Looking for employees or how much does one employee cost

Chapters of the article

• Contributions for employees
• Payroll
• Other expenses
• Notice and expenses
• Staff grants and allowances and conditions of use

Contributions for employees

As an employer, you are obliged to pay social security, health insurance, income taxes and, if applicable, withholding taxes on behalf of your employees every month.

Social insurance

Social insurance is calculated as the product of the assessment base and a percentage rate, and a certain amount is then paid each month based on this. You have to make the calculation yourself – the employee’s assessment base is the sum of his/her earnings and the employer’s assessment base is the sum of the assessment earnings of all employees who are covered by sickness insurance (therefore not valid for example for employees on an agreement up to a certain earnings level). The percentage rates for 2024 are set at 24.8% for employers and 6.5% for employees. The insurance must be paid monthly into the relevant account of the District Social Security Administration. In addition, a statement of the amount of the assessment base and the amount of the insurance premium must also be sent to the Social Security Office.

For some of your employees, you may be able to apply a 5% discount on your premiums each month. These include employees over 55, under 21 or employees who are studying. You can find out more about who this applies to and how the discount works on the Czech Social Security Administration website.

In addition, there is a maximum assessment base. It is 48 times the average wage and in 2024 it amounts to CZK 2,110,416. It is calculated as the sum of all the employee’s assessment bases for one calendar year. If this sum exceeds the maximum assessment base, then no social insurance is payable on the excess. However, this applies only if the employee was employed by only one employer.

Health insurance

You have to pay health insurance on behalf of the employee, which is calculated as 13.5% of the assessment base. One third of this amount is deducted from the employee’s wages and you are liable for the remaining two thirds. It is again paid each month into your employees’ health insurance accounts.

Income tax

Income tax needs to be deducted directly from your employees’ wages each month. It is set at 15%. For employees whose income is more than four times the national average wage, it is 23%. This is 43,967 crowns for 2024. Employees are often entitled to various tax breaks, which they would certainly like to claim. In addition to the classic taxpayer’s allowance, this may include, for example, a spouse’s allowance, a student’s allowance or school fees.

Execution by deduction from wages

For some employees, you may also encounter enforcement deductions. In this case, you will be served with an enforcement order which you must comply with or you could be in trouble. Find out more about how these enforcement deductions from wages work in our next article.

Wage

The biggest item you’ll have to pay for an employee is their wages. Its amount and conditions are regulated by the Labour Code. First and foremost, it is important that you cannot pay your employee a wage that is less than the minimum wage. This is set at CZK 18,900 per month for 2024, i.e. CZK 112.50 per hour. But in addition to this, employees are also legally entitled to various allowances:

• Overtime: you can only give overtime to employees for serious reasons and they are entitled to an extra payment of at least 25% of their average earnings. In addition, an alternative in the form of compensatory time off may also be chosen by agreement.
• Working on public holidays: if a public holiday falls on a working day, your employee is off work on that day and is entitled to regular pay as if they were working normally. However, if the employee works on a public holiday, he or she will be entitled to paid time off in lieu of work or a supplement of at least the average earnings.
• Night work: For night work, employees are entitled to a supplement of at least 10% of average earnings.
• Working in a difficult working environment: A difficult working environment is defined as an environment in which the performance of work is hazardous (e.g. working in a noisy, dusty environment, etc.). The employee shall be entitled to an additional payment of at least 10% of the basic rate of the minimum wage for such work.
• Weekend work: For weekend work, the employee shall receive a supplement of at least 10 % of average earnings.

Other expenses

In addition to the levies and salary, you have to pay other expenses on behalf of the employee:

• Personal protective equipment: personal protective equipment is protective equipment that must protect employees from risks, must not endanger their health, must not hinder their work and must meet the requirements set by the European Union. These include, for example, safety glasses, helmets, etc. You must always provide and pay for them.
• Workwear and footwear: You must only pay for your employees’ workwear and footwear if it has a protective function or if it is worn out or soiled quickly.
• Training: if you plan to send your employee for training, you must also pay for it and they will be paid for the time spent in training. Similarly, in some cases you must also reimburse the employee for travel and subsistence.
• Business trips: If you send your employee on a business trip, you must pay their travel, accommodation and subsistence costs. However, you will only pay for meals if the duration of the business trip exceeds 5 hours.
• Miscellaneous benefits: the cost of the employee may also include miscellaneous benefits such as meal vouchers, benefit cards, sick days, 13th salary, miscellaneous allowances and so on. However, in this case, it is not a mandatory expense. Thus, whether you provide benefits is entirely at your discretion.

Notice and expenses

The cost of the employee must also be taken into account if you decide to dismiss the employee. The process of dismissal itself can be quite complicated. It is easy to dismiss an employee at the end of a fixed-term contract, during a probationary period or if you mutually agree to end the employment relationship.

In other cases, the situation is more complicated and you must have a legal reason for the dismissal (e.g. organisational reasons) and pay the employee a severance payment. The only exceptions are if the employee would be in breach of his/her job duties or has been convicted of a deliberate criminal offence.

Severance pay

The amount of severance pay is determined on the basis of the length of service:

• Less than 1 year – at least one average month’s earnings;
• 1-2 years – at least twice the average monthly earnings;
• more than years – at least three times the average monthly earnings.

If the employment relationship is terminated due to occupational disease or accident, the employee is entitled to a severance payment of at least 12 times the average earnings.

Staff grants and allowances and conditions of use

You can take advantage of various subsidies and allowances to reduce your staff costs. These include:

• Employment Agency subsidies: these subsidies are available if you offer vacancies to jobseekers under an agreement with the employment agency. The amount of the grant depends on where you offer the job and the unemployment rate in the area.
• COVER II: Support for training for employees will contribute to various training and educational courses for your employees.
• DisabilityEmployment Allowance: If you employ a disabled person, you can benefit from tax credits and financial contributions from the Employment Agency.
• Community service allowance: You will also receive a contribution if you employ an employee to carry out community service. You can get a contribution towards wages and insurance premiums. However, the work must be in the public interest (e.g. maintenance of public areas)