HR Solutions & Employee Relations in the Czech Republic with IRIS

IRIS HR consulting has a strong reputation for helping businesses expand into the Czech Republic and beyond. It can otherwise be risky to leave local laws and legislation open to interpretation. For a scalable, compliant operation, IRIS can manage your HR in the Czech Republic to help businesses hire, recruit, and pay staff overseas. When it comes to running a compliant operation overseas, the top priority is often employment, this includes navigating the complex employment laws in Czech Republic.

As a desirable destination for businesses, IRIS can navigate local barriers – from culture to compliance – to arrive at a rewarding opportunity for your business to thrive in this exciting central European marketplace.

Take your business to the Czech Republic with IRIS HR Consulting.

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    Global expansion in Czech Republic

    A central European location, the Czech Republic is landlocked by neighbours Austria, Germany, Poland, and Slovakia. Known for its historic ties to trade, Prague has long been a key trading route between northern and southern European territories, permitted by its access to the long, interconnected river Vltava. A desirable destination, the Czech Republic has favourable links for export, where it’s popular for trading vehicles, computer machinery, and other electronics. Exports in the Czech Republic are continuously strong and owed to the activity of its key trading partners, which tend to be neighbouring countries, the largest of which is Germany.

    Outside of its key attraction of foreign direct investment (FDI) in recent years, the Czech Republic has maintained a strong and growing economy. Internally, the Czech Republic is driven by a healthy demand from household consumptions, which is achieved through a strong (and growing) income growth. Other strong financial indicators, like private investment, also support its economy.

    For risk forecasts, the Czech Republic generally attracts foreign attention for its legal-business climate that is considerably conductive. Primary investment comes from the likes of the UK, which has contributed more than 2.4 billion Euros since the 1990s.

    The river Vltava & the Ministry of Industry and Trade in Prague

    Known for its touristic river views, the Vltava is often referred to as the national river and reaches out to key spots both in southern and northern Europe. Prague, which is a riverside settlement, is important in supporting the economic life of the Czech Republic. A key player in the administration of its cultural, social, and economic success and growth over the years, the Ministry of Industry and Trade regulates many issues regarding export and trade promotion and policy. This governmental body is foundational in helping businesses achieve success in the Czech Republic.


    Czech Republic Employment laws

    When first expanding your business into the Czech Republic, familiarising your business with employment laws and remaining complaint at the same time isn’t always so simple. Like most of Europe, the Czech Republic is governed by local employment and labour laws. Throughout Europe, these laws are not always universal. Rather, employment is reflected in local policies and is constantly shifting.

    Did you know?

    When an employee is hired, they must be registered with local authorities within eight days of starting the new job, this also applies to expat new starters. 

    Hiring & recruitment in the Czech Republic

    When getting your first hire in the Czech Republic, you will need to comply with local employment laws. The terms, conditions and other expectations of regular employment can be captured in two types of contracts, with periods to be negotiated by the employer:

    • An employment contract, which contains a definite period.
    • An employment contract, which contains an indefinite period.

    When working outside of an employment relationship, an employee can perform working duties under two further types of contract:

    • Agreement to complete a job.
    • Agreement to perform work.

    Employment contracts in the Czech Republic

    An employment contract must be in writing and the employee must receive a copy. Inside, the contract should contain sensitive details about working arrangements, such as the duties, place of work, including the first day of work. This should also contain consent permissions to capture personal information and nosiness trips.

    If salary is not included in the contract, it should be stated in a separate agreement. Probationary periods are also very common for most roles, including seniority ones.

    Czech Republic work visas and permits

    The Czech Republic has long been considered a prime location for foreign investment and employment opportunities. Whilst there is abundant opportunity, employers will need to consider employment laws after they hire new talent. The two employee types exempt from visas, include:

    Citizens from the EU (European Union)

    Citizens from the EEA (European Economic Area)

    Expats not covered, here, will need to apply for a Schengen visa before successfully taking up a role in the Czech Republic. These are further split into short- and long-term visa types, depending on the length of a stay. When an employee overstays a 90-day period (across 180 days), then they will require a longer-term Schengen visa. Anything shorter will require a short-term visa permit.

    Establishing your business in the Czech Republic

    Foreign businesses have many options when expanding into the Czech Republic. Oftentimes, many opt to join an existing Czech company. Yet, for larger global companies, they may choose to establish a branch office, which will need to be registered in the Czech Republic. The alternative is to establish a Czech company.

    When establishing a business, you should first consider your type of business:

    There are four types of business in the Czech Republic:

    • Limited liability companies (s.r.o)
    • Joint-stock companies (a.s.)
    • Branch office
    • Partnership

    Other helpful guidance for business expansion:

    • Trade names must always be unique.
    • Visa issues should be consulted beforehand, and this is governed by Act No. 326/1999 Coll.
    • Foreign investors should consider consultation with the AFI, a platform founded under the Ministry of Industry and Trade.

    Probationary periods in the Czech Republic

    The conclusion of a probationary period, captured in an employment contract, can range anywhere from three consecutive months, up until six-consecutive months for more senior posts. Yet, for probationary period, these stipulations cannot run longer than one half of the agreed period of employment (or beyond 6 weeks).

    What are the working hours in the Czech Republic?

    The typical working week, in hours, is averaged out to about 39 hours per week, without taking overtime into consideration. Standard terms fall at roughly the 40 weekly hours mark. Yet, for employees under the age of 18, these rules are slightly different – working hours are truncated to a maximum of 30 hours a week, contained to daily shifts of 6 hours.

    Public Holidays in the Czech Republic

    Public national holidays, commonly across Europe, are considered non-working days.

    There are 12 holidays which include:

    • New Year’s Day
    • Easter Monday
    • Labour Day
    • Liberation Day
    • Saints Cyril and Methodius
    • Jan Hus Day
    • St. Wenceslas
    • Independent Czechoslovak State Day
    • Struggle for Freedom & Democracy Day
    • Christmas Eve
    • Christmas Day
    • St. Stephens’ Day

    Equal Opportunities in the Czech Republic

    The Czech government has been proactive on issues of workplace and social equalities, whereby advisory groups have consulted on the issue since the early noughties. The Government Council for Equal Opportunities for Women and Men, for example, represents this move for greater, more dynamic, equality.

    Working overtime in the Czech Republic

    Overtime work is to be performed only in expectational scenarios. This means that overtime is often not included in standard employment contracts, but rather can be included in part-time contracts of employment on a special basis. The total scope of overtime must not exceed a period of 8 hours weekly, over a course of 26 weeks.

    Sick leave in the Czech Republic

    After amends, employees are entitled to 14 calendar days of sick leave. Originally, employees had to go through an unpaid “waiting period”, whereas new laws now entitle paid leave commencing the first day of sickness. This is governed under Act No. 32/2019.

    Vacation in the Czech Republic

    On average, employees in the Czech Republic can get a total 25 vacation days (generally, European countries are generous with vacation time). This time combines with the public holiday allowance, which can extend the amount of leave employees can take annually. The statutory vacation rate is, however, set at 20 days.

    Maternity/ Paternity leave in the Czech Republic

    Maternity leave (mateřská dovolená) covers 28 weeks of paid leave. This benefit commences six weeks prior to the birth of a child, and continues eight weeks thereafter. PPM support is delivered by the Czech Social Security Administration (also known as CSSZ).

    Fathers, on the other hand, can be given written agreement by employers to take seven weeks paid leave after the birth of a child.

    Retirement & pension in the Czech Republic

    Pension is supported by three “pillars” in the Czech Republic, including:

    1. Public Pension/ defined benefit (or DB)

    This is a pay-as-you-go scheme that covers those who are self-employed.

    • Public pension – flat rate basic or earnings related.

    This tier of public pensions covers a public scheme outside of self-employment, which works through a 3% employee contribution rate. The difference is that a flat rate is a basic all-inclusive pension types, whereas the earnings-related scheme is redistributive.

    • Private pension

    These voluntary pension schemes offer DC plans. These can involve tax exemptions at certain thresholds.

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    End of Service

    HR in the Czech Republic means total compliance not only during an employee’s service, but also at the end of it. End of service includes severance, termination, redundancy, and leaving packages. Or, for globally mobile companies with international teams, this could be repatriation services for those returning from an assignment overseas.

    For these more complicated matters, you will need expert HR guidance in order to navigate Czech employment laws and remain compliant.


    Termination

    The most common method of termination involves a written notice, which outlines the off-boarding expectations. The notice commences two months from the first day of the delivery of the notice period. Ultimately, the notice must include the reasons for termination.

    Reasons for termination might include:

    • Reorganization
    • Change in the employee’s health
    • Employee fails to meet legal requirements
    • Serious/ repeated misconduct

    Benefits of working in the Czech Republic

    The Czech Republic has many highlights in its professional employment, with benefits including:

    • bonuses in terms of financial rewards
    • professional trainings
    • language courses and personal development
    • the option to work from home
    • additional days off (extra holidays, study leave, sick days)
    • discounts on company products
    • flexible working hours
    • meal vouchers
    • company phone
    • company car or transport allowance
    • insurance contributions
    • refreshment/beverages at workplace

    Supplemental benefits

    • Occupational Medical Insurance.

    Each employer in the Czech Republic has the legal obligation to ensure the provision of occupational medical and other related services for its employees. Each employer is obliged to categorize the work that the employees perform at the workplace, no later than 30 calendar days from the date of commencement.

    • Supplemental Medical Insurance.

    The benefit is taxable for the employees and normally the cost of the plan is 100% funded by the employer.  The benefit is only usually offered to expats and not locals.

    • Meal Vouchers.

    Meal vouchers are commonly offered to employees. An employer can apply 55% of the value of a meal voucher in the company’s tax costs (but no more than 70% of the meal allowance defined for an employee on a business trip of 5-12 hours)

    Social security in the Czech Republic

    The employer is obliged to pay monthly contributions to social and health insurance and advances on the income tax. The employee should also make relevant contributions.

    Compensation for workers in the Czech Republic

    Every employer is obliged to maintain insurance under the law against occupational accidents and diseases. Such insurance applies to all its employees automatically upon signature of an employment contract.

    Why Partner With IRIS?

    When entering new, exciting countries in Europe, like the Czech Republic, you will need an employment specialist to navigate the parts of Czech Republic employment laws. Delivering a compliant solution, IRIS can help your business arrive into new marketplaces whilst protecting your workforce – our partners can discover power and protection through us.

    Overseas expansions can seem risky to those who dare it alone. Understanding the complexity of a fully complaint solution, IRIS can help businesses establish a foreign branch in Czech Republic without the hassle.

    Our cost-effective, knowledgeable approach to HR in Czech Republic makes us an ideal partner to commence your overseas plans.