How to Hire Remote Employees In 

Czech Republic

The Basics

Currency
Czech Koruna (CZK)
Employer Taxes
33.80%
Payroll Frequency
Monthly
Official Language
Czech

Employment in 

Czech Republic

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Czech Republic

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Czech Republic can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Czech Republic, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Czech Republic.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Czech Republic is not the same as paying workers in your own country. Employees have to be paid using Czech Republic’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Czech Republic

 Specific Information

Working Hours

A full-time workweek is 40 hours or 8 hours per day. The length of a shift cannot exceed 12 hours.

Overtime

Overtime work can only be performed as an exception and cannot exceed 150 hours within a calendar year.

If there is an agreement between the employee and employer in regards to work beyond regular hours, overtime cannot exceed 8 hours a week for more than 26 consecutive weeks.  If there is a collective agreement, overtime may be increased.

For managerial positions- the maximum amount of overtime that can be negotiated is 150 hours per year.

Overtime pay is as follows:

  • Overtime pay is 125% of the regular pay.  It is also possible to give additional time off in place of overtime pay.
  • For work over holidays, employees are entitled to their wages plus time off.
  • For work over the weekend, the overtime pay rate is 110% of the regular wages.
  • For nightshift- The shift cannot exceed 8 hours within a 24-hour time period and the pay rate is 110% of the regular wages.

Payroll Tax

Employer

  • 33.80% - Employer Contributions

Minimum Wage

The monthly minimum wage is 15,200 CZK.

Payroll

Pay Cycle

The payroll cycle is monthly and a regular date for payment must be set by the employer.  Salaries must be paid no later than the following calendar month in which the work was performed.

13th Salary

There are no provisions in the law regarding 13th salaries.

Leave

Paid Time Off (PTO)

Employees are entitled to 4 weeks of paid leave.

Public Holidays

There are 13 public holidays.

Sick Days

During the first 14 days of illness, the employee is entitled to receive 60% of their regular wages, so long as the employee has fulfilled the conditions to be eligible for this entitlement.

Maternity Leave

In the Czech Republic, a woman is entitled to 28 weeks of maternity leave or 37 weeks for multiple births. The leave can start at least 8 weeks before the expected due date, but no later than 6 weeks.  Maternity leave is compensated at 70% of the regular salary, however, this amount depends on how much the employee has contributed to social security.  In addition, at least 14 weeks of maternity leave must be taken.

Paternity Leave

New fathers are able to take leave in lieu of the mother after the first 7 weeks from birth.

Parental Leave

The mother is entitled to parental leave starting at the end of the maternity leave and the father is entitled to the leave starting from the child’s birth until the child reaches the age of 3.  This leave can only be taken when the child is being cared for from home.

Parents are entitled to a maximum allowance of 220,000 CZK until the child reaches the age of 4 or 330,000 CZK for multiple births.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

An employee can be terminated:

  • By a mutual agreement between the employee and employer
  • Notice of termination by either the employee or employer.
  • The notice must be delivered in writing
  • If the employee is resigning, they are not required to give a reason
  • If the employer is terminating the employee, the employee is obligated to list the reason for termination.
  • Notice of termination cannot be given during the protection period (i.e the employee is pregnant or on maternity leave, the employee is unfit for work, etc.)
  • For immediate termination for a reason that is specified under the Labor Code
  • Within a probationary period
  • On an agreed date if the employment contract is for a definite period
  • In the event of death of the employee

Notice Period

The notice period for the employee or employer must be at least 2 months. It is possible to extend this period if both parties agree on a longer notice period and must be agreed upon in writing. The notice period commences the first day of the month following the delivery of the notice.

Severance Pay

Depending on how long the employee has been employed, the amount of severance pay to be paid out will vary:

  • 1 year of employment: 1 months’ gross salary
  • 2 years of employment: 2 months’ gross salary
  • 3+ years of employment: 3 months’ gross salary

Probation Period

The probation period is a maximum of 3 consecutive months for regular employees and up to 6 consecutive months for chief officers. The probationary period must be agreed upon in writing and cannot be longer than half of the agreed period of the employment relationship.