An Employer of Record (EOR) in the Czech Republic provides a comprehensive solution for businesses that want to hire talent without setting up a local entity. The EOR assumes the primary employer's role and takes responsibility for ensuring compliance with local labour laws, processing payroll, fulfilling tax obligations, managing employment contracts, and other related matters and reduces the risks associated with non-compliance and potential penalties.

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Hiring an Employer of Record (EOR) in the Czech Republic can assist businesses in managing intricate labour regulations. Partnering with an Employer of Record (EOR) in the Czech Republic can provide several benefits, regardless of whether you are a small startup or a multinational corporation. By leveraging the local talent pool, businesses can access cost-effective hiring options and expand their presence in the Czech market.

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To navigate the Czech Republic's labor laws, foreign employers can benefit from partnering with an Employer of Record (EOR) or Professional Employer Organization (PEO). These services, like Gloroots, provide expertise in Czech labor regulations, ensuring compliance and reducing legal risks. 

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EOR/PEOs possess in-depth knowledge of employee rights, benefits, and working conditions, safeguarding employees and simplifying the complexities of the Czech labor market. They assist in drafting contracts that adhere to local laws and help determine worker classification.

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The cost of Czech Republic EOR/PEO services in the Czech Republic may differ based on various factors, such as the number of employees, the extent of services needed, and the intricacy of the project. The pricing structure for Czech Republic EOR/PEO services usually involves a monthly fee per employee or a percentage of the employee's salary. Extra charges may apply for additional services or customization.

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Key Metrics For Foreign Employers 

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The Czech Republic  ranks 21st globally for talent competence in the Global Talent Competitiveness Index. The Czech Republic has relatively low labor costs compared to other Western European countries. This makes it an attractive destination for businesses looking to reduce their costs. The Czech Republic ranks 16th in the world for labor productivity, according to the World Economic Forum.

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The table below depicts key indicators from the Global Talent Competitiveness Report for employers wishing to hire from the Czech Republic.

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Source: The Global Talent Competitiveness Index 2023

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Through the Gloroots’ Recrew platform, you can discover amazing talent in the Czech Republic.

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Misclassification refers to the improper classification of workers, particularly in terms of their employment status. 

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Utilizing a PEO/EOR in the Czech Republic helps mitigate the risks associated with misclassification by ensuring compliance with labour laws, proper employee classification, accurate payroll processing, and access to comprehensive benefits. 

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Employment contract

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In the Czech Republic, it is mandatory for both the employer and employee to sign a written employment contract when entering into an employment agreement. The contract must contain crucial information such as :

•  Identification of both the employer and employee
• Employment start date (and duration for temporary contracts)
• Workplace location
•  Job description and responsibilities
• Salary details (including payment frequency and method)
•  Working hours (including regular hours, overtime policy, and breaks)
• Holiday entitlement (including annual leave and public holidays)
•  Notice periods for termination (both for the employer and employee)
•  Reference to collective agreements (if applicable)
• Health and safety regulations
• Company policies (such as code of conduct, dress code, and confidentiality agreements)

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Employment contracts are typically considered permanent unless otherwise stated. However, fixed-term contracts are allowed as long as they do not exceed a duration of three years. In certain circumstances, these contracts offer flexibility to both employers and employees.

Additionally, it is noteworthy that Czech labor law permits work to be carried out even without a formal employment agreement. Work can be performed through agreements commonly referred to as “agreement on work activity” or “agreement on work performance”.

These agreements offer a different approach to work arrangements, providing more flexibility and independence. 

It’s important for employers to understand the intricacies of these programs before making a hire. 

This might sound overwhelming—but it doesn’t have to be. A solution like Gloroots eliminates the barriers for you. With Gloroots’ Employer of Record offering, hiring and managing employees globally is a piece of cake.

Get an overview of what you need to know when hiring in Czech Republic.

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Overtime 

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Employees are allowed to work overtime, but the number of hours is restricted to a maximum of eight hours per week and 150 hours per year. Employees who work beyond their regular working hours are entitled to receive an additional 25% of their usual hourly pay for each hour worked as overtime compensation.

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Minimum Wage

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The minimum wage in the Czech Republic is CZK 17,300 per month.

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Overtime 

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Employees are allowed to work overtime, but there are restrictions in place. Overtime is limited to a maximum of eight hours per week and 150 hours per year. If employees work beyond their regular working hours, they must be compensated at a rate of 25% more than their normal hourly pay for each hour worked as overtime.

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Annual leave 

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Employees are entitled to a minimum of four weeks of paid annual leave per year. In their first year of employment, employees are eligible for a prorated amount of annual leave after completing 60 days of work with their new employer.

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The Czech Republic observes 13 public holidays. If employees are required to work on these holidays, they should be compensated at a rate of double their regular pay.

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Maternity and Paternity leave 

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Female employees have the option to take a maximum of 28 weeks of maternity leave, or 37 weeks in the case of multiple births. Maternity leave can commence either six or eight weeks prior to the expected birth date. To qualify for maternity benefits from the Czech Social Security Agency, the employee must have been employed for at least 270 days in the two years preceding the leave. These benefits amount to 70% of the employee's regular wages.

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The child's father is entitled to 14 days of paternity leave, during which he receives a paternity allowance equivalent to the statutory maternity benefit. To avail this leave, it must be taken within the first six weeks following the child's birth.

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Sick Pay

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As per the Labour Code, it is mandatory for employers to offer sick pay to their employees who are unable to work due to injury or illness for the initial two weeks of their sick leave. The sick pay provided to an employee should be a minimum of 60% of their regular wages.

The employee is eligible to receive sick leave benefits from social security starting from the 15th day of their sick leave and up to a maximum of 380 days. The longer an employee is on sick leave, the higher their sickness benefits will be.

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Employees and employers in the Czech Republic are subject to the following tax and social security contribution rates :

Employer Payroll Tax

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Employee Payroll Tax

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Employee Income Tax

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Employment Termination and Severance

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Termination Process

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In the Czech Republic, employers are required to provide written notice with a stated reason when terminating an employee. Employees who voluntarily resign are not obligated to provide a reason for their decision.

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Notice Period

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 Employers must give a minimum of two months' notice to terminate an employee in the Czech Republic. The notice period officially begins on the first day of the following month. For example, if an employee receives a termination notice on March 15, their employment will not be fully terminated until June 1.

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Severance Pay

•  The amount of severance pay in the Czech Republic depends on the duration of an employee's tenure with the company. Employees who have worked for less than one year are not entitled to severance pay.
•  For termination within the first year, severance pay is equivalent to one month's payment.
•  For termination after two years, severance pay amounts to two months' payment.
•  For termination after three years, severance pay amounts to three months' payment.

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Probation Periods

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Probationary periods in the Czech Republic are limited to a maximum of three months. However, for executive officers, this period can be extended to six months.

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When it comes to global hiring, ensuring compliance can be a daunting task. Employers need to navigate through employment laws, payroll procedures, DE&I compliance, GDPR, and other data protection regulations to ensure a smooth and legally compliant onboarding process. Setting up the necessary infrastructure and keeping up with the ever-evolving compliance landscape can add significant complexity to the hiring process.

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At Gloroots, we are here to simplify this journey for you. Our comprehensive solutions offer a centralized platform to efficiently manage all aspects of hiring in the Czech Republic. With our in-house experts, you can confidently navigate cross-border employment and payroll compliance risks. We provide support in generating employment contracts, ensuring timely payments, and offering compliant benefits, allowing you to focus on screening and selecting the right talent.

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Our promise is to provide you and your employees with a seamless global employment experience.

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Contact our experts today to kickstart your global hiring campaign in the Czech Republic.

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Growing a team means hiring the right employees at the right time and for the appropriate positions. To hire in the Czech Republic, employers must have a local entity n and use local resources to handle compliance, payroll, tax, and benefits management. However, the complexity around employment regulations in the Czech Republic makes compliance with employment laws demanding.

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With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.

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