Posting of workers
A company from the EU can post its workers to the Czech Republic only for the temporary and/or occasional provision of services that are at the same time being provided in its country of origin at the same time.
A typical example of cross-border provision of services are e.g. construction activities, software provision or consultancy; reversely, services tied to one place (restaurant, hotel, hairdresser´s) are inadmissible.
The posted workers are subject to a certain part of Czech labour law, which regulates all relevant issues such as working hours, minimum wages, the security of work or the extent of leave according to article 3 of the Posting of Workers Directive 96/71/EC. The workers nevertheless remain contracted to the posting employer.
Before concluding the contract with a foreign entity, the Czech company to which workers are temporarily posted, is obliged to discuss with the Labour Office the numbers of the posted workers and their professions. The Czech entity then applies for Work Permit for every single posted worker.
In general, the posting company is obliged to comply with the above mentioned part of the legislation of the host country if it is beneficial for its workers. If the workers stay posted in the host Member State for a longer period of time, it is necessary to comply with the rules for relocation.
The posted workers and their employer need to comply with the specific rules concerning the posting of workers, in particular the rules pertaining to the notification of the host country, and the rules concerning taxation and social and health insurance. It is also important to be aware of the regulations on the working standards in the Czech Republic and the possible applicable sanctions.
Notification of Workers
The Czech company to which workers are temporarily posted is obliged to notify the posted workers to the relevant labour office. The notification needs to be submitted on a special notification form. The notification has to be submitted for every single worker by the day of the commencement of the employment at the latest. The termination of the posting must be also announced to the respective labour office within 10 calendar days at the latest. The forms include the following:
- Identification of the worker (e.g. name, address in the Czech Republic and in the country of permanent residency, and others)
- Name of the legal or the natural person in the Czech Republic for whom the posted workers will carry out the work
- Information on the company posting the workers
- Profession of the posted worker
- Place of work
- Address in the Czech Republic and in the country of origin
Moreover, if the service that is to be provided is regulated in the host country, it is necessary to notify the qualification of the company to the relevant authority of the host state. To find out which services/professions are regulated in the Czech Republic, please visit the Database of regulated professions and professional activities. More information about this prior notification. The respective form then is on http://www.msmt.cz/file/37252/.
Working Standards in the Czech Republic: Minimum Wages and Maximum Length of Working Time
In 2016, the minimum wage in the Czech Republic is CZK 58.70 per hour or CZK 9,900 per month (a working month is 4 working weeks with 40 working hours per week). It is probable that the minimum wage will increase repeatedly in the years to come. The wage, salary or remuneration paid to posted workers must not be lower than the minimum wage. Of course, if the minimum wage in the country of origin is higher, it is obligatory to pay the higher minimum wage to the worker.
The minimum wage does not include:
- wage or salary for overtime work
- extra payment for work on a holiday
- bonuses for night work
- extra payment for work in a hazardous working environment (i.e. extra payment for dirty, heavy work)
- extra payment for work on Saturdays and Sundays
Provided the employee's wage or the salary does not reach the minimum wage or the lowest relevant level of guaranteed wage, the employer must provide the employee with a bonus that will raise his wage to the level of the Czech minimum wage. If the posting to the Czech Republic is shorter that 30 days in the calendar year, the obligation to pay the Czech minimum wage is not applied.
Maximum length of working time
The weekly working time of an employee:
- working single-shift is a maximum of 40 hours a week.
- working two-shifts is a maximum of 38.75 hours a week.
- working three-shifts or in a continuous service is a maximum of 37.5 hours a week.
An employee under the age of 18 must not work more than 8 hours a day. His weekly working time may not exceed 40 hours in total. Shorter weekly working time without a concurrent wage reduction may be stipulated in collective agreements or internal regulations.
The maximum length of the shift is 12 hours.
Above the working time scheduled in the shifts (in the written weekly working time schedule) the employer can order overtime.
Maximum ordered overtime by the employer cannot exceed 150 hours in calendar year and 8 hours in a week (in case it is agreed in the contract between the employer and the employee the overtime cannot exceed 8 hours in average in a week in the period which cannot exceed 26 weeks or according to the collective agreement provision it can be prolonged up to 52 weeks.
The employer also has to provide his employees with a minimum length of a rest period. There are four types of a rest period in the Czech Republic:
- lunch and rest break – at least 30 minutes after 6 hours of consecutive work, it can be divided into more pieces in case that at least one piece will last at least 15 minutes.
- continuous rest period between two shifts – general 11 consecutive hours between the shifts in the period of 24 hours, in special occasions it can be shortened up to 8 hours between the shifts in the period of 24 hours.
- continuous weekly rest period – general 35 consecutive hours a week, in special occasions it can be shortened up to 24 hours a week.
- safety break in accordance with specific legal regulations.
Furthermore, the employer has to provide his employees with the minimum length of annual holidays. The standard length of holidays is a minimum of 4 weeks per calendar year.
Sanctions for Failure to Notify and Other Reasons for Sanctions
Failure to comply with the provisions of the Labour Code may lead to the imposition of remedial measures as well as sanctions. Both forms are used either separately or simultaneously. The penalties may be the following:
- for infringement of the maximum working time and the rest period – up to 2,000,000 CZK
- for infringement of the minimum length of holidays per calendar year or the aliquot part – up to 200,000 CZK
- for infringement of the minimum wage, the lowest guaranteed wage and for failure to pay overtime – up to 2,000,000 CZK
- for infringement of security and health protection provisions – up to 2,000,000 CZK
- for infringement of working conditions of pregnant women, breastfeeding women or women until the ninth month after the delivery, and young employees – up to 1,000,000 CZK
- for infringement of equal treatment of employees and prohibition of discrimination – up to 400,000 CZK
- failure to comply with terms of agency employment – up to 1,000,000 CZK
Registration, Taxation and Social and Health Insurance
Posted workers staying in the host country more than three months have to register at the local police in order to be granted temporary residence.
The posted workers usually do not pay social and health insurance in the host Member State because if posting lasts up to a 24 month period they remain affiliated to the system of their country of origin. To prove this fact they should always have the A1 form and the European Health Insurance Card issued in their country of origin with them.
Concerning income taxes, it is necessary to act in line with the respective treaty avoiding double taxation and a respective income tax acts. In case of collision of the particular treaty avoiding double taxation and the particular income tax act, the treaty has priority.
If a permanent establishment arises for the posting company in the Czech Republic (article 5 of the respective treaty), the posting company has the obligation to register for income tax in the Czech Republic and to pay the relevant taxes there. Permanent establishment can arise, for instance, in case of a construction project running longer than 12 moths or in case of cross-border provision of services longer than 6 months during 12 consecutive months.
The posted employees are obliged to pay their income tax only in the Member State of origin if all of the following conditions are met:
1. The posting period is shorter than 183 days in 12 consecutive months (or in the calendar year).
2. The costs are not borne by the permanent establishment of the posting company.
3. The remuneration is paid by the employer who is not a resident of the Czech Republic.
If the income tax obligations arise, they start from the beginning of the activities in the Czech Republic.
The registration should be done in the tax office, nevertheless the Points of Single Contact (list and contact details) can assist foreign companies with the registration or with other administrative procedures connected to the posting of workers to the Czech Republic.