Paid Vacation for Self-Employed Individuals in 2026: When Are You Eligible?

Are you self-employed (with an IČO), but does your work arrangement resemble employment? We’ll help you assess the true nature of your working relationship, review your entitlements, and suggest how to effectively defend yourself if your employer fails to respect your rights.

When Is a Self-Employed Person Entitled to Vacation Time?

If you’ve been working for a specific company as a self-employed person for a long time, that doesn’t automatically mean you’re entitled to paid vacation. However, the situation is different if your arrangement actually constitutes an employment relationship. If you work for the company in person, following its instructions, on its behalf, and in a subordinate relationship, this may constitute a disguised employment relationship. In such a case, provided you meet the legal requirements, you may also claim vacation time or, upon termination of the employment relationship, compensation for any unused vacation time.

A landmark case involved a certain Mr. King from the United Kingdom. He demanded compensation for unused vacation time from Sash Window Workshop Ltd. The company dismissed his claim, arguing that as a self-employed individual, he was not entitled to paid vacation. Mr. King, who terminated his employment upon reaching retirement age, was not deterred, however, and first took his case to a British court, which ruled in his favor; the European Court of Justice subsequently upheld the decision.

The courts thus sent a clear message to European countries that employees who masquerade as self-employed individuals to help companies save on social security contributions are entitled, under European Union law, to four weeks of paid vacation per calendar year. This is because the European directive includes such individuals under the definition of “worker.”

The case of King v. The Sash Window Workshop Ltd. was a textbook example of replacing an employment contract with some form of business partnership. This can be legitimate. A self-employed person is flexible, can work for multiple clients, and benefits from reduced administrative burdens. In some cases, however, the goal is simply to reduce the tax burden. Under Czech law , this typically constitutes the so-called “Švarc system”—that is, the illegal circumvention of labor law standards. One consequence of this may be, among other things, the deliberate forfeiture of the right to vacation time.

By when must claims be filed?

Even in such a case of circumventing the Labor Code, Czech law allows for a retroactive legal challenge to such a relationship, and the court may classify it as an employment relationship, which entails a number of new rights and obligations—including the right to vacation time.

However, be mindful of the statute of limitations. For monetary claims, a general three-year statute of limitations generally applies. Exactly when it begins to run depends on the nature of the specific claim and the circumstances of the case. Furthermore, European case law protects workers whose employers did not actually allow them to take paid vacation. Therefore, if you are requesting back pay for vacation from several previous years, it’s worth first verifying the time period to which your claim may apply.

If you are ending your work as a self-employed individual and suspect that you were actually working as an employee, be sure to also check your potential entitlement to unused vacation time. Under the rules in effect in 2026 , an employee may become entitled to a pro-rated portion of vacation after just four weeks of employment, provided they have worked at least four times their weekly working hours during that period.

The right to vacation is not automatically excluded even during the probationary period. Starting in June 2025, this period may last up to four months, and for managerial employees, as long as eight months. If the employment relationship ends and the employee has unused vacation time remaining, they are entitled to compensation equal to their average earnings. If you’re unsure whether you’re entitled to similar benefits while working under a trade license, please contact our experts.

Example from legal practice: Working under a business license, but without paid vacation

A client approached us who had worked as a graphic designer for a marketing agency for nearly three years. Although he held a trade license and issued invoices every month, his work was practically indistinguishable from that of an employee. He had to adhere to set working hours, attend regular meetings, and complete tasks according to his supervisor’s instructions. When he wanted to take two weeks off, the agency informed him that he would not be paid for that time because, as a self-employed person, he was not entitled to vacation pay.

After the collaboration ended, he contacted us to ask whether he could claim compensation for his unused vacation time. We reviewed his contract, invoices, work-related communications, and the way tasks were assigned. We determined that the collaboration exhibited significant characteristics of dependent employment.

We therefore prepared a pre-litigation demand letter in which we highlighted the possible concealment of an employment relationship and the client’s related claims. The agency ultimately agreed to out-of-court negotiations, and we were able to reach a financial settlement agreement. The client thus received compensation without the need for lengthy litigation.

Watch out for the “Švarc system”!

To avoid covert illegal activity, pay attention to the following aspects of your collaboration:

• The compensation is determined by the employer’s rate, not the contractor’s price list;
• thecontractor has only one client,
• the contractor uses the client’s equipment (work phone, computer),
• the client requires the contractor to perform the work in person,
• to third parties, the contractor appears to be an employee, 
• the work is typically performed within an employment relationship,
• the relationship isongoing, not sporadic,
• the pay periods for employees and self-employed individuals coincide,
• the self-employed individual does not invest any resources in their work other than their labor,
• the self-employed person receivesbenefitssimilar to those of employees.

The mere presence of any of these characteristics does not automatically mean that a “Švarc system” is involved. Even the fact that you work for only one client or use their computer does not necessarily pose a problem. The decisive factor is primarily whether you actually perform your work independently or whether you are, in fact, subordinate to the company that assigns you work, manages its performance, and determines your working conditions. Each case must therefore be assessed individually.

Are you unsure whether your work under a business registration number (IČO) complies with the law? Send us your contract and a description of how your work actually takes place. We’ll assess any potential risks, recommend the appropriate course of action, and help you prevent disputes or assert any rights you may be entitled to.

Vacation for Self-Employed Individuals: How Can the Self-Employed Secure Paid Time Off?

While employees are guaranteed paid vacation under the Labor Code, self-employed individuals generally have to arrange their own time off. However, this doesn’t mean they have to work all year without a break or accept that they won’t have any income during their vacation.

So how can self-employed individuals secure paid time off? One option is to factor planned vacation time into the prices of your services. For example, if you know you want to take four weeks off every year, you should adjust your rates accordingly and build up a financial reserve to cover the loss of income.

If you have a long-term working relationship with a single company, you can also agree on a regular monthly payment, the terms of which explicitly account for your pre-planned time off. However, it’s important to specify this arrangement directly in the contract to avoid future disputes over whether you’re entitled to compensation during your time off.

Vacation for self-employed individuals does not necessarily mean several weeks without income. Unlike employees, however, self-employed individuals have no legal right to compensation for time off. It depends primarily on how they structure their business and contractual relationships with clients.

How much paid vacation can you get, and how is it calculated?

If it is proven that you were in fact working as an employee, you may be entitled to standard vacation leave provided you meet the legal requirements. The extent of this entitlement depends primarily on the duration of the employment relationship, the time worked, and the amount of vacation leave.

According to the Labor Code, employees are entitled to at least four weeks of vacation per year. Starting in 2021, vacation is calculated in hours, not days. So, if you work 40 hours a week and are entitled to four weeks of vacation, this corresponds to 160 hours of time off if you work for the entire calendar year. If you worked only part of the year, you may be entitled to a proportional portion.

What if you haven’t taken any vacation and your employment has already ended? If the existence of an employment relationship and the corresponding entitlement can be proven, you can request financial compensation for unused vacation time. This is calculated based on your average earnings. The specific amount therefore depends on the circumstances of your case.

Sick Leave and Vacation for the Self-Employed: What’s the Difference?

You may have wondered whether sick leave insurance could help you with a loss of income during your time off. However, it is important to distinguish between two completely different situations here.

Vacation is intended for rest, while sick leave insurance provides financial security under specified conditions in the event of illness and other legally defined circumstances. Therefore, you cannot claim sick leave benefits simply because you want to go to the beach for two weeks or take a break from work.

However, if you become ill as a self-employed person and meet the legal requirements, you may be entitled to sick benefits. These are provided to self-employed individuals starting on the 15th calendar day of temporary incapacity for work. For shorter illnesses, therefore, having your own financial reserve is also important.

Unlike employees, who are mandatorily covered by sickness insurance if they meet the legal requirements, self-employed individuals can enroll in sickness insurance voluntarily.

Voluntary sickness insurance for self-employed individuals allows them, upon meeting the relevant conditions, to receive sickness benefits as well as other benefits, such as maternity benefits, paternity benefits, or caregiver benefits. In 2026, the minimum monthly premium is 243 CZK.

You can enroll through the Czech Social Security Administration, for example, online via its ePortal. However, entitlement to individual benefits does not arise automatically immediately upon enrollment. The law sets forth additional conditions, including the required period of insurance coverage.

Also keep in mind that health insurance does not replace paid vacation. If you want to ensure an income during your regular time off, you must rely primarily on your own savings or on the terms agreed upon with your clients.

Summary

Paid vacation for self-employed individuals works differently than vacation for employees. If you are truly running a business on your own account and at your own risk, the law does not guarantee you four weeks of paid time off or financial compensation during your vacation. You must factor your vacation time into your pricing, build up the necessary financial reserve, or agree in advance with your clients on contractual terms that allow you to take time off without a significant loss of income. Voluntary health insurance can help you in the event of illness, but it does not cover regular vacation time.

The situation is different if, as a self-employed person, you are in fact performing work as an employee. If a company sets your working hours, issues binding instructions, and you work under its supervision, this may constitute a “Schwarz system.” In such a case, you may also be entitled to employee vacation benefits. Upon termination of employment, it may be possible to claim financial compensation for unused vacation time, subject to the conditions set forth by law and relevant case law.