Sick leave for self-employed workers. When is it payable?

What is sick leave?

Sick pay is one of the sickness insurance benefits that provides financial support to employees (and in some cases self-employed people if they pay voluntarily) when they are temporarily unable to work. These benefits are paid in the event of illness, injury or quarantine. You may often see the terms sick leave or sick leave in connection with sick pay.

Sick pay can get you out of a jam, such as a long-term illness or an injury that prevents you from working for a long time. So if your savings account is only a few thousand and your other accounts aren’t much better off, it’s a good idea to choose one of the two, or combine the two options of paying voluntary sick pay and commercial insurance:

Voluntary sickness insurance for self-employed persons

Sickness insurance for self-employed persons works in a similar way to the classic compulsory sickness insurance for employees. However, the conditions are a bit stricter and the calculation of the advance payments and sickness benefits is different.

How do I apply for sickness insurance?

First of all, as a self-employed person, you must register for voluntary sickness insurance, as it is not automatic. You can sign up through the district social security administration (OSSZ) under which you fall. To do this, you need to visit the ePortal of the Czech Social Security Administration (ČSSZ), where you can fill in the online application form, or download the form, fill it in and deliver it to the relevant OSSZ (in person, by post or by mail). The application form can be submitted at any time during the year, for example when submitting income and expenditure statements.

If you are just starting a business, you can apply for sickness insurance when you set up your business. Just fill in the single registration form (used to register for the various duties of self-employed workers) and indicate in Part B of the form the date from which you want to take out voluntary sickness insurance.

The earliest date on which participation in the insurance starts is the date of application. Sickness insurance cannot therefore be paid retrospectively. If you forget to pay the advance payment of sickness insurance or pay it late (after the end of the following month), your participation in sickness insurance will cease and you will have to apply again.

Amount of advance payments for sickness insurance

Sickness insurance premiums for self-employed persons (self-employed persons) are determined on the basis of the assessment base (AB), which self-employed persons choose themselves. The premium rate is set at 2.7% of the assessment base in 2024. Here is a detailed procedure on how the advance payments are determined:

• The minimum monthly GAAP is CZK 8,000, which corresponds to a minimum monthly payment of CZK 216.
• The maximum monthly contribution depends on the income from the last income and expenditure statement. The maximum monthly gross monthly income corresponds to the amount calculated as the average monthly income (based on the assessment base from the income and expenditure statement).

If it is not possible to determine the maximum wage (e.g. when starting a business), it is equal to half of the average wage applicable for the year. For 2024, half of the average wage is CZK 21 984, which corresponds to a maximum payment of CZK 594 per month.

Special rules apply to self-employed persons in the flat-rate scheme. For them, the maximum amount of advances is determined on the basis of the chosen flat-rate band:

At the same time, self-employed persons with a flat-rate scheme have to pay advances even if they have spent the whole month on sick leave, but they do not have to pay sickness insurance.

How to pay advance payments of sickness insurance

Sickness insurance is payable from the 1st to the last day of the month for which the premium is paid. For example, premiums for February must be paid no later than 31 March. In the month in which you sign up for sickness insurance, the premium is not due until the end of the following month.

Payments must be sent to the special bank account of the Social Security Office, which is designated for sickness insurance. You can find the account numbers of the individual Social Security Institutions on the website of the Social Security Institution for your place of business. Please use your personal identification number as the variable symbol.

If you have not paid your insurance premium by the due date, you can pay it by the end of the following month. This can be paid from the overpayment or together with the next premium payment. However, you can only pay the amount corresponding to the minimum monthly assessment (i.e. CZK 216). Otherwise, it will be cancelled.

If, on the other hand, an overpayment occurs (e.g. you pay more than your maximum assessment base), it will be calculated and refunded after the end of the calendar year (by the end of February of the following year at the latest). However, the amount up to CZK 432 will remain in your account as a reserve.

If you are entitled to sick pay for a full calendar month, you do not pay any insurance for that month. However, if you are sick for only part of the calendar month, you must pay the premium for that month. This includes the first 14 days of illness when you are not yet receiving sickness benefits.

Conditions for granting sickness benefits

In addition to the general conditions applicable to employees, self-employed workers must meet specific requirements. In general, the conditions include:

• Participation in sickness insurance: entitlement to sickness benefits only arises if the self-employed person is covered by sickness insurance. Participation in the insurance starts on the date indicated on the application form, but not before the date on which the application form is submitted. The self-employed person must also meet the minimum period of participation in sickness insurance, which is set at 3 months immediately before the incapacity for work or quarantine.
• Incapacity for work: Sickness benefits are only granted if the occurrence of temporary incapacity for work is decided by the attending physician by issuing a sick note and if the temporary incapacity for work or quarantine lasts longer than 14 calendar days.
• Interruption of business activity: during the period of incapacity for work or quarantine, the self-employed person may not engage in self-employment. Active business would then result in loss of entitlement to benefits.

The amount of sickness benefits

The amount of sickness benefits for self-employed workers is calculated on the basis of a reduced daily assessment base, which is derived from the income earned during the reference period:

• The assessment base is the sum of the monthly bases on which the self-employed person paid sickness insurance during the reference period.
• The reference period is usually the 12 calendar months preceding the month in which the incapacity for work arose. The reference period excludes months when the self-employed person did not pay sickness insurance or was not obliged to pay insurance premiums (e.g. was entitled to sickness benefits, maternity pay or long-term sick pay for the whole month).

A reduction is made from the calculated daily assessment base, which means that different parts of the assessment base are taken into account in different proportions:

The amount of the daily benefit is based on the reduced daily assessment base and depends on the duration of the incapacity for work:

• From the 15th to the 30th day of incapacity for work: 60% of the reduced daily assessment base.
• From the 31st to the 60th day of incapacity for work: 66 % of the reduced daily assessment base.
• From the 61st day of incapacity for work: 72 % of the reduced reduced daily assessment base.

Commercial sickness insurance

If you don’t want to pay for voluntary sickness insurance from the state, you can still take advantage of commercial sickness insurance. This is offered by some commercial insurers and you can set your payout after 15, 30 or 60 days of illness, depending on their offer.

As a rule, you will need to provide proof of the previous year’s tax return. The amount of the payments should be set so that if you are unable to earn money, it will not mean a significant drop in income and will allow you to pay all the mandatory payments (rent, utilities, mortgage, etc.) and still make a reasonable living.

Termination of voluntary sickness insurance

If you decide to end your voluntary sickness insurance, you must apply to the district social security office. You can submit it in person, send it by post or by mail, or use the ePortal of the Social Insurance Institution.

Participation in sickness insurance ends on the date you indicate in the opt-out form, but not before the date you submit the opt-out form. The insurance cannot be terminated retrospectively, so it is necessary to submit the withdrawal in time.

Sick leave – employee vs. self-employed

To put this information into context, let’s look at how sick pay and sickness insurance payments differ for employees and self-employed workers:

Obligation to participate in sickness insurance

• Employees: Sickness insurance is compulsory for employees with earnings above the qualifying income and automatically starts on the date of entry into employment that triggers participation in the insurance (e.g. employment contract or employment agreement with income above the set limit of CZK 11,500).
• Self-employed persons: sickness insurance is voluntary for self-employed persons. Participation in the insurance is only triggered by an application and starts at the earliest on the date of the application.

Payment of insurance premiums

• Employees: Sickness insurance for employees is paid by the employer and is determined as the product of the assessment base and the percentage rate. An additional 0,6 % is deducted from the employee’s salary.
• Self-employed persons: self-employed persons pay their own premiums on the basis of their own decision. The amount of the premium is based on the assessment base chosen by the self-employed person.

Conditions for entitlement to sickness benefit

• Employees: Employees are entitled to sickness benefits if they have been insured for sickness for at least the duration of their employment (i.e. immediately from the first day of participation in sickness insurance).
• Self-employed workers: Self-employed workers must have been insured for sickness for at least three months before the incapacity for work arose in order to qualify for benefits. Without this condition, they are not entitled to sickness benefits.

Sickness benefit payments

• Employees: For the first 14 days of incapacity for work, employees receive wage compensation from their employer (from the 15th day onwards, the state pays sick pay).
• Self-employed workers: Self-employed workers are not entitled to wage compensation because they do not have an employer. Therefore, they only receive sickness benefits, which the state starts paying from the 15th day of incapacity for work.

The amount of sick pay

• Employees: The amount of sick pay is based on their income for the reference period. Employees with higher incomes receive higher benefits.
• Self-employed persons: for self-employed persons, the amount of sick pay depends on the assessment base they set when paying their insurance premiums. If the self-employed pay the minimum premium, their sickness benefits will be significantly lower than for employees.

Voluntary sick pay for the self-employed – yes or no?

As the above information shows, you will only get sickness benefits if you pay voluntary sickness insurance. Whether or not this is worthwhile is up to each of us. If you don’t have enough saved up to get by comfortably for a few months, then sick pay is probably more important to you than if you have saved up.

However, it’s important to remember that even if you are able to come out of savings for a few months, you could still use at least some option for sickness. For example, even paying the lowest voluntary sickness benefit of CZK 216 will allow you to avoid paying social security and health insurance contributions in the event of long-term illness.

Summary

Sickness insurance can be a key cover for self-employed people during times of illness, injury or quarantine when it is not possible to carry on business. Unlike for employees, sickness insurance is voluntary for the self-employed and entitlement to benefits is only triggered when specific conditions are met, such as a minimum of three months’ participation in the insurance or a break in business during incapacity for work.

The insurance premium is based on the chosen assessment base, with a minimum amount of CZK 216 per month. Benefits are paid from the 15th day of sickness and are calculated on the basis of the reduced daily assessment base. Specific rules apply for self-employed persons in the flat-rate scheme, where the maximum payment depends on the chosen flat-rate band.

The decision whether to pay sickness insurance should be based on your financial situation. If you do not have sufficient savings to cover several months of income loss, sickness insurance is beneficial. An alternative or supplement may be commercial insurance, which offers more flexibility in setting terms and conditions.