22
Thu, Feb
62 New Articles

Consolidation Package 2023 From the Perspective of Labour Law

Consolidation Package 2023 From the Perspective of Labour Law

Czech Republic
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

The government has proposed a package of measures aimed at reducing the state budget deficit in the next coming years. The package anticipates savings of almost CZK 150 billion, which, should bring to the state budget, in addition to changes in tax rates, also changes affecting employees and employers.

The Chamber of Deputies and the Senate have already approved the package, which is now awaiting the President's signature and publication in the Collection of Laws. The changes will be effective from 1 January 2024.

We have prepared a summary of the main changes that will have an impact on employment law in the following areas:

Contributions from income from the agreement on performance of work        

  • More strict rules for the exemption from insurance contributions in the case of agreements on performance of work (currently income from all agreements on performance of work up to CZK 10 thousand/month).
  • Two new limits for compulsory contributions for employees working on agreements on performance of work:
  1. 25% of the average wage for earnings from all agreements on performance of work with one employer,
  2. 40% of the average wage for earnings from all agreements on performance of work with multi-employer.
  • If employee with an agreement on performance of work exceeds one or the other limit, the employer is obliged to make social security and health insurance contributions.
  • A central register of all agreements on performance of work and income from agreements will be established.
  • A new obligation for an employee to inform the employer about work on agreements on performance of work with different employers and an obligation for employers to report the amount of income from agreements on performance of work to the Social Security Administration.

Employee benefits 

  • Introduction of an aggregate limit for tax exemption of selected employee benefits (e.g. goods and services of a health and medical nature, educational services, admission to sports facilities, admission to cultural events) at the level of half of the average wage (limit for 2024 in the amount of CZK 21,983).
  • However, this limit does not apply to all benefits, e.g. pension or life insurance contributions, meal vouchers, etc.

Sickness insurance for employees        

  • Sickness insurance for employees is introduced as part of social security contributions.
  • The employer will now deduct 7.1% from the employee's gross wage (compared to the current 6.5%) for social security contributions, while 0.6% is for sickness insurance.

Meals

  • The conditions for tax exemption of meals provided to employees are unified and clarified, as the current conditions for the meal voucher lump sum will also apply to meals provided in a non-monetary form (factory meals, meal vouchers).

At the same time, in connection with the amendment to the Labour Code, which is effective as of 1 October 2023, we would like to recommend you once again:

  • Revise the templates of agreement on performance of work and working activity,
  • Conclude written agreements with all employees working, even if only on a casual basis, from home (legal deadline 31.10.2023),
  • Obtain employee consents to electronic concluding of employment documentation and delivery,
  • Review work regulations and other internal directives,

Prepare new forms to inform employees (including for employees with agreements) of their rights and obligations.

By Ondrej Benes, Counsel, and Martina Vodickova, Associate, Eversheds Sutherland

Czech Republic Knowledge Partner

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

PRK Partners has one of the most experienced legal teams on the market. We are consistently rated as one of the leading law firms in the region. We have received many significant honours and awards for our work. We represent the interests of international clients operating in the Czech Republic in an efficient way, combining local knowledge with an understanding of their global requirements in a business-friendly approach. We are one of the largest law firms in the Czech Republic and Slovakia. Our specialised teams of lawyers and tax advisors advise major global corporations as well as local companies. We provide comprehensive legal advice drawing on our profound knowledge of local law and markets.

Our legal advice delivers tangible results – as proven by our strong track record. We are the only Czech member firm of Lex Mundi, the world's leading network of independent law firms. As one of the leading law firms in the region, we have received many national and international awards, in some cases several years in a row. Honours include the Chambers Europe Award for Excellence, The Lawyer and Czech and Slovak Law Firm of the Year. Thanks to our close cooperation with leading international law firms and strong local players, we can serve clients in multiple jurisdictions around the globe. Our strong network means that we can meet your needs, wherever you do business.

PRK Partners has been repeatedly voted among the most socially responsible firms in the category of small and mid-sized firms and was awarded the bronze certificate at the annual TOP Responsible Firm of the Year Awards.

Our work is not only “business”: we have participated on a longstanding basis in a wide variety of pro bono projects and supported our partners from the non-profit sector (Kaplicky Centre Endowment Fund, Tereza Maxová Foundation, Czech Donors Forum, etc.).

Firm's website: www.prkpartners.com

Our Latest Issue