Employer of Record in Czech Republic

An Employer of Record, or EOR, is a service that helps you hire employees in the Czech Republic without setting up a local entity. The EOR becomes the legal employer for your team members. It handles all the legal and HR work that comes with employment. This includes payroll, taxes, benefits, and employment contracts, all while making sure you follow Czech labor laws. You still manage your employees' day-to-day work, but the EOR takes care of the administrative side. For companies looking to expand into the Czech market, using an EOR like Rivermate can make hiring much simpler.

How an Employer of Record (EOR) Works in Czech Republic

Using an EOR in the Czech Republic simplifies the hiring process. Here is how it typically works:

1. You Find the Talent: You recruit and select the person you want to hire in the Czech Republic.
2. The EOR Hires Them: The EOR legally hires the employee on your behalf. They create a locally compliant employment contract.
3. Onboarding is Handled: The EOR manages the onboarding process, including any necessary registrations with local authorities.
4. Payroll and Benefits are Managed: The EOR takes care of paying your employee, withholding taxes, and managing all required contributions for things like health insurance and social security.
5. You Manage the Work: Your new team member works for your company, and you manage their daily tasks and projects.
6. Ongoing Compliance: The EOR stays up-to-date with any changes in Czech labor law to ensure your company remains compliant.

Benefits of Using an EOR for Hiring in Czech Republic

Using an EOR to hire in the Czech Republic offers several key advantages. It allows you to enter the market and build a team quickly and efficiently, without the usual complexities of international expansion.

• Avoid Setting Up a Local Entity: You can hire employees without the time and expense of establishing a legal entity in the Czech Republic.
• Ensure Legal Compliance: EORs are experts in local labor laws, so they handle employment contracts, taxes, and benefits according to Czech regulations.
• Simplify Payroll and HR: The EOR manages all payroll, tax withholdings, and statutory benefit contributions for your employees.
• Attract Top Talent: Offering compliant employment with all the standard local benefits makes your company more attractive to skilled professionals.
• Focus on Your Business: With the administrative side of employment handled, you can concentrate on your core business goals and managing your team.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Czech Republic includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Czech Republic.

Hiring in the Czech Republic gives you access to a skilled and stable workforce right in the heart of Europe. The country has a strong, export-driven economy, particularly in engineering and automotive industries. You'll find that the job market often favors job seekers, with low unemployment making for a competitive landscape when attracting top talent. To hire here, you can either set up your own local entity or partner with an Employer of Record (EOR) to simplify the process. An EOR acts as the legal employer, handling contracts, payroll, and compliance for you.

Employment contracts & must-have clauses

You must provide a written employment contract for every employee. This is a legal requirement. The contract can be for a fixed term or an indefinite period. A fixed-term contract cannot be for more than three years and can only be renewed twice.

Your employment contracts must include these key details:

• Type of work: A clear description of the job and responsibilities.
• Place of work: Where the employee will be based.
• Start date: The first day of employment.

While not legally required to be in the contract itself, you must inform employees in writing about:

• Weekly working hours
• Salary and pay schedule
• Annual leave entitlement
• Notice periods

Probation periods

You can agree to a probation period in the employment contract. This gives both you and the employee a chance to see if the role is a good fit. During this time, either party can end the employment relationship without giving a reason.

Here are the maximum probation period lengths:

For fixed-term contracts, the probation period cannot be longer than half of the contract's duration.

Working hours & overtime

The standard workweek is 40 hours, typically spread over five days. A single shift cannot be longer than 12 hours.

Overtime should only be for specific business needs. Here’s what you need to know:

• Standard Limit: Overtime is generally capped at 150 hours per year.
• With Agreement: You can agree with an employee to extend overtime up to 416 hours per year.
• Compensation: You must pay a premium of at least 25% for overtime hours. Alternatively, you can agree to provide paid time off instead.

Public & regional holidays

Employees are entitled to paid time off for public holidays. There are 13 national holidays in the Czech Republic, and no regional holidays. If a holiday falls on a weekend, it is not moved to a weekday.

Here are the public holidays for 2024:

Hiring contractors in Czech Republic

You can hire independent contractors for project-based or specialized work. This offers flexibility and access to specific skills without a long-term commitment. However, it's critical to classify workers correctly.

An independent contractor is self-employed, controls their own work, and is not integrated into your company's structure. Misclassifying an employee as a contractor to avoid providing benefits and paying certain taxes can lead to serious penalties. Fines for misclassification can be substantial, and you could be liable for back taxes and social security contributions.

An Employer of Record (EOR) helps you avoid these risks. When you partner with an EOR, they legally hire the worker as an employee. This ensures full compliance with local labor laws. The EOR manages all HR tasks, including contracts, payroll, taxes, and benefits. You get the talent you need without the legal complexities and risks of misclassification.

Navigating compensation and payroll in the Czech Republic is straightforward when you understand the key components. The system is a mix of monthly payments, structured wage tiers, and clear tax regulations. Both you and your employees contribute to social security and health insurance. This ensures everyone is covered. Let's break down the essentials to help you manage your payroll effectively.

Payroll cycles & wage structure

In the Czech Republic, you pay your employees monthly. You must provide a payslip with each payment, which can be in paper or digital format. This document needs to show the gross salary, all deductions, and the final net pay.

The country uses a system of "guaranteed wages." This means that jobs are categorized into eight different groups based on their complexity, responsibility, and required skill level. Each group has a corresponding minimum wage, ensuring fair pay across various professions.

Overtime & minimums

The standard work week is 40 hours. Any time worked beyond this is overtime. You can't ask an employee to work more than eight hours of overtime in a week, or more than 150 hours in a year. For any overtime worked, you must pay at least 25% more than the regular hourly rate.

As of January 1, 2025, the national minimum wage is CZK 20,800 per month. The minimum hourly rate is CZK 124.40.

Employer taxes and contributions

As an employer, you are responsible for withholding taxes and social security contributions from your employees' salaries. You must then remit these funds to the appropriate government agencies. Here's a breakdown of your contributions:

Employee taxes and deductions

Employees also contribute to social security and pay income tax. You will deduct these amounts directly from their gross salary each pay period.

Here are the employee's contributions:

And here are the income tax rates:

In the Czech Republic, you'll find a solid foundation of employee benefits and leave entitlements. The system ensures people have time off to rest, care for their families, and recover from illness. While there's a legal minimum for things like vacation time, many companies offer more to attract and keep good employees. This creates a competitive job market where benefits packages can be a deciding factor.

Statutory leave

The Czech Republic provides several types of legally required leave.

• Annual Leave: You get a minimum of four weeks of paid vacation each year. However, five weeks is a common standard in the market.
• Sick Leave: If you're sick, you can take up to 380 days of sick leave. Your employer pays you 60% of your average salary from the 4th to the 14th day of your illness. After that, the government's social security system takes over the payments.
• Maternity Leave: Mothers are entitled to 28 weeks of maternity leave. For multiple births, this extends to 37 weeks. Maternity leave benefits are paid by the Social Security Administration at 70% of the employee's assessed salary.
• Paternity Leave: Fathers can take two weeks of paternity leave within the first six weeks after the child's birth. This is also paid at 70% of salary by social security.
• Parental Leave: After maternity leave, one parent can take parental leave until the child is three years old. They can claim a parental allowance from the government during this time.
• Care Leave: You can take up to nine days of leave to care for a sick child under 10 or another sick family member.

Public holidays & regional holidays

The Czech Republic has 13 public holidays. If a holiday falls on a weekend, it is not typically moved to a weekday.

Typical supplemental benefits

To stay competitive, many companies offer benefits beyond the legal requirements.

Statutory Benefits

Non-Statutory (Supplemental) Benefits

How an EOR can help with setting up benefits

Setting up a benefits package in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in the Czech Republic. This means you don't have to go through the lengthy process of setting one up yourself. They understand the local laws and market standards for benefits.

Here's what an EOR does:

• Ensures Compliance: They make sure your benefits package meets all legal requirements.
• Saves Time: You avoid the administrative burden of researching and setting up benefits.
• Offers Competitive Packages: They know what local employees expect and can help you create an attractive benefits plan.
• Manages Administration: They handle the day-to-day tasks of managing employee benefits.

Using an EOR allows you to quickly and easily hire employees in the Czech Republic while offering a competitive and compliant benefits package.

Ending a working relationship in the Czech Republic has clear rules. You can't just let someone go. The process is defined by the Czech Labour Code, which outlines specific reasons and procedures for termination. This ensures fairness for both you and your employee. Whether it's a mutual agreement or a dismissal, you must follow the correct steps to stay compliant.

Notice periods

When you or an employee decides to end the employment contract, a notice period is usually required.

• Standard length: The legal minimum notice period is two months for both the employer and the employee.
• Starting the clock: The notice period always starts on the first day of the month after the notice is given. For example, if notice is given on March 15, the two-month period begins on April 1.
• Written agreement: You can agree to a longer notice period in the employment contract, but it cannot be shorter than the two-month minimum.
• Probationary period: During a probationary period, either you or the employee can end the employment without giving a reason. The contract ends on the day the notice is delivered.

Severance pay

If you dismiss an employee for specific reasons, you must provide severance pay. The amount depends on the employee's length of service.

Source: Rippling, L&E Global

There are special circumstances. If an employee is dismissed due to a work-related injury or occupational disease, they are entitled to severance pay of at least 12 times their average monthly earnings.

How Rivermate handles compliant exits

When you use an Employer of Record like Rivermate, we manage the entire offboarding process for you. We make sure every step is compliant with Czech labor law.

Here’s how we handle it:

• Documentation: We prepare and manage all necessary termination paperwork.
• Compliance checks: We ensure the reason for termination is valid under the Czech Labour Code.
• Calculations: We accurately calculate final pay, including any required severance.
• Communication: We guide you on how to communicate the termination to your employee, ensuring a smooth and professional exit.
• Deadlines: We handle all administrative deadlines, like de-registering the employee from social security and health insurance.

Using Rivermate removes the guesswork. You can be confident that the termination process is handled correctly and respectfully, protecting you from legal risks.

Navigating the visa and work permit process in the Czech Republic is straightforward when you understand the system. For non-EU nationals, securing the right authorization is a key step to working here legally. The process involves different permits based on the job's nature and duration, and it requires cooperation between you and your employer.

Employment visas & sponsorship realities

The most common route for long-term employment for non-EU citizens is the Employee Card. This card combines your residence and work permit into a single document. For highly skilled professionals with a higher salary, the EU Blue Card is another option. Both require a formal job offer from a Czech-based employer before you can apply.

An Employer of Record (EOR) can be your legal employer in the Czech Republic, handling all the necessary sponsorship and administrative tasks. This is a practical solution if your company doesn’t have a local entity. However, there are realities to consider:

• Licensed Providers: EOR services are a regulated activity. You must use a provider that holds a valid license from the Labour Office.
• Assignment Limits: Agency workers, which is how you are classified under an EOR, can typically only be assigned to the same client for a maximum of 12 consecutive months.
• Equal Treatment: You are entitled to the same pay and working conditions as comparable direct employees at the client company.
• Not for Freelancers: Sponsorship is for employees. Independent contractors cannot use an EOR to get a work visa.

An EOR simplifies the process by managing the legal requirements, but the relationship is subject to specific labor laws that define the boundaries of the arrangement.

Business travel compliance

For short-term visits, such as business meetings, conferences, or training, you will likely use a Schengen (short-term) visa. This visa allows you to stay in the Schengen Area for up to 90 days within any 180-day period.

Keep these points in mind for business travel:

• Visa-Free Travel: Citizens of many countries, including the US, UK, Canada, and Australia, can enter the Czech Republic for business purposes for up to 90 days without a visa.
• No Work Allowed: A short-term visa or visa-free travel does not permit you to work. The activities are limited to business-related purposes that are not considered gainful employment.
• Check Requirements: Always verify the specific rules for your nationality before you travel, as regulations can change.

If your stay needs to extend beyond 90 days, or if the purpose of your trip involves employment, you must apply for a long-term visa or an Employee Card.