Employment Contracts

Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over a hundred countries by creating compliant and balanced labour contracts. Our team keeps track of the Czech laws and regulations daily to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR service we can provide compliant labour contracts for employees in the Czech Republic, including local benefits. To support your plans, we made this guide including the basics of employment contracts in Czechia. After reading this guide you will know everything about the conditions, laws and benefits to include in a Czech employment contract.

How do you hire Czech Republic Employees?

Foreign companies planning to hire employees in the Czech Republic must operate within a strict framework of legislation that gives significant protection to the workforce. Companies must primarily comply with the Labor Code, the State Labor Inspectorate, the Collective Bargaining Act, and the Employment Act. Additionally, there is further specific legislation covering various employment areas.

Czech employees and foreign workers are covered by the regulations.

These considerations come into play during one of the first stages of hiring and onboarding – drawing up a contract with your new employee. Once Bradford Jacobs’ Professional Employer Organization (PEO) recruitment networks have located the best talent for your company, we step in to advise your company on this crucial element of recruitment.

General requirements from the Labor Code apply to all contracts, which include:

• A written contract must be in place before employment starts, detailing the start date, the type and location of work, immediately giving the employee all statutory rights
• The employer must give written confirmation of other details, such as hours, vacations, and termination within one month of the employee starting work
• Fixed-term contracts cannot exceed three years or be repeated more than twice, to exceed a total of nine years, or the contract becomes open-ended
• Contracted probation periods cannot exceed three months for non-managerial posts or six months for managers
• Although not legally required, contracts should be bilingual for foreign employees with one in Czech as the State Labor Inspectorate may demand to see them during an inspection

Outsourcing the recruitment and hiring process through Bradford Jacobs’ Professional Employer Organization (PEO) network will give you the security that our in-depth knowledge can deal with all these potential contractual issues. Guarantee a trouble-free move into your new territory by trusting our Employer of Record (EOR) services to handle every aspect of recruitment and contracts.

Types of Employment Contracts in Czech Republic

Employers must provide a written contract at the start of employment detailing the type and scope of the role, the location where the work will be undertaken and the start date. Other details not covered in the initial contract must be provided in writing within one month of work commencing. These include remuneration, overtime, working hours and breaks, paid vacations, notice periods, termination, and severance agreements. Outside of ensuring contracts at least comply with the Labor Code, employers can provide benefits above the mandatory minimums. Any internal policies or work codes regarding employees’ responsibilities must be in writing. Modifying such work codes or workplace policies requires the relevant labour union’s permission.

Czech law recognizes two forms of full employment contracts, indefinite, open-ended contracts, and fixed terms. However, there are other forms that are practised, including:

Indefinite, Open-ended Employment Contracts: Where an end date has not been contractually agreed. They can be terminated by agreement. The employee can terminate for any reason; the employer can terminate only for reasons set out in the Labor Code.

Fixed-term Employment Contracts: A fixed-term contract cannot exceed three years and can be renewed only twice for a maximum of nine years covering all three terms. If there is a gap of more than three years between fixed-term contracts between the same employer and employee, the sequence is broken. There can be an exception to the ‘three contracts’ rule where an employee’s fixed-term contract is specifically for summer seasonal work.

Executive Services Agreement: Contractually, executives form an Executive Services Agreement with their employer, with different obligations and liabilities to a regular employee.

Probation Periods within Employment Contracts: Both open-ended and fixed-term contracts can include the terms of a probationary or trial period. The maximum is six months for managerial staff and three months for others. Probation periods cannot be extended even if they were originally agreed to be less than three or six months.

The Czech Labor Code is the main influence on employment law and contracts, supplemented by government acts, statutes, and European Union (EU) directives. Employees’ mandatory minimum rights are strictly protected and cannot be downgraded unilaterally. The State Labor Inspectorate ensures companies comply with regulations – plus health and safety and workplace conditions – and can stage summary inspections of employers’ premises.

Some aspects are implied in the employment relationship, such as entitlement to extra payments for overtime and night work and notice periods. A contract must be in place before Czech or foreign employees start work. The minimum information which must be on the initial contract includes:

• The type of work
• The location or locations where the employment will take place
• The start date of employment

At this point, the employee is entitled to all statutory rights. Within one month of starting work, the employer must supply written confirmation of other details including:

• Detailed job description
• Working hours and entitlement to breaks
• Paid vacations
• Confirmation of payment schedule
• Changes to the contract’s terms have to be mutually agreed in writing.

Although not legally required, contracts should be bilingual for foreign employees with one in Czech as the State Labor Inspectorate may demand to see them during an inspection.

Collective Bargaining Agreements (CBAs)

Collective Bargaining Agreements are organized between employer organizations and the relevant trade unions in industrial sectors, known as ‘higher level,’ CBAs, and also at the individual company level. Figures from the Czech Statistics Office suggest that around 40%-plus are covered by CBAs, but a similar number percentage are not, with the remainder undetermined.

What Employment Laws exist in Czech Republic?

Employer-employee relationships in the Czech Republic are mainly governed by the Labor Code and the Civil Code. Czech employment laws are also in line with EU directives on working conditions. The State Labor Inspectorate has the power to inspect premises to ensure regulations are in force. Other involved authorities include the Office for Personal Data Protection, the Foreign Police Department, and the Customs Administration.

In addition to the Labour Code, there are individual Acts – on topics such as Employment, Work Inspection, Sickness Insurance, Personal Data Protection, Anti-Discrimination, Specific Health Services and State Holidays – and Decrees.

Common employment laws:

Working Hours & Overtime: Normal working hours in the Czech Republic are set working hours of 40 per week, which are usually distributed over a 5-day working week. The length of a shift, inclusive of overtime, cannot exceed 12 hours.

Flexible working hours and shift work is also managed under this law and is protected in cases of overtime and regulation. Overtime also cannot exceed 8 hours in a week, and 150 hours in a calendar year. Employees are either entitled to a premium of 25% of their average earnings, or time off for the hours worked.

Rest Days & Breaks: Employees in the Czech Republic are entitled to a break of 30 minutes for a meal and rest after 6 hours of continuous work. These breaks are not included in the working hours, and at least one part of it has to be more than 15 minutes. An employee is entitled to at least 11 hours between shifts/workdays, and at least 35 hours in a week.

Health and Safety: In Czechia, it is the employer’s responsibility to ensure the health and safety of the workplace. Employee representation on health and safety issues is also required – either through the workplace’s trade union organization or elected employee representatives.

Annual Leave: Employees are entitled to a minimum of 4 weeks of paid annual leave per year. Public sector employees are entitled to 5 weeks annual leave, whilst academics benefit from 8 weeks of paid leave. Public holidays are not included in leave entitlement.

Sick Leave: In case of injury and illness, the employer is obliged to compensate the employee with sickness benefits (60% of their pay) between the 1st-14th day of their work incapacity. From the 15th day onwards, the Social Security Administration pays benefits. The employee must provide a medical certificate from a physician, proving illness.

Maternity Leave: Pregnant employees are entitled to 28 weeks of maternity (or 37 in cases of multiple births). Benefits are compensated by the Social Security Administration, at 70% of their pay.

Paternity Leave & Parental Leave: There is no law for paternity leave in the Czech Republic, but fathers are entitled to parental leave, along with the mother, until the child reaches the age of three. Parental Leave can begin from the end of maternity leave for the mother and the date of birth for the father. This can be granted to employees on request.

Probation: According to the Labor Code, the maximum time of probation period in the Czech Republic is 3 months.

Termination and Notice: The notice period for employment termination is two months. This can be extended according to the parties’ mutual agreement. This period commences on the first day of the calendar month following the month the notice was delivered to the last day of the relevant calendar month. Dismissal without notice is only done in cases of serious misconduct.

Notices from the employer must be given in writing, signed by someone authorized by the employer, and delivered personally to the employee.

Severance Pay: Severance pay is only granted in cases of redundancy and health reasons concerning an industrial injury, occupational disease, or the threat of an occupational disease. The amount of severance pay that is due in cases of termination for health reasons is 12 times the employee’s average monthly earnings.