Labour and Employment Law in the Czech Republic

Under Czech labour law, “dependent work” must be within an employment relationship. The “Švarc system” occurs when companies misclassify employees as independent contractors. Key criteria for dependent work include employer control, comparable employee status, wage-based remuneration, employer-provided materials, and exclusivity. Authorities have intensified enforcement, with fines up to CZK 100,000 (€4,000) for individuals and CZK 250,000–10,000,000 (€10,000–€400,000) for companies.

Also the so called disguised employment intermediation is forbidden. The disguised employment intermediation means the activity of a legal person or natural person consisting in hiring labour to another legal person or natural person without complying with the conditions for employment intermediation, i.e. without labour agency licence. This might  usually happen when employees are assigned to another employee and costs for such employee are only simply re-invoiced.

Czech labour law requires employment contracts to be in written form, but electronic signatures are legally recognized under both EU and Czech regulations. Private employers can use simple electronic signatures, while public entities must use recognized ones. Valid options include biometric signatures, online verification services, and other secure authentication methods that clearly identify the signatory.

For an electronic contract to be legally valid, it must accurately capture the agreement’s content, clearly identify both parties, and be stored in a format that allows both the employer and employee to retain and print a copy. Employers must also ensure proper document delivery and authorization. The Czech Supreme Court has ruled that simple emails without electronic signatures do not meet the legal requirement for written contracts. However, when an electronically signed contract is properly authorized and the employee begins work, it is generally considered a valid employment agreement.

The concurrence of positions — a company executive (statutory body member) and an employee — has been a complex legal issue in the Czech Republic. While this arrangement is common in practice, Czech courts have traditionally taken a strict stance against it, particularly when the employment role overlaps with statutory duties. Key differences include liability, work injury protection, termination rules, and severance rights. Recent court decisions, particularly the Supreme Court ruling in 2018, have somewhat relaxed the strict separation, allowing Labor Code provisions to apply to executive contracts by agreement — though key commercial law provisions still govern establishment, termination, and liability standards.

The Czech Supreme Court ruled in 2018, that companies and executives may agree to apply the Labour Code to executive contracts, though the relationship remains business-law based. Key commercial law rules—such as appointment, termination, remuneration, and managerial duty—remain mandatory. Executives do not gain employee protections like notice periods or limited liability. A 2019 ruling further clarified that employment contracts signed by the same person as employer and employee are not automatically void but require case-by-case review. For more information, please visit our site.

Under Czech labour law, all employers must provide occupational medical services, as required by the Czech Labor Code, the Act on Specific Health Services, and the Public Health Protection Act. Jobs are categorized into four categories based on health risk, with employers required to classify positions within 30 days of employment. Employers must sign a written contract with an occupational doctor outlining the work categories, services, pricing, and duration. Mandatory medical examinations include initial, periodic, extraordinary, final, and follow-up exams, depending on job risk. Regular workplace supervision by an occupational doctor is required annually or biannually for Category 1 positions. Non-compliance can result in penalties of up to CZK 3,000,000.

Czech labour law offers several options for companies facing reduced workloads. Employers can terminate employment due to “organizational changes” with proper notice, continuing full salaries during the notice period. Alternatively, they can implement “partial unemployment” with reduced wages (at least 60% of average earnings) during temporary shortages, requiring internal regulations or union agreement. When employees cannot work due to employer issues, they are entitled to compensatory wages equal to their average earnings. Additionally, a “working hours account” system can be established for flexible hour distribution. Each option has specific legal requirements and financial implications, so companies should carefully assess their situation before deciding.

The Labor Code has been aligned with the EU Directive on work-life balance for parents and caregivers. While existing Czech laws already exceed EU requirements—offering 70% compensation for two weeks of paternity leave and more generous parental leave than the EU’s four-month minimum—the amendment introduces additional protections. It extends nursing allowance benefits to employees under work performance agreements, work activity agreements, or small-scale employment. Employers must also allow remote work for pregnant employees or those caring for children under 15 or dependent persons, unless operational reasons prevent it. A key change is the shift in the burden of proof for dismissals, requiring employers to prove terminations are not related to employees’ statutory rights. Employers will also need to justify in writing when denying flexible working requests. These changes further protect parents and caregivers, improving work flexibility and reducing discrimination.

In 2023, the Czech Republic introduced whistleblower protection legislation through Whistleblower Protection Act aligning with EU Directive. The law applies to public contracting authorities, employers with 50+ employees, tax authorities, and financial entities. Employers must set up confidential reporting systems, designate a qualified person to manage whistleblowing, and protect whistleblowers from retaliation. This protection extends to related parties, including family and colleagues. Violating these requirements can result in fines up to CZK 1,000,000, especially for retaliation or failing to establish proper reporting systems.

The Czech Labor Code allows employers to withdraw from non-competition clauses during the employment relationship, but a 2021 Constitutional Court ruling (Case No. II. ÚS 1889/19) changed how this is applied. Previously, case law required employers to provide a reason for withdrawal, but the Court ruled that employers can withdraw without explanation if the contract explicitly allows it. However, the Court stressed that each case must be evaluated individually, considering factors such as the timing, whether the employer acted arbitrarily, and potential abuse of rights. This ruling clarifies employer rights while ensuring employee protection.

In 2018, the Supreme Court ruled that secret audio or visual recordings may only be used as evidence if no other means of proof are available and if the need for a fair trial outweighs privacy protections. This exception must be applied restrictively, considering factors like the circumstances of the recording, the importance of the legal interest at stake, and whether other evidence options exist that don’t violate privacy. This ruling gives employers a limited but valuable tool for proving employee misconduct in certain cases.

The Czech Employee Card is a combined work authorization and residency permit for non-EU nationals seeking employment in the Czech Republic. Valid for up to two years, it streamlines immigration through a single application process. Employers must first announce the job vacancy at the Labour Office for 30 days. Applicants must submit their documents to Czech embassies or the Ministry of Interior, including a passport, accommodation proof, employment contract, qualifications, and a clean criminal record. The process typically takes 60 days, after which the applicant receives a D-type visa, visits the Ministry for biometric data, and gets a Certificate of Compliance to work. The biometric card is issued 3-4 weeks later. Application fees total CZK 3,500. Employers must report employment to the Labour Office on the first working day.

Under the amended legislation, EU-based employers who post workers to the Czech Republic must maintain specific documentation at the Czech workplace where the posted employees perform their duties. These required documents include a copy of the employment contract, other written agreements establishing the employment relationship, and written confirmation from the employer documenting the employment relationship. Crucially, all these documents must be translated into the Czech language. The State Labour Inspection Office and Regional Labour Inspectorates are authorized to conduct workplace inspections, with non-compliant employers facing potential fines of up to CZK 500,000 (approximately €20,000). Additional provisions apply for posted workers who are not citizens of the Czech Republic or other EU member states, who may be required to provide proof of legal residency issued by an authorized body in another member state.

The employment agency temporarily assigns its employee to perform work for a client on the basis of a written temporary assignment agreement entered into by and between the agency and the client. The employment agency and the client are obliged to secure that the working and wage conditions for the temporarily assigned employee are not or would not be worse than those under which a comparable employee works or would work.

The Czech Republic has implemented significant changes to labour agency regulations in 2024. Key modifications include transferring licensing authority from the Labour Office to the Ministry of Labour and Social Affairs, increasing the required deposit to CZK 1,000,000, implementing stricter qualification standards, and enhancing employee protections through a mandatory 14-day notice period for temporary assignment terminations. Additional requirements have been introduced for responsible representatives who must now work at least 20 hours weekly and have relevant experience within the past decade. For more detailed information about these changes, please visit our site.