Employer in Czechia? Get to grips with new reporting requirements

Changes to Czech employment law are already likely to have been noticed by expats, due to the addition of nine new countries to those whose citizens do not require a work permit to work in Czechia.

The changes are important for expats hailing from the USA, UK, Australia, Canada, New Zealand, Japan, South Korea, Singapore, and Israel. As of July 1, 2024, they have the right to work in Czechia without needing to obtain a work permit, employee card, or “blue card.”

Yet as the government seeks to streamline employment procedures, cutting administration to ease the movement of foreign workers into Czechia, these headline changes aren’t all that expats should be aware of. The Manpower Group, one of the world’s largest employment agencies, explained how else the legislative transformation affects employers.

For companies employing expat workers, a significant aspect of the legislative change is the introduction of a new section aiming to make legal arrangements more transparent while reducing the administrative burden when employing people from other EU countries.

According to the new law, any posting to Czechia of a foreign employee must be reported to the State Labor Inspection Office – previously, reporting to the regional branch of the Labor Office was required. Manpower says “for foreign companies, it was complicated to determine the correct jurisdiction” for such reporting.

Reporting the arrival of a seconded foreign employee can now be done electronically via the Labor Office’s online portal. Reporting must include identification data on the employer and employee, the start date of the posting, the expected duration (if more than 12 months), and the anticipated end date of the posting.

The means through which the employee arrived in Czechia must also be stated. Employees can be listed as individuals working under an employment contract, as a person sent by a business corporation located in an EU member state with an office in Czechia, or as someone sent by an employment agency to perform work in Czechia based on an employment contract or agreement.

Employers must also submit a copy of the document establishing the working relationship with the new employee (such as a work contract or agreement), translated into Czech if the original document was in any language other than Czech or Slovak. 

As of July 1, there’s no need to keep physical copies of documents in paper form on employers’ side, as all evidence is available in the Labor Office’s database.

The government’s decision to open up free labor market entry to nine more countries forms part of a move to increase the desirability of Czechia as a place for foreigners to work. According to Manpower, “the result will be faster arrival of employees from abroad to the labor market, less administration and faster filling of vacant jobs, as well as an increase in the efficiency of the economy.”

The wish to streamline job application processes to boost efficiency is also manifested in a change to the registration of vacant jobs. The characteristics for vacant jobs are expanded within the official classification system, while vacancies will be automatically removed from the Labor Office’s register after six months to avoid distortion of statistics.

For employers, another major change is the requirement to register all employees working based on Work Agreements (Dohoda o provedení práce or DPP in Czech). Whereas in the past, only DPP employees participating in pension or health insurance plans had to be registered, this requirement now applies to all workers registered for Czech social insurance.

Manpower Group’s Jiří Halbrštát explained that “Agreements have become closer to full employment conditions, and firms therefore logically complain that their administration costs have increased. The amendment makes it more difficult for them to use such Agreements.”

He adds that “the higher administrative burden consists primarily in the fact that items to which employment contracts previously provided entitlement must now be registered, charged and reimbursed. This concerns registrations as well as planning and accounting for vacations, for example.”

Employers must report the amount of income gained by DPP employees by the 20th of each following month. Reports are required regardless of employees’ participation in pension and health insurance.

Meanwhile, the new legislation requires that all Work Agreements concluded before June 30 must be reported. Manpower recommends terminating any outstanding Agreements for employees who no longer work for your company. All newly arrived DPP employees must be reported by the eighth day after they start work. All necessary reporting procedures can be carried out on the online portal of the Czech Social Security Administration (ČSSZ).

According to Manpower, the overall aim of the amendment is “to set limits to insurance premiums.” Changes in this regard will not, however, take place until January 1, 2025.