Benefits of a PEO in The Czech Republic & EOR in The
- Expand without an entity
- Flexible and cost-effective solution to outsource payroll and HR functions for international expansion
- In compliance with foreign local laws & regulations
- Minimizes employment liabilities and risks
- Reduced risk, as the risks of being an employer fall almost completely on the employer of record
- Saves you time to focus on your core business
- You manage your employees
- EOR and /or PEO takes care of registration and contact with local authorities
Employment Contracts the Czech Republic
The most common employment contract in the Czech Republic is an indefinite employment contract, as in most European countries. A definite or fixed-term contract also exists, but it must be clearly stated and agreed upon by both parties at the beginning of the employment. The repeated conclusion of fixed-term contracts between the same parties is limited to a maximum period of two years.
The Labor Act does not specify that the contract must be in writing, but the Directive on Written Terms of Employment in the Czech Republic requires the employer to provide employees with a written statement of conditions and full information on the rights and obligations arising from the proposed contract, including the working conditions and remuneration for the work to be performed.
According to the Labor Code, the duration of the trial period is 3 months. Both parties to the employment contract may agree on a shorter probationary period, but the 3-month period cannot be extended by agreement.
PEO and EOR service providers in the Czech Republic will support you with the set-up of a local employment contract.
Employment Termination and Notice Period - Czech Republic
In the Czech Republic, dismissal with notice is permitted under conditions such as organizational change resulting from dissolution, relocation, or other non-discriminative reasons. The employer may provide sufficient reason for dismissal without notice due to misconduct, disobedience, lack of competence, neglect of duties, or unauthorized absence.
The law provides a minimum notice period of two months for either party, employer, or employee initiating the termination. The two-month notice period may be extended by agreement between the parties. No notice period is required for dismissal during the trial period and for immediate dismissal due to misconduct.
Social Security for Employers in the Czech Republic
In the Czech Republic, both the employer and the employee pay social security contributions. On average, employers have to pay 33.80% social contribution to the local authorities.
|Employer Payroll (Social Security) Contributions||%|
|Total Additional Employment Costs||33.80%|
Average Salary & Average Employer Costs in the Czech Republic
The average salary in the Czech Republic is 805,128 CZK, which is equivalent to 36.972,55 USD. This is less than the average annual salary in the United States, which is $65,835.58 USD. As an employer, the actual employer costs are approximately 33.80% higher than the gross annual salary. Based on an annual salary of 36.972,55 USD, employment costs would be 49469.27 in the Czech Republic
To learn more about the average salaries in Europe and the actual employment costs in Europe, we invite you to read this article on the Costs of hiring European employees.
Working Hours Czech Republic
The standard workweek in the Czech Republic is 40 hours per week, with a maximum of nine hours per working day. Any work performed beyond the usual weekly hours constitutes overtime and is governed by the employment contract/collective agreements.
All overtime hours worked beyond 40 hours per week are compensated at an overtime rate of 125.00% of the employee's regular pay rate.
Paid Vacation Leave Czech Republic
In the Czech Republic, full-time employees are entitled to a minimum of 4 weeks or 20 days of leave per year, excluding public holidays. However, it is common for employers to offer 5 weeks of paid vacation (25 days of paid vacation).
An employer may require an employee to take up to 2 weeks of paid leave on specific dates if communicated in writing by the end of June of the current year.
To learn more about the average paid vacation days in Europe and how the Czech Republic compares to the rest of Europe, we invite you to read our blog on paid vacation days in Europe.
Public Holidays Czech Republic
The main public holidays, for which most employees in the Czech Republic are granted leave, are listed below. In addition to the national holidays listed, some days may be observed as regional holidays, bank holidays, and days not worked in certain sectors.
- New Year's Day - 1 January
- Good Friday - 15 April
- Easter - 17 April
- Easter Monday - 18 April
- Labour Day - 1 May
- Liberation Day - 8 May
- St Cyril and St Methodius Day - 5 July
- Jan Hus Day - 6 July
- Czech Statehood Day - 28 September
- Republic Day - 28 October
- Freedom and Democracy Day - 17 November
- Christmas Eve - 24 December
- Christmas Day - 25 December
- St. Stephen's Day/2nd Day of Christmas - 26 December
Maternity and Paternity Leave Czech Republic
In the Czech Republic, a woman is entitled to 28 weeks of maternity leave, 37 weeks in case of multiple births. The leave may begin at least eight weeks before the expected date of delivery, but not later than six weeks. Maternity allowance starts at the same time as maternity leave. It is calculated at 70% of the normal salary and paid by the Social Security.
Fathers are entitled to one week of paid paternity leave at the rate of 70.00% of the employee's regular salary. Paternity leave may begin six weeks after the birth of the child, provided the mother of the child has consented in writing to the father's care of the child during that period.
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Monique Ramondt Sanders
Executive Vice President | HR Outsourcing