Dear Readers,
The area of agreements on work performed outside the employment relationship dramatically changed and additional changes will become effective on 1 January 2024 or 1 July 2024. Please find below a summary of information about contracts for work (the “CFW”) and agreements to perform work (the “APW”) that complies with the existing text of the Labour Code (the “LC”) and reflects changes effective from 2024.
Contract for Work, Section 75 of the LC
Conditions under the LC
- A maximum of 300 hours a year (all CFWs with a single employer are added up; Section 75 (1) and (2));
- The agreement must specify the work and period of time, for which it is entered into (Section 75 (3));
- An employee’s work must be scheduled (and the employee has to be informed about his or her schedule) no less than three days before a shift’s beginning; this is connected with a duty to keep a register of the time worked (Section 81 et seq.);
- In entering into a CFW, the duty to inform has to be complied with pursuant to Section 77a; where such data are not contained in the CFW, the employer is obliged to inform the employee in writing about the required data (such as the employer’s name and registered office, the term and conditions of the probation period, vacation entitlement, etc.) no later than within seven days from the commencement date of the work’s performance;
- A special duty to inform in relation to employees seconded abroad (Section 77b);
- Provisions about (and compensation for) obstacles at work on the employee’s side will now apply to employees (Sections 200 and 205 of the LC will not apply);
- An extra pay for work at night, under arduous working conditions and on weekends, and time off in lieu or salary to compensate work on a holiday, i.e. remuneration is seen as salary, will now apply to employees;
- Rest rules, including continuous rest, have to be complied with (Sections 90 and 92);
- An obligation to provide vacation applies from 1 January 2024 where certain conditions are met (Section 77 (8)); and
- Written reasons for an employment’s termination have to be provided under certain conditions and on request (Section 77 (7)).
Summary of the Obligation to Pay Social Security and Healthcare Insurance Contributions and Income Tax (Effective as of the Date of the Article’s Publishing)
- In case of remuneration higher than CZK 10,000 where the employee signed a tax declaration:
- Social security and healthcare insurance contributions have to be paid; and
- Income tax advances have to be paid (relieves can be applied, if any)
- In case of remuneration higher than CZK 10,000 where the employee did not sign a tax declaration:
- Social security and healthcare insurance contributions have to be paid; and
- Income tax advances have to be paid (relieves cannot be applied)
- In case of remuneration below CZK 10,000 where the employee signed a tax declaration:
- Income tax advances have to be paid
- In case of remuneration below CZK 10,000 where the employee did not sign a tax declaration:
- Tax at 15% has to be withheld and paid – the employee has to register at a tax office and file an annual statement of accounts.
Conditions (Changes) from 1 July 2024 (consolidation package): The law has been signed by the President and is to be published in the Collection of Laws.
- An obligation to report CFWs to the Social Security Administration Authority (the “SSAA”) for each calendar month together with information about commencement and the end (within eight days);
- An obligation to report the level of the employee’s earnings from the CFW to the SSAA on a monthly basis – a form;
- Changes in thresholds for payments of social security, healthcare insurance and sickness insurance contributions:
- A threshold of 25% of the average salary if the employee works for one employer; and
- A threshold of 40% of the average salary if the employee works for more than one employer at a time on the basis of a CFW;
- The employee’s obligation to report any and all formed contracts to employers – the employer’s obligation to provably inform the employee about this obligation.
Agreement to Perform Work, Section 76 of the LC
Conditions under the LC
- There is not limit for the number of worked hours but only one half of the specified weekly working hours can be worked as a maximum (i.e. 20 hours);
- The agreement must specify the work and period of time, for which it is entered into (Section 76 (4));
- An employee’s work must be scheduled (and the employee has to be informed about his or her schedule) no less than three days before a shift’s beginning; this is connected with a duty to keep a register of the time worked (Section 81 et seq.);
- In entering into an APW, the duty to inform has to be complied with pursuant to Section 77a (see CFW above, the obligations are identical);
- A special duty to inform in relation to employees seconded abroad (Section 77b);
- Provisions about (and compensation for) obstacles at work on the employee’s side will now apply to employees (Sections 200 and 205 of the LC will not apply);
- An extra pay for work at night, under arduous working conditions and on weekends, and time off in lieu or salary to compensate work on a holiday will now apply to employees;
- Rest rules, including continuous rest, have to be complied with (Sections 90 and 92);
- An obligation to provide vacation will apply from 1 January 2024 where certain conditions are met (Section 77 (8));
- Written reasons for employment’s termination have to be provided under certain conditions and on request (Section 77 (7)).
Summary of the Obligation to Pay Social Security and Healthcare Insurance Contributions and Income Tax (Effective as of the Date of the Article’s Publishing)
- In case of remuneration exceeding the threshold of CZK 4,000 (for 2023)
- Social security and healthcare insurance contributions have to be paid (exceptions exist in healthcare insurance, e.g. for self-employed individuals and persons insured by the state); and
- Income tax advances at 15% must be paid (relieves can be applied if the employee signed a tax declaration)
- In case of remuneration below CZK 4,000 (for 2023)
- Tax at 15% has to be withheld and paid – the employee has to register at a tax office and file an annual statement of accounts.
Other Information (Applicable to both the CFW and APW)
- An agreement on remote performance of work can be entered into under the rules applicable to employment.
- An employee is entitled to compensation of expenses in case of remote working under a CFW or APW only if agreed with his or her employer.
This article is a summary of the most important pieces of information rather than an exhaustive enumeration of facts. If you need more information about this topic, please feel free to contact us. We are ready to help you.
Lenka Kolmanová
kolmanova@clarksonhyde.cz
