Chapters of the article
Employer’s basic obligations: agreement to perform work
First of all, there is no such thing as a verbal agreement to perform a job; everything must be written down in black and white. Otherwise, it is a “black job”. You can conclude a work performance agreement with each of your employees for a maximum of 300 hours per calendar year and you must keep a record of the hours worked.
You do not have to pay health insurance on the employee in the case of a temporary employment contract, but only if his monthly earnings do not exceed CZK 10,000. If his earnings exceed CZK 10,000, you must pay health insurance for him. In addition, you are also obliged to pay employers’ liability insurance. However, you must pay this even if you are only employed on the basis of a work performance agreement. In this case, however, it is only a minimum premium of CZK 100 per quarter.
Basic employer obligations: employment agreement
Like the VPA, the employment agreement is concluded by means of a written contract. In this case, the employee’s working hours are limited to 20 hours per week. However, this does not mean that your employee can work a maximum of 20 hours each week. This is the average of the hours worked over the total duration of the FTE or a maximum of 52 weeks. So an employee can work 40 hours one week and have the next week off. However, you must keep a record of the hours worked.
Neither the employee nor the employer pays health insurance, but only if the employee’s gross earnings do not exceed CZK 3,500. Even in this case, however, you should expect to pay employer’s liability insurance.
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It’s not easy to employ someone, even on a contract basis. Employment law can be complex and sometimes a small deviation can cause big problems later. We can help you navigate them and set up your employment documents in accordance with the law.
How employers’ liability insurance works
Employers’ liability insurance covers any damage to the health of your employees arising out of their work. The insurance contract is not concluded for this insurance, but arises automatically by law on the date of employment.
The calculation of the premium is up to you. It is calculated as a multiple of the rate and the base for the quarter. The rate is determined on the basis of your predominant activity. The basis is then determined from the sum of the assessment bases of all employees for the previous quarter. Insurance premiums are payable each quarter, i.e. on 31 January, 30 April, 31 July and 31 October.
Amendment to the Labour Code and the FTE and FTE in 2023
An important piece of information for all employers will be that the Labour Code has been amended in 2023, and with it the rules for FTEs and FTEs have changed. So, what do the main changes in 2023 for performance and employment agreements include?
1. Social security and health insurance
As of 1 July 2024, there will be two thresholds for the obligation to pay social and health insurance for PPAs. Until now, there was one threshold, which was set at CZK 10,000. The first threshold will be set at 25% of the average wage, which is set at CZK 10,500 for 2024.
The second threshold will apply in cases where the employee has multiple concurrent FTEs. The latter will be set at 40% of the average wage, i.e. 17,500 crowns for 2024. If either threshold is exceeded, you must start paying insurance on behalf of the employee.
2. Minimum wage
From the first day of this year, you are obliged to pay your contract workers at least the minimum wage. This is based on an hourly wage, not a monthly wage. Otherwise, you would be obliged to pay the employee the difference between the minimum hourly wage and the real wage.
Tip: Working out payroll for FTEs and FTEs can often be a complicated matter. Therefore, do not turn to pay slip templates for FTEs and FTEs. The 2023 changes have meant that these templates are now out of date and do not contain all the essential information. Contact us instead. You’ll get the most up-to-date form of payslip – online and from the comfort of your home.
Newly, even employees on an agreement will be entitled to holiday. The terms and conditions are the same as for employment on a permanent basis. In order to qualify, the employee must work at least four times his or her weekly working time, which is 20 hours per week for agreements. The second condition is that the agreement must last at least 4 weeks. This also applies to agreements that are directly linked to each other.
Tip: Have you started a new job, are you on a three-month probationary period and are not sure when you can take your holiday? Find out when you are entitled to holiday.
You are now also obliged to report your employees on contract to the Czech Social Security Administration. Reporting must take place within 8 days of the employee starting work. The purpose of this reporting is to prevent employees from having multiple agreements at the same time without paying the mandatory contributions.
Termination of a fixed-term contract and a fixed-term contract of employment
The FTC or FTC may specify the period for which the agreement is valid and the automatic termination of the employment relationship at the end of the agreement. The same applies in the case of 300 hours of service on a VPA. However, it is also possible to terminate the agreement earlier. For both, there is a mandatory notice period of 15 days to 2 months depending on the total duration of the employment relationship. This starts as soon as you give written notice to your employee. You only need to give a reason if the employee has worked for you for more than 3 months.
However, if your employee breaches the performance or employment agreement, you can give him/her immediate notice. However, one of the statutory grounds must be present:
- the employee has been convicted of a deliberate criminal off ence and sentenced to a term of imprisonment of more than 1 year,
- the employee has been convicted of a deliberate criminal offence committed in the course of his/her employment and sentenced to a term of imprisonment of at least 6 months,
- the employee has breached obligations arising from the legal provisions applicable to his work in a particularly serious manner.
Tip: Do you have disputes in the workplace? Is your employee not following work procedures? Has he or she caused you damage and refuses to take responsibility for it? Or does he or she want to sue you wrongfully? We will assess your chances of success and take care of the best course of action.
Of course, it is also possible to terminate the employment relationship immediately if both parties agree. Such an agreement must not lack the identification of the employee and the employer, the identification of the employment relationship and the date of termination of the agreement.
The notice should always be in writing. It should not lack the identification of both parties, identification of the employment relationship and its nature, the duration of the notice period and, where appropriate, the reason for the notice. However, please do not rely on templates available on the internet and contact us. With us, you can be sure that the notice of termination will comply with the Labour Code. We will inform you in advance of the consequences of this and protect your rights as an employer.