Individual employment relations in Czechia

Requirements regarding an employment contract

Employment is based most often on the conclusion of an employment contract. The employment contract must specify the following information: the type of work that the employee is supposed to do, the place of work and the start date. The employer and employee have to reach agreement on these details. In addition to these, the contracting parties may also agree on other aspects that they wish to include, particularly special working conditions deviating from the generally applicable legal regulation (such as conditions for homeworking or job-sharing for example).

Under the Labour Code, employment contracts are defined for an indefinite period of time as standard, but the conclusion of employment contracts for a definite period of time is also allowed for. However, a contract for a definite period of time may be concluded a maximum of three times, and each period cannot exceed three years. Further similar contracts can be concluded only after legally prescribed conditions are met (this applies for seasonal workers especially). In the employment contract, parties may agree on the length of a trial period, which, by law, can be no more than three months for rank-and-file employees and six months for managerial employees.

In addition to standard employment contracts, the Labour Code makes it possible to conclude agreements on work performed outside employment – agreements to ‘complete a job’ (dohoda o provedení práce) and to ‘perform work’ (dohoda o pracovní činnosti) – which are relatively popular in some sectors (such as the construction, hotel and restaurant sectors). An agreement to complete a job can be concluded only when the range of work will not exceed 300 hours in a calendar year for the same employer. Employees working on agreements to ‘complete a job’ only pay social and health insurance contributions if their monthly income amounts to more than CZK 10,000 (€390 approximately) and only in those months in which this income threshold is exceeded.

The agreement to perform work is characterised by the fact that it does not allow the performance of work in excess of half the set weekly working hours (usually 20 hours a week). Compliance with the agreed maximum weekly working hours is assessed for the entire period for which the agreement to perform work is concluded, but not longer than 52 weeks. The agreement to perform work is also more stringent with respect to social and health insurance contributions. The obligation to pay such contributions arises once earnings exceed (since 1 January 2023) CZK 4,000 (€115 approximately) per calendar month.

Dismissal and termination procedures

Employers or employees may terminate employment in several ways:

• by agreement – between the employer and the employee in writing, by a certain date

• by notice – in writing, by the employer (indicating statutory reasons) or by the employee (without having to indicate a reason)

• by immediate termination of the employment contract – by the employee (allowed only for serious health reasons or because their salary has not been paid within 15 days of the due date)

• by cancellation within the probation period – by the employer or the employee, also without having to indicate a reason

• by a lapse of the agreed period in the case of fixed-term employment

It is prohibited to terminate employment with an employee during the period of protection. Following the COVID-19 pandemic, quarantine is now (since 2022) also included among the reasons for protection when the prohibition of dismissal under the Labour Code applies.

If notice has been given, employment shall end only after the notice period. The notice period is identical for both employers and employees and at least two months’ notice must be given.

An employee can hand in their notice for any reason or without stating a reason. An employer may terminate employment unilaterally only for the reasons expressly defined by the Labour Code. These reasons are as follows:

• the employer, or one of its branches, shuts or relocates

• the employee becomes redundant as a result of a decision made by the employer or the competent body to change the employer’s business or commercial objectives

• the employee can no longer perform as expected because of ill health

• the employee does not meet the prerequisites prescribed by the statutory provisions for the performance of the agreed work or does not meet the requirements for the proper performance of such work

• the employee seriously breaches some duty arising from the statutory provisions and related to the work performed by them, or reasons for the immediate cancellation of employment are given.

Parental, maternity and paternity leave

An employee (mother) is entitled to 28 weeks of maternity leave. She begins maternity leave at least six or at most eight weeks before the expected date of birth. In the case of a multiple birth, the mother is entitled to 37 weeks of maternity leave. The minimum length of maternity leave taken in the case of a birth cannot be shorter than 14 weeks and cannot be finished or interrupted before six weeks have passed since the date of birth.

Responsibility for the payment of the maternity leave allowance lies with the Czech Social Security Administration (Česká správa sociálního zabezpečení, ČSSZ).

Maternity benefit (maternity leave allowance) corresponds to 70% of the claimant’s reduced assessment base (more or less the claimant’s gross salary). An insured person who is the father of the child or the husband of a woman who bore the child also has the right to maternity benefit if the father has concluded a written agreement with the mother of the child that he will take over the care for the child from the mother. The agreement must include data laid down by law and may be concluded with effect no sooner than the beginning of the seventh week after the birth.

Parental leave applies to the mother of the child once her maternity leave comes to an end and to the father of the child from the child’s birth. They can apply for parental leave from their employer until the child is three years old. The parental allowance can be received until the child is four years old. In recent years, the amount of the parental allowance and the speed at which it is drawn down have been modified several times. Since January 2020, the total amount of the allowance has been CZK 300,000 (€11,682), and CZK 450,000 (€17,523) in the case of children from a multiple birth. Since January 2018, a parent has been able to freely choose the monthly amount of parental allowance and thus the period of its drawing. The allowance is paid monthly, and the maximum amount corresponds to the amount of maternity benefit (in 2021: a maximum of CZK 43,470 (€1,693) and, for a multiple birth, CZK 65,205 (€2,539)). If the maximum monthly amount is chosen, the total amount of parental allowance (CZK 300,000 (€11,682)) will be paid out over seven months. The choice regarding the amount of parental allowance can be changed once every three months.

A parent is entitled to parental allowance if they personally care for the youngest child in the family on a full-time basis and that child is up to four  years of age. The condition of personal full-time care is also considered to be fulfilled in the following cases:

• a child under the age of two years attends a crèche or other facility for preschool children for a maximum of 92 hours in a month

• a child regularly attends a remedial care centre, crèche, kindergarten or similar facility for preschool children with disabilities for a maximum of four hours a day

• a child of parents with disabilities attends a crèche, kindergarten or similar facility for preschool children for a maximum of four hours a day

• a child with a disability attends a facility for preschool children for a maximum of six hours a day

• the parent arranges for care for the child by another adult while the parent is gainfully employed or studying

Attendance in these facilities is not monitored for children over two years of age.

The parent’s income is not tested; the parent may carry out an occupational activity without losing their entitlement to parental allowance.

Starting in July 2022, if another child is born while receiving parental allowance and the family does not manage to exhaust the current benefit up to the total statutory amount, the Labour Office of Czechia will pay the remaining part of the parental allowance at once. However, at least one parent must meet the condition of the determination of the daily assessment base on the date on which the youngest child in the family is born, or at least one of the parents must be considered self-employed for pension insurance purposes on that date.

Although the legislation enables Czech men to take parental leave under the same conditions as women, men taking parental leave represented only 1.7% of all cases of parental leave in 2019. Moreover, this proportion was constant between 2008 and 2019, with the percentage ranging from 1.6% to 1.9%.

Since 1 February 2018, fathers have been entitled to claim the ‘paternal postnatal care benefit’. The duration of the benefit is currently set at two weeks, and the amount paid is derived from the maternity benefit calculation (70% of the daily assessment base). These two weeks of leave can be taken any time during the first six weeks following the birth of the child. In 2022, paternity leave was introduced into the Labour Code as an important personal ‘obstacle’ to work on the part of the employee; this leave was effective from 1 December 2022. Leave has also been recently granted in the event of a stillbirth or the death of a child within the first six weeks of birth.

Sick leave

Sick leave is addressed primarily by Act No. 187/2006 Coll. on sickness insurance and by section 192 of the Labour Code.

During the first two weeks of an employee’s temporary incapacity to work, an employer provides the employee with a compensation wage for working days equal to 60% of the employee’s average earnings. The employee is entitled to the compensation wage only for the period of the employment relationship during which they make contributions to health and social insurance.

From the 15th calendar day of a temporary incapacity to work, the employee is entitled to a sickness benefit from the sickness insurance scheme. The support period lasts no longer than 380 calendar days from the date of the temporary incapacity to work or quarantine order, unless stated otherwise.

The amount of sickness benefit per calendar day is 60% of the reduced daily assessment base until the 30th day of the temporary incapacity to work. From the 31st to the 60th calendar day of the temporary incapacity to work, the rate is 66% of the daily assessment base and, from the 61st calendar day of the temporary incapacity to work, the rate is 72% of the daily assessment base. This gradual increase was introduced on 1 January 2018; before this, it remained at the level of 60% of the reduced daily assessment base for the whole period of the temporary incapacity to work.

The employer cannot terminate an employment relationship with an employee during their temporary incapacity to work, with the exception of cases in which the employer’s undertaking, or its part of the undertaking, is closed down or relocates away from places where the employee is to perform work in accordance with their employment contract.

Retirement age

Two fundamental processes apply to the calculation of retirement age.

The first process is the approximation of the retirement age for men and women. At present, women still retire earlier than men, specifically depending on the number of children raised (their retirement age decreases as the number of children raised increases). The retirement age, regardless of the number of children born, will be fully equalised no earlier than 2037, namely when those born in 1972 will start retiring, aged 65 years.

The second process is a continuous increase in the retirement age for each generation born. An unlimited increase in the retirement age was adopted by the Chamber of Deputies of the Parliament of the Czech Republic (Poslanecká sněmovna Parlamentu České republiky) in 2011. The retirement age is thus postponed for each age group with the same year of birth, namely by two months when compared with the previous age group. However, both employers and trade unions were critical of the unlimited increase in the retirement age.

On 5 September 2016, the Czech government approved the capping of the retirement age at a maximum of 65 years. This measure will positively affect those born after 1965, who would otherwise have retired when they were older than that.

In 2021, men retired when they were 63 years and 10 months of age and women when they were between 59 years and 63 years and 10 months of age, depending on the number of children raised.

On 1 January 2023, Act No. 323/2021 Coll., amending the Pension Insurance Act, came into force. It stipulates that the person (woman or man) who has provided the majority of care for a child is entitled to the benefit granted for raising that child (výchovné). In 2023, this was a fixed monthly allowance of CZK 500 (€20 approximately) (subject to gradual indexation) for each child raised.