Hiring a (Foreign) Employee in Czech Republic
Hiring and firing any employee in Czech Republic is a relatively complicated process, because of the entensive paperwork that needs to be filled in. Many companies (including czech ones) therefore often do not register their employees correctly / completely which may turn out disasterous when the social office checks the employer (usually every 2 years).
The situation becomes even more complicated if the employee is not a Czech, but of foreign origin.
Standard Requirements for a company (employer) in Czech Republic
In order to be able to hire people on employement contracts or even on temporary contracts (prácovni dohoda) the company must be registered as such:- at the tax office for income-related taxes,
- at the social office (as organisation),
- at the health insurance,
- at the cooperative health insurance.
- at the tax office, registering the person for income tax,
- at the social office as new employee,
- at the health insurance that the employee currently has,
- at the labor office, exchanging information about the previous employment.
At the end of every month the accountant must be notified of sickness, holidays, day off without payment and in case of temporary workers the days and hours they worked. This is all essential data for the payroll administration.
Before the 8th of the following month the following payments need to be made: salary, social charges, health charges and once per quarter cooperative health insurance.
Missing out a couple of times on payments will immediately result in a check by the social office. If you discover a mistake, it is clever to notify the social office immediately. Usually they let you go without penalties. If however they make the discovery, there is almost no escape from paying a fine.
Hiring a Foreign Employee - EU Citizen
EU Citizens and their family members do not need a Visa or Work Permit, but still the employer must register an EU Citizen at the labor office.Also, an EU-Citizen or familz member must have a temporary residence permit if the purpose of stay is employment. This residence permit can be applied for if the person is already in Czech Republic.
Officially the application should be made within 90 days at the Foreign Police and is granted (almost) always.
We recommend however, to do this as soon as possible, as well as registration for income tax, so the tax residency can be proven from the date of written in the temporary residence permit.
Hiring a Foreign Employee - 3rd-Country National
Before being allowed to work in Czech Republic a 3rd-Country National will at least need a Work Permit + Visa for work purposes, or a Work Permit + Residence Permit, unless the employee has a permanent residence permit. In that case the Work Permit is no longer required.This Visa and Work Permit need to be renewed (extended) (at least) once per year at the Foreign Police in Czech Republic. For a renewal a 3rd-Country National does not have to go to an embassy abroad.
Work Permit for 3rd-Country National
A 3rd-Country National without a Permanent Residence Permit needs to have a Work Permit in order to get a job as a regular employee. This is not an easy process. Many papers need to be provided (such as diplomas and certificates) - all translated with apostille. Note that there is a substantial risk nowadays that the labor office refuses the application for a Work Permit, especially now there are so many unemployed already in Czech Republic, and therefore it becomes easier for the Labor Office to find a suitable person in Czech Republic, as they are required by law to do.In order to apply for a Work Permit, the employer needs to initiate the process, by filing a job description at the local Labor Office. Then the position is posted for 30 days, and if no suitable czech person is found, the Work Permit is granted. This process takes usually about 6 weeks. With that, the 3rd-Country National can then apply for a Visa for work purposes. The total process may take 3-4 months.
Since it is such a long process it might be easier for an employee to hire:
- a Czech National,
- an EU-Citizen or one of his family members,
- a 3rd-Country National with permanent Residence Permit
- a 3rd-Country National with a Trade License (Živnostenský List)
- a 3rd-Country National with a Company (s.r.o.)
Temporary workers on Živnostenský List
A company can hire a person on a živnostenský list and pay a monthly invoice. There is no employee registration, no social- and health charges to be paid and there is no obligation to pay the person several months' salary when fired.There is however, one important condition: the work should not have the character of permanent employment. (i.e. full-time employment, the only customer is you, the person is sitting at a desk as normal employee). The social office may conclude that the trade license construction is a form of evading social charges and will make the employer pay additional social charges (employer's and employee's part!) from the moment the person started to work for the company.
Another option for temporary work / on project basis is signing a "prácovní dohoda" or similar document. There are three variaties for 'brigada' work, but it is wise to discuss this with us before hiring. It is really not a good idea to have the person start without any written contract.
Employment Contract, Determined and Undetermined Period
There are two types of employment contracts:- determined period, maximum a year
- undetermined period
The trial period is 3 months. During this time a person can be fired without reason. Should the employer want to fire the person after these 3 months, then usually at least 2 months salary should be paid (more if the employee has been in the company longer, the maximum payment could be up to 6 months)
An employer can offer the same employee more than one contract of determined time. But if between those temoprary contracts is a gap of small than 6 months not being employed at that company, the total months worked will start to add up. After having worked several times within 24 months, the employer is forced to give a contract of undetermined time.
We recommend for starting companies with foreign ownership to be very careful with the employment contracts. It is usually not clear how business the coming year will look like, so it is clever to write temporary contracts so that you are not forced to pay employees huge sums if you are economically not doing well.
Salary Costs for an Employee, total costs for the company
The minimum salary for an employee is 8.000 CZK (gross).The employee will get 7.120 CZK (nett).
The total costs for the company are 10.200 CZK (supergross)
As a rule of thumb, the net wages are about 2/3 of the gross salary.
The total salary costs for the company (supergross) are about twice the nett wages.
For an exact calculation of salary costs we recommend this calculator on Finance.cz