10 things employers need to know about Czech labor and employment laws

Navigating through the labor and employment laws in the Czech Republic (Czechia) can be a daunting process, filled with complex regulations and legal requirements for the employment relationship. If you’re headquartered outside the Czech Republic, you need to take into account the differences in labor laws between countries. But your Czech compliance work gets even trickier when managing workers across the European Union (EU) where there may be additional employee rights and labor standards.

So how do you keep track of the overwhelming number of Czech and EU laws to stay updated on the most significant labor regulations in the Czech Republic? This guide will provide you with essential information to help you navigate the labor market in the Czech Republic and make informed decisions when hiring local talent.

1. At-will employment doesn’t exist

In the Czech Republic, you can only terminate an employee without notice for “just cause,” which has a high burden of proof. It is generally reserved for cases of serious misconduct or criminal activity.

2. Misclassifying employees could cost you hundreds of thousands of dollars

Employees in the Czech Republic are individuals who work according to the employer's instructions, usually full-time, have a contract of employment, and are entitled to benefits. Contractors provide services to a business and are more likely to work on their own and use their own tools and equipment and work on short-term or fixed-term contract. They are not entitled to benefits. It is important to classify workers correctly in order to comply with Czech labor and employment laws and avoid large fines and penalties.

3. The Czech Republic has strong anti-discrimination protections

The Czech Republic has anti-discrimination protections in the Constitution, the Czech Labour Code, and the Anti-Discrimination Act. Employers cannot discriminate based on a wide range of characteristics including gender, race, sexual orientation, ethnic origin, and age.

4. Hiring illegal workers could cost you a bundle

It is vitally important that all employees have the necessary authorization to work in the Czech Republic. This includes work permits, work visas, and residency permits. Employing someone without proper authorization is illegal and can result in severe penalties. These include substantial fines, a ban on hiring foreign workers, and possible imprisonment.

5. Czech workers have the right to unionize

In the Czech Republic, employees have the freedom to unionize. The decision to join a union is left tothe  individual employee. Employers are prohibited from impeding employees' union membership and it is illegal to engage in discrimination against employees based on their union affiliation. Through the process of collective bargaining, employers and unions collaborate to establish a collective agreement, which outlines and governs working conditions like working weeks, working days, working time, rest periods, and night work.

6. If you fail to offer benefits, you’ll face fines, penalties, and legal consequences

If you fail to offer mandatory employee benefits (for example, entitlements like pension, health insurance, social security, employment insurance, vacation time, and statutory holidays) in the Czech Republic, you could face a large fine and, in more serious cases, you may personally be held criminally liable. The mandatory benefits you need to offer employees in the Czech Republic are regulated by the Czech Labour Code.

7. Non-disclosure agreements (NDAs) are legally binding in the Czech Republic—with restrictions

An NDA (Non-Disclosure Agreement) is legally binding in the Czech Republic. However, it is important to note that the provisions within an NDA must not violate any existing legal regulations. For example, an NDA should not be utilized to obstruct or discourage whistleblowers from reporting wrongdoing. These agreements can be included as part of a Czech employment contract.

8. Workplace health and safety standards are the responsibility of the employer

The Czech Charter of Fundamental Rights and Basic Freedoms states that employees have the right to satisfactory work conditions and employers are required to provide a safe work environment and health protection. Sexual harassment is illegal in the Czech Republic and can result in legal action. The employer is obligated to investigate any complaints.

9. You must safeguard employees’ personal information

In the Czech Republic, strict laws protect employees' personal data. The Labour Code prohibits employers from accessing non-job-related information and limits the processing of personal data to specific purposes. The European General Data Protection Regulation (GDPR) also applies, ensuring privacy rights and control over personal data. Employers handling data must maintain records of collection and usage.

10. EU companies must ensure pay transparency

The EU adopted new rules on pay transparency in 2023 to combat pay discrimination and close the gender pay gap. EU companies will be required to share information on remuneration and take action if their gender pay gap is more than 5%. The directive contains provisions regarding compensation for victims of wage discrimination, as well as penalties for employers found to violate these regulations. EU member nations have three years to add the directive to national regulations, when it will go into effect.

Frequently asked questions about Czech labor laws

What is the minimum wage in the Czech Republic?

As of January 1, 2023, the minimum wage in the Czech Republic is CZK 17,300 (€739, $782) a month. This works out to CZK 103.80 an hour (€4.38, $4.69).

What are the overtime laws in the Czech Republic?

Employers can require overtime work or obtain consent for it under specific conditions outlined in the Czech Labour Code. Overtime work is considered work performed beyond the standard weekly working hours. It should only be done in exceptional cases and within legally established limits. A worker’s overtime must not exceed eight hours per week or 150 hours per calendar year.

If the employer and worker agree, overtime work can exceed the above limits but must not average more than eight hours per week over a maximum period of 26 consecutive weeks. In exceptional cases, a collective agreement may extend this period to a maximum of 52 consecutive weeks. Overtime work that a worker is given a period of time off for does not count towards the limit.

Pregnant workers are prohibited from working overtime as are employees caring for a child under one year of age. Part-time workers are not required to work overtime.

Overtime compensation is the worker’s regular hourly salary plus an additional 25% (minimum) of their average earnings, unless the employee and employer have agreed to time off in lieu (compensatory time) as compensation instead.

What are the required benefits in the Czech Republic?

All full-time Czech employees are entitled to the following statutory benefits:

• Health insurance
• Pension
• Employment insurance
• Annual leave
• Public holidays
• Paternity leave
• Sickness insurance/sick leave

Failure to offer these mandatory benefits could result in fines and criminal liability for the employer.
For more information on mandatory benefits in the Czech Republic, read our complete guide.

How do I terminate employees in the Czech Republic?

You might not be thinking about terminating employees at this stage, but it’s important to be aware of Czech termination regulations.

At-will employment isn’t recognized in the Czech Republic. These are the ways an employee can be involuntarily terminated:

Termination during the probationary period: The probationary period is defined in the contract of employment. This period allows employers to evaluate a new hire. Employers can terminate the employee before the expiry of their probation period without providing any notice so long as the termination of the employment is in good faith.

Termination for cause: Regular termination with cause and notice is possible, but it is tightly regulated by the Czech Labour Code. The employer must give notice and ensure delivery of the notice. Minimum statutory severance pay is determined by either the reason for dismissal or the length of employment, or both. Grounds for dismissal include layoffs, the business closing down, specific issues relating to the performance of work, and severe breaches of company policy. For more on mandatory notice periods and termination pay for Czech employees see our guide.

As noted above, layoffs and company reorganization due to a poor business climate or other issues are accepted reasons for termination, and the same labor regulations covering just cause apply. However, mass layoffs and those involving trade union members are much more complex. These involve the union and compliance with additional labor code regulations.

Immediate termination of employment without notice: These cases are rare and the employer must prove just cause. There are two situations where this is possible. The first is a gross breach of duty. The second is a criminal conviction resulting in imprisonment of one year or more (six calendar months or less, if the crime was committed within the worker’s job). This does not apply to employees who are pregnant or on maternity leave or parental leave.

Want to know more about Czech termination requirements—including notice periods and wrongful dismissal claims? It’s all in our guide.

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Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.