Overview

Employment in the Czech Republic is governed by the Zákoník práce (Labor Code). Employment must be contract-based, with clear documentation for hiring, any changes to terms, and termination.

Employers are also required to submit a Unified Monthly Employer Report (Jednotné měsíční hlášení zaměstnavatelů – JMHZ). This system centralizes payroll and employment reporting under the Czech Social Security Administration, which shares data directly with tax authorities and health insurers.

This changes how payroll needs to be managed:

• You submit one consolidated monthly report instead of multiple filings  

• Payroll data must be fully consistent across systems, as discrepancies (e.g., tax residency or contribution limits) are automatically flagged  

In practice, employee data, classifications, and contribution calculations need to align from the start to avoid errors.

Employment Conditions

All employment must be established by a written contract. Under the Labor Code, a contract is only valid if it includes:

• The type of work (druh práce).

• The place of work (místo výkonu práce).

• The start date (den nástupu do práce).

Minimum Wage

The national minimum wage has increased to CZK 22,400 per month (or CZK 134.40 per hour) for a standard 40-hour work week. Employers must ensure that no employee's gross salary falls below this threshold, as it also serves as the minimum assessment base for health insurance.

Probation and Working Hours

Taxes & Mandatory Contributions

Personal Income Tax (PIT)

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Social Security & Health Insurance

Both employer and employee contributions are mandatory and calculated on gross salary.

Employer contributions (33.8% total)

• Social security: 24.8% (pension, sickness, employment policy)  

• Health insurance: 9.0%  

Employee contributions (11.6% total)

• Social security: 7.1%  

• Health insurance: 4.5%  

Social security contributions stop once the employee’s annual income reaches CZK 2,350,416.

Health insurance has no cap and continues to apply to the full salary.

Payments & Payroll Administration

New employers must register with the Financial Administration and the CSSZ within eight days of the first employee starting work.  

Additionally, the employer must register with the specific health insurance company chosen by each employee.

Payroll logistics

Payroll operates on a monthly cycle, with both salary payments and reporting aligned to this frequency.  

Employers can initiate payments from foreign accounts, but amounts must be converted into Czech Koruna (CZK) unless a different arrangement is agreed.

All employers are also required to contribute to a statutory workplace injury insurance scheme (zákonné pojištění odpovědnosti zaměstnavatele). Contribution rates typically range from 0.28% to 5.04% of total payroll, depending on the risk profile of the industry.

Benefits & Leave

Leave in the Czech Republic is highly structured with clear rules on who pays and when, especially for sick and parental leave.

Beyond leave entitlements, employers are required to provide several statutory benefits tied to payroll and employment. These are not optional and must be built into your cost structure from the start.

Social security and health insurance

Employers must contribute a combined 33.8% of gross salary, covering pension, sickness, unemployment, and healthcare.  

Employees also contribute a portion through payroll deductions.  

Social security contributions are capped annually, but health insurance applies to the full salary with no cap, which increases costs for higher earners.

Workplace injury insurance

All employers must register for and contribute to a statutory workplace injury insurance scheme (zákonné pojištění odpovědnosti zaměstnavatele).  

Rates vary by industry risk, typically ranging from 0.28% to 5.04% of payroll. This is mandatory regardless of company size.

Public holidays

Employees are entitled to paid time off during official public holidays (typically around 13 days per year).  

If employees are required to work on these days, additional compensation or time off in lieu must be provided.

Meal allowances

While not strictly mandatory, meal benefits are widely treated as a standard part of compensation. Employers typically provide meal vouchers (stravenky) or a cash meal allowance, which is tax-efficient and expected in most roles.

Remote work reimbursement

If employees work from home, employers are generally expected to cover related costs. A flat-rate allowance (e.g., CZK 4.70 per hour in 2026) can be provided to cover utilities such as electricity and heating, unless a different arrangement is agreed.

End of Employment

Employers can only terminate for specific reasons outlined in the Labor Code, such as redundancy, organizational changes, or breach of duties. Termination "at will" is not permitted outside the probationary period.

The statutory notice period is at least two months, beginning the first day of the month following the delivery of the notice.

Mandatory Severance (for redundancy/organizational reasons):

• Under 1 year of service: 1 month of average monthly earnings.

• 1 to 2 years of service: 2 months of average monthly earnings.

• Over 2 years of service: 3 months of average monthly earnings.

How an EOR simplifies hiring in the Czech Republic

For companies seeking to hire in the Czech Republic without establishing a local branch or subsidiary, an Employer of Record (EOR) provides a compliant infrastructure.

Operational Model

The EOR acts as the legal employer, managing all local registrations, payroll, tax withholdings, and statutory reporting. This model is particularly effective for managing the "single collection point" reporting requirements.

Using an Employer of Record like Knit transfers employment compliance responsibility to the EOR. The choice between an EOR and setting up a local entity depends on how you want to operate. EOR allows companies to hire without establishing a legal presence while maintaining flexibility to scale up or down as needed.

If you’re looking to further navigate hiring and compliance in the Czech market, let us help.

Frequently Asked Questions

Do I need a local entity to hire employees in the Czech Republic?

No. While establishing a local entity is one option, employers can use an Employer of Record (EOR) to hire and pay employees in the Czech Republic.  

The EOR manages local employment compliance, payroll, and statutory requirements, while you retain day-to-day oversight of the employee’s work.

Can I pay employees in a foreign currency like USD or EUR?  

Salary is generally agreed and paid in Czech Koruna (CZK).  

If a foreign currency is used, there must be a valid international element, and all payroll reporting, tax, and social security calculations must still be converted and filed in CZK based on official exchange rates.

What are the primary employer social security rates?  

Employer contributions are calculated as a percentage of gross salary and typically include both social security and health insurance components.  

Social security contributions are subject to an annual assessment cap, while health insurance applies to the full income without a cap.

Is there a mandatory probation period?  

No. A probation period is not legally required but is standard in practice. It must be agreed in writing before the start of employment and cannot exceed the statutory limits for standard and managerial roles.

What is the consolidated monthly reporting system?  

Employers are required to submit a single monthly report to the Czech Social Security Administration, which consolidates data that was previously reported separately to multiple authorities.  

While this reduces the number of filings, it increases the need for accurate and consistent payroll data across systems.

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