The Czech Republic is one of the most developed economies in Eastern and Central Europe. The predominant industries in the country are automobile, engineering, electronics, metallurgy, food & beverages processing, textile, and paper. Industrial complex constitutes nearly 41% of the GDP while 55% is from the service sector.
Trade is important, and the combined value of exports and imports equals 163% of GDP. Business growth in the Czech Republic is driven by factors such as well-protected property rights, secure contracts, and relaxed licensing requirements.
Currency: Czech Koruna
Principal language: Czech
Government: Unitary Parliamentary Constitutional Republic
Capital City: Prague
Major Cities: Brno, Ostrava, Plzen, Liberec
Employment contracts must be in writing and specify:
- The place where an employee will work
- The nature of job an employee will do
- The date on which an employee will commence working.
The contract also contains clauses of termination, provisions about holidays, working hours, wages, and business trips.
A trial period of no more than 3 months can apply to rank-and-file employees and no more than 6 months to managers, can be mentioned in a noncompetition clause.
The provision related to working hours are based on the European Union directives and International Labor Organization Convention. Standard work schedule cannot exceed 40 hours in a week.
Employees should be given a break of minimum 30 minutes for having meal and rest after working for 6 continuous hours. For underage employees, the break must be given after 4.5 hours of work.
In Czech Republic, employees are entitled to the following 12 holidays:
- Jan. 1: New Year/The Day of Restoration of Czech Independence
- Easter Monday
- May 1: Labor Day
- May 8: Liberation Day (End of World War II)
- July 5: Saints Cyril and Methodius (missionaries who brought Christianity to the region)
- July 6: Jan Hus Day (the religious reformer Jan Hus was burned in 1415)
- Sept. 28: St. Wenceslas Day (the patron of the Czech state)
- Oct. 28: Independent Czechoslovak State Day (creation of Czechoslovakia in 1918)
- Nov. 17: Struggle for Freedom and Democracy Day (commemorating the student demonstration against Nazi occupation in 1939 and the demonstration in 1989 that brought about the fall of Communism and the restoration of democracy)
- Dec. 24: Christmas Eve
- Dec. 25: Christmas Day
- Dec. 26: St. Stephen's Day
Holidays are observed on the day on which they fall, and are not moved to the closest Monday even if they fall on a weekend.
Full-time employees are entitled to four weeks of paid annual leave and are paid the average pay when taking the leave. Eight weeks of annual leave must be given for an academic or pedagogical purpose. Leave not taken in a year should be compensated with the average wage.
Social Security Administration pays for the parental leave. Female employees can take 28 weeks of maternity leave in case of one birth or 37 weeks for multiple births. Maternity leave can be taken 6 weeks prior to the expected date of birth. Mothers who give birth to stillborn children can take 14 weeks of maternity leave. Mothers with adopted children can take 22 weeks of maternity leave which is extensible to 33 weeks for multiple adoptions.
Employees who work underground extracting minerals or building tunnels or who work in difficult conditions must be given 1 week of supplemental leave. Those who perform ‘hard work,’ i.e., work in specific medical fields, or work where the risk to infection or radiation is inherent, or have to contact prisoners regularly, or work in tropical areas also get a week of supplemental leave. It can’t be compensated with wages.
Employers don’t compensate employees for the initial 3 days of sick leave. Following the first 3 days, employers are required to compensate employees for up to 14 days. Employees can get extra sick leave paid via social security after the first 14 days. These extra days are paid at 60% of wages received last year.
Civic duty Leave
Employers are required to give unpaid leave to all employees to perform civic duties.
Employees can take a paid leave to serve armed forces and are paid by the military authority.
Maternity benefits are provided according to the Sickness Insurance Act. Maternity leave should be taken at least 8 weeks before the expected date of birth and can’t be less than 14 weeks in total.
The retirement age is 62 years and two months for men with a minimum insurance coverage of 26 years and 60 years and 8 months for women with a minimum insurance coverage of 26 years. Both retirement age and minimum years for insurance coverage will increase to 65 and 35 years for men and women by 2030.
The Czech Social Security Administration manages social security including the state unemployment policy fund, pension insurance fund, and the sickness insurance fund.
Employees are required to make contributions toward social insurance for a minimum of 12 months for the last 3 years to claim unemployment benefits. They should also be able to prove that they have:
- no source of income
- no severance pay outstanding
- no foreign source of income
- no businesses or directorships
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Czech Republic and hire their employees without having to establish a branch office or subsidiary in Czech Republic.
- Your candidate is hired via our Czech Republic PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Czech Republic laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
24/7 Support in 100+ Countries
- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
- We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.
Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.
Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.