to apply for employment permits for foreign workers with permanent residency permits or citizens of other EU countries, nor do these employees need to apply for additional work or residency permits.
Employee Background Checks
Legal and Background Checks
Private companies cannot conduct background checks other than requiring information from the candidate and recommendations from previous employers. They can, however, ask the candidate to present a criminal record issued by the competent authorities.
The employer must ask the candidate for a medical certificate that ascertains that the candidate is medically fit to be employed since his medical fitness prior to signing the agreement is an issue of the employment agreement’s validity.
Last updated on January 11, 2024
If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com
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