Hire and pay employees in Czechia (Czech Republic)

Employer of Record (EOR) vs. entity

Whether you should hire Czech employees through an EOR or by setting up your own entity depends on your resources, size, and your company’s aspirations to scale. 

• Legal entity in the Czech Republic. Establishing a legal entity from scratch usually requires licensing and registration with local authorities, opening a local bank account, and consulting with local experts to ensure compliance with tax and Czech labor laws (Act No. 262/2006) and benefits (Act No. 187/2006). 
• Czech EOR. An EOR is a third-party service that operates as an employer on a company’s behalf, so you don’t need to set up your own entity. It allows you to hire full-time Czech employees and handles all the legal requirements for complying with Czech laws for payroll, contracts, and benefits—including calculating and withholding taxes, onboarding employees, and paying them. 

Keep the following pros and cons in mind when deciding between an EOR and your own entity:

Once you’ve selected an EOR that works in the Czech Republic, you can initiate the hiring process by collecting your new employee's name, date of birth, start date, contact information, personal ID number, bank account information, and so on. 

Understand the steps to hiring through an EOR, and learn how Rippling can help you hire and onboard Czech employees in 90 seconds—in our guide.

Classifying Czech workers: employees vs. contractors

Worker classification laws vary from country to country—and the Czech Republic is no different. Understanding the difference between full-time employees and independent contractors (along with their entitlements and protections) can help you create a sound employment relationship early on. Failure to classify your Czech workers correctly can result in fines as high as CZK 10,000,000 (about $471,000). 

Our in-depth guide covers the ins and outs of worker classification and maintaining compliance with Czech employment and labor laws. Here’s an overview of the differences between employees and contractors in the Czech Republic:

Work permits for Czech employees

Before you can move forward with the hiring process, your prospective employee needs to be legally allowed to work in the Czech Republic. The Ministry of the Interior and the Ministry of Foreign Affairs offer several work permit options for foreign nationals who don’t have permanent residency in the Czech Republic. 

If your new hire isn’t a resident of the European Union, EEA member states, or Switzerland, they’ll need a permit. Here are the available types—dependent on the nationality of the employee, type of employment, and length of employment: 

• The Employee Card. This permit allows foreign nationals to work and reside in the Czech Republic for more than 90 days. 
• The EU Blue Card. Granted to highly qualified non-EU workers, the Blue Card requires high professional qualifications—as well as an employment contract of at least one year. 
• Intra-Company Transfer Card. This type of permit grants permission for foreign nationals to work as managers, specialists, or employed interns transferred within multinational companies.
• Special Work Visa. The Special Work Visa is granted for stays of at least 90 days, but no longer than one year. 
• Schengen Short-Term Visa. Schengen visas can be issued for stays that are less than 90 days. 
• Seasonal Work Visa. Short-stay (three months max) or long-stay visas (six months max) are issued for seasonal workers. 
• Digital Nomad Visa. Those who have obtained a license as a freelancer are eligible for this long-term residency and employment permit. It’s valid for one year, with the option to renew. 

Read our comprehensive guide on Czech work visas for more information on work and residence permit eligibility, applications, and costs.

New hire onboarding checklist

The onboarding process can seem daunting—especially when you’re hiring in a new country. You want to make sure you complete the proper paperwork, understand Czech work culture, and set your employee up for success (before their first day even starts). 

The bright side: if you get it right, you can limit employee turnover, saving you thousands in re-hiring costs. Here are the boxes you’ll want to tick for a successful onboarding experience: 

Before their first day

• Complete an employment background check. 
• Send an offer letter (more on that in the next section).
• Include a Czech rights and obligation document.
• Do the necessary paperwork (income tax documents, NDAs, etc.) 
• Enroll them in benefits.
• Add them to payroll. 
• Order and configure their devices. 
• Prepare any resources they’ll need, like an employee handbook. 

On Day 1

• Make sure their workspace is ready. 
• Send a welcome email. 
• Give them an agenda or plan for the first week. 
• Schedule a 1:1 with their manager. 
• Give them an office tour. 
• Provide them with a list of important contacts. 

During their first 90 days

• Schedule organizational and position-specific training. 
• Assign work and help them set goals. 
• Schedule regular check-ins and mentorship. 
• Seek their feedback on how to improve the experience.

For the full list of onboarding essentials, read our guide to new hire onboarding in the Czech Republic.

What to include in an offer letter in the Czech Republic

Crafting an offer letter (aka an employment contract) that meets all the legal obligations in the Czech Republic can be the difference between a seamless onboarding process and serious legal disputes. Here’s a checklist of what to include in your offer letter in the Czech Republic: 

• Position, job description, and start date 
• Details about contract parties
• Probation period 
• Working hours (and overtime work policies) 
• Compensation and benefits (salary, equity, etc.) 
• Vacation
• Termination policy 
• Collective bargaining agreement information 
• Health and safety information 
• Non-compete and non-solicit agreements 

Our comprehensive guide covers all the bases for sending legally compliant offer letters in the Czech Republic.

NDAs and confidentiality agreements in the Czech Republic

The enforceability of non-disclosure agreements (NDAs) and their legal requirements vary from country to country. In the Czech Republic, for instance, an NDA must be reasonable, specific, and in the public interest, in order to be legally enforceable.

But what types of information are actually covered under a Czech NDA? Here’s a short list: 

• Trade secrets 
• Proprietary information 
• Customer information 
• Employee information 
• Intellectual property 

For more details on Czech NDAs and their essential components, see our beginner’s guide.

Running background checks on Czech employees

Background checks are a common part of the hiring process in the Czech Republic. Most employers run them to verify a new hire’s employment history and protect their company from potential risk. Before conducting a background screening, however, you must obtain consent from the candidate.

Generally, the type of background check an employer chooses to run is dependent on the type of job they’re hiring for. Here are some common (and less common) types of screenings you can conduct:

Get the full rundown on Czech background checks (and common mistakes to avoid) in our detailed guide.

Paying employees in the Czech Republic

Once you’ve decided between an EOR or setting up your own legal entity, it’s time to think about payroll. Here are the next steps you can take: 

• Select an international payroll solution.
• Correctly classify your employees. 
• Capture your new Czech hire’s information including full name, date and place of birth, national identification number, address, citizenship, bank account number, health insurance provider, and more. 
• Input payment amount in CZK—employers should pay employees in Czech koruna. 
• Run payroll. 

Keep in mind, minimum wage in the Czech Republic is set at CZK 17,300 per month. Learn more about paying employees in the Czech Republic—along with employer taxes and costs—in our primer.

Mandatory employee benefits in the Czech Republic

In the Czech Republic, benefits requirements are regulated by the Czech Labor Code. While the benefits laid out in the labor code are statutory minimums, you can always offer more. Mandatory benefits in the Czech Republic include: 

• Pension. All Czech taxpayers make contributions to pension insurance; the amount is determined by the taxpayers’ assessment base. Employees contribute 6.5% of their assessment base to social security as a whole, including pension insurance. Employers contribute 21.5% of their assessment base.
• Employment insurance. As an employer, you must contribute 1.2% of your base assessment to the state employment policy. Employees who lose their job can claim unemployment benefits if they were employed for at least 12 months in the last two years. 
• Sickness insurance. Employers must also contribute 2.1% of their base assessment to sickness insurance. If an employee becomes ill or temporarily disabled, they’ll receive 60% of their daily earnings for the first two weeks, paid by the employer. After that period of time, they’ll be paid out by the state insurance. 
• Holiday entitlements. Paid time off varies by industry in the Czech Republic. Full-time employees working in the private sector are entitled to a minimum of 20 days of holiday leave each year. Employees in the government sector are entitled to five weeks. 
• Statutory holidays. Employees are entitled to 13 public holidays. If the holiday happens to fall on a weekend, employees can choose to use this leave day at any time during the year. 

For more information on mandatory benefits, and supplementary ones, check out our guide to offering benefits in the Czech Republic.

Managing remote employees’ computers and apps

Global employment forces you to keep track of more than international labor laws: you also have to think about shipping devices, managing apps throughout the employee lifecycle, and setting up employee accounts. 

As the employer, you need to ensure your employees are all set up for their first day. With Rippling, you have a single place to set, up, manage and disable employee apps (like Slack and Google Workspace). You can also secure employees’ accounts quickly and grant them access to all the tools they need from afar. 

Our guide gives you the basics on setting up and managing remote employee devices.

Protecting company IP in the Czech Republic

Intellectual property (IP) agreements are essential to protecting your company’s competitive advantage. Since IP is governed by both Czech law and European Union regulations in the Czech Republic, the complex landscape of IP rights can be difficult to master. 

For example, IP assignment agreements are enforceable in the Czech Republic, but their implementation varies based on the type of IP being protected (copyright vs. patent right vs. industrial design ownership). Generally, however, the employer owns intellectual property in the Czech Republic. 

For more information on the types of IP protections and rights available in the Czech Republic, read our guide.

Complying with Czech labor laws

Czech employees enjoy strong protections under Czech and EU labor standards, but keeping up with all the relevant employment laws can be tricky. Here are some of the most important regulations to keep in mind when hiring in the Czech Republic: 

• At-will employment doesn’t exist. You can only terminate an employee with just cause, which has a high burden of proof (more on that later). 
• Czech workers can unionize. The decision to join a union is entirely up to the employee and employers can’t discriminate against employees based on their union affiliation. 
• Employers are responsible for workplace health and safety. The Czech Charter of Fundamental Rights and Basic Freedoms regulates work conditions. These rights entitle employees to satisfactory work conditions and a safe working environment. 

Read our Czech labor and employment law guide for a more detailed list of regulations.

Terminating employees in Czech Republic

It’s unlikely that you’re thinking about terminations if you’re just beginning to hire in the Czech Republic. But it’s still important to be aware of termination policies, in the likely scenario that you do dismiss an employee. 

Czech employees are allowed to voluntarily leave their job for any reason, as long as they provide their employers with advance notice. Involuntary termination on the part of the employer is a bit more tricky. Here are the possible ways you can dismiss an employee in the Czech Republic: 

• Termination during the probationary period. Probation periods in the Czech Republic typically last between two and three months, but should be concretely defined in the employment contract. Employers can terminate an employee during this time without notice. 
• Termination for cause. Employees are entitled to a notice of termination and, in some cases, minimum statutory severance pay—determined by the reason for dismissal or length of employment. Immediate termination is possible in cases where there’s a gross breach of duty or a criminal conviction resulting in imprisonment for one year or more. 

Note: notice periods for dismissals are dependent upon length of service. For more details, check out our in-depth guide to termination.

Disclaimer: Rippling and its affiliates do not provide tax, legal, or accounting 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.