Expand your organization into Czech Republic with or without a Czech entity
The Czech Republic, also known as Czechia, is a landlocked country in Central Europe with a rich and diverse history and culture. The country has experienced massive economic growth in recent years, and now has some of the highest standards of living in Europe, as well as a wealth of opportunities for foreign businesses interested in expanding.
If your organization is planning growth and expansion in the Czech Republic, you will probably be looking to establish an entity, hire employees, and so on. These processes can be very complicated for anybody unfamiliar with the nation’s customs, language, and regulatory infrastructure, all of which can commonly result in operational delays.
At New Horizons, we help businesses from all industries to expand abroad, including into the Czech Republic. Our professional employer organization (Czech Republic PEO), and payroll services can provide your organization with everything you need to kickstart your Czech expansion in a matter of days, not months, even if you don’t have an established entity in the country.
As the only global PEO with an in-house recruitment team, we can also take care of the sourcing, hiring, and onboarding of your Czech workforce, along with any ongoing HR and compliance admin. Our bespoke services can save you thousands in expansion costs and provide you with a faster route into the Czech Republic.
Why choose New Horizons for your expansion into the Czech Republic
New Horizons enables your business to expand its operations into the Czech Republic, without having to set up a legal subsidiary.
Employment & Labor Laws in the Czech Republic
Employment contracts in the Czech Republic
It is a legal requirement to provide your employees in the Czech Republic with a formal contract of employment, including all relevant details of the employment agreement such as salary/wage, parental leave allowance, sick pay, working hours, and so on. It should also be written in Czech and use the Czech koruna currency.
By partnering with our Czech Republic PEO, New Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
Working hours in Czech Republic
Normal working hours in the Czech Republic are 40 hours per week. Czechs have a tendency to start work earlier than most cultures, with 7am start being common. However, this is not legally required, and many foreign-owned organizations do not enforce it.
Work beyond 40 hours per week needs to be compensated at overtime rates, which are at least 125% of normal pay.
Public holidays in Czech Republic
There are 12 standard public holidays in the Czech Republic. The following is an expanded list of common public holidays, and not all employers will offer every day as a holiday to employees:
Vacation leave in the Czech Republic
Employers in the Czech Republic must provide their employees with at least 20 days of vacation leave every year. Many organizations offer more as part of their benefits packages, and employees may want to negotiate extra during the hiring process.
Sick leave in the Czech Republic
Employers in the Czech Republic are not legally required to pay employees for the first three days of absence through sickness. After the third day (up to 21 days), employers must provide 60% of normal salary. Beyond this (and up to 380 days of absence), payments to employees are state-funded.
Parental leave in the Czech Republic
Female employees can take a minimum of 28 weeks of parental leave. This can be extended to 37 weeks for births of more than one child. 70% of her usual salary will be covered by the state. There is also additional financial support available from the state.
Terminations and severance in the Czech Republic
Employees and employers must provide a minimum of two months of notice when terminating an employment contract. This does not apply in probation periods, which can last for up to three months.
Severance pay may be required if an employee is terminated without proper cause. For employees who have been with a company for under one year, severance of one month of salary must be paid. For employees of between one and two years, severance rises to two months of salary. For employees of more than two years, the minimum payment is three months of salary.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. New Horizons’ Czech Republic PEO can mitigate risk for foreign companies and provide guidance through this process.
Taxation in the Czech Republic
Employers in the Czech Republic are required to pay 25% of employee salaries to social security schemes, with a cap on maximum payments.
Income tax in the Czech Republic is charged at a rate of 15%, but employees are also required to pay a 7% ‘solidarity tax’, which was introduced in 2013.
The Czech Republic’s corporate tax rate is 19%.
Health coverage in the Czech Republic
Employers must pay 9% of employee salaries to the national health insurance fund. Besides this, some employers may choose to offer private health insurance as part of their benefits packages.
Czech Republic compensations & benefits
Compensation laws in the Czech Republic
The minimum wage in the Czech Republic is 14,600 CZK per month, based on a 40-hour work week. However, there are certain types of employment that have higher minimum wages, so it is important that you are familiar with your specific situation as an employer.
New Horizons Czech Republic PEO can provide expert guidance to help simplify the process of expanding into China.
Benefit management in the Czech Republic
Managing your benefits packages as an employer in the Czech Republic may include setting up things like health insurance, pension contributions, parental leave payments, and so on.
Establishing and running a benefits system for your Czech employees can be difficult as a foreign company, and you will need to be familiar with the country’s customs and labor laws. The process can take a long time to establish, so we advise getting professional advice if you are unsure.
New Horizons can simplify your Czech Republic benefits management, with our Czech Republic experts setting up and managing everything for you and helping you focus on a successful expansion operation.