Legal dispute sparks debate on remote work for EU nationals in Czechia

A civil dispute in Czechia has raised questions about the legalities associated with working remotely for a foreign-based company, after a woman from the Olomouc region received hundreds of thousands of crowns in compensation from the state.

The 37-year-old woman, who works for a Portuguese company but is based in Czechia, was initially denied the benefit because officials believed Portugal—where the child’s father is also from—should be responsible for the payments. She complained, leading to a legal dispute lasting over two years.

However, ombudsman Stanislav Křeček intervened on behalf of the woman, concluding that the Czech Republic should have been paying the allowance all along. He highlighted that the woman had full proof that she resided and worked in the Czech Republic, despite being employed by a Portugal-based company. "She is entitled…because she performs her work to a significant extent from the Czechia," he said.

The woman's case highlights the complexities of social security regulations for remote workers in the EU. The Labor Office and the Ministry of Labor initially argued that since both parents worked for a Portuguese company, Portugal was responsible for the parental allowance.

The ombudsman emphasized, however, that the key factor was the child's residency in the Czech Republic, rather than the parents' employment location. According to an EU regulation, parental allowance is paid by the state where the child resides if one parent is gainfully employed there.

Following the ombudsman's intervention, the Labor Office acknowledged its error and awarded the woman the parental allowance, including a back payment of CZK 278,000 (approximately EUR 10,000).

Experts believe similar cases could become more prevalent as remote work becomes increasingly common. The state ombudsman's office encourages foreign workers in the Czech Republic to understand their rights and seek assistance from relevant authorities, such as the ombudsman itself (which, handily, has an English-version website).

Working remotely for a foreign company can confusing not only in terms of state security benefits, but also in tax. There are no EU-wide rules that say how EU nationals who live, work, or spend time outside their home countries are to be taxed on their income, says an official EU website.

Czech employers believe that work-abroad rules will be simplified in the near future, director of the Czech Association of Business Service Leaders Jonathan Appleton told Expats.cz in 2023, mainly due to growing demand and an increasing trend of working from abroad.