Hiring Talent And Managing Payroll In Czech Republic

Agreements

Onboarding Process

• A job description is prepared by the HR teams. They collaborate with the unit that has a job vacancy.
• The description is then uploaded on the official site of the company along with other platforms like LinkedIn.
• Employers in the Czech Republic mainly post job vacancies in the local newspapers.
• Candidates apply for the job by proving their eligibility. They are further shortlisted based on rounds of screenings and interviews.
• Final shortlisted candidates then negotiate their terms and conditions with the employer. After the mutual agreement, the candidate is hired as an employee.
• Once the employee is onboarded, the employer had to register them with the local authorities within eight days.
• If the employee is an expatriate then they should provide their work permit, signed working contract, and a passport.
• Once the employer is done with all the employment formalities as per the law, they should introduce their employees to the company.
• It is suggested to review the employment contract at this stage and to provide job training to the employees.
• During the first week or day, the new employee should be introduced to other employees.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• The health and safety of the employee are the responsibility of the employer. Employers have to maintain healthy working conditions.
• Employees are also required to represent their health issues if any.

Working Hours and Overtime

• Work hours: An employee in the Czech Republic is supposed to work 40 hours a week. It makes 5 days of work per week starting from Monday to Friday.
• Break: An employee is granted 30 minutes food break after 6 hours of continuous work. Every employee is entitled to have a break of 11 continuous hours. 35 hours of break is given to each employee in a week.
• Overtime: Overtime in the Czech Republic should not exceed 8 hours in a week. An employee must not work more than 150 hours in a working year.

Social Security

Taxes for Employees

• An employee has to pay an income tax. An employee has to pay a tax of 15% on an income of up to CZK 1,701,168. A tax of 23% is levied on an income above CZK 1,701,168.
• A tax of 6.5% is levied on an employee for the contribution towards social security.
• 4.5% is contributed to health insurance.

Termination

• An employer is bound to provide a written notice stating the reason for termination.
• An employee who resigns on their own is not required to provide the reason for their decision

Severance Pay

• An employee who has worked less than a year will not get severance pay.
• An employee who gets terminated within a year will get a month's salary as severance pay.
• If terminated after 2 years, the employee will get a 2-month salary.
• If an employee is terminated after 3 years, a salary of 3 months is given.

Employees or Contractors

• A person who works for a company and earns a wage or salary is called an employee.
• An organization or person who hires people to work for them is called an employer or contractor.
• A penalty of CZK 50,000 or above is imposed on the misclassification of the employee as a contractor. This is levied for minor violations.
• Companies that are found guilty of misclassification have to pay a penalty of CZK 10,000,000 for major violations.
• An employer has to pay employment income tax on the behalf of the employee.
• An employer has to pay health insurance and social security contribution for the employee.
• A duty of payment of overhead surcharges is paid by the company if found guilty.
• The company has to pay all the related interests and sanctions on the behalf of a misclassified employee.

Final Words