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Minimum wage in the Czech Republic
Payroll in the Czech Republic
Statutory benefits in the Czech Republic
Other employee benefits in the Czech Republic
Compliant, seamless payroll and benefits in the Czech Republic and beyond
Payroll and benefits in the Czech Republic
Every country in the world has its own rules and processes for running payroll. Employers looking to hire in the Czech Republic need to understand what that procedure will look like before they begin hiring employees.
Payroll in the Czech Republic involves calculating an employee’s gross salary and making deductions for social security and taxes. Employers must then remit the right contributions to the relevant authorities and provide each employee with a payslip detailing their salary and the deductions that have been made.
Of course, you can make the process easier by working with a payroll provider in the Czech Republic. However, you should still have an understanding of what the basic process of running payroll looks like, so you can ensure the payroll company you choose will meet its statutory requirements.
In this section, we’ll take you through everything you need to know about payroll in the Czech Republic. We’ll also discuss the mandatory benefits that Czech employers are required to provide to their employees, plus some additional benefits that could help you attract and retain talent.
Minimum wage in the Czech Republic
The national minimum wage in the Czech Republic is the legal minimum that an employer can pay an employee for their work. It’s given as a monthly figure for full-time employees, and an hourly figure for those working part-time or irregular hours. The minimum wage is set by a government decree each year and takes effect at the start of the next calendar year.
The minimum wage in the Czech Republic does not include premiums paid for overtime, work on public holidays, night work, work on Saturdays and Sundays, or work conducted in a dangerous work environment.
Minimum wage in the Czech Republic in 2024
As of 2024, the minimum wage in the Czech Republic is 18,900 (EUR 744.68) per month. This is an increase of CZK 1,600 (around 9%) compared to 2023, to compensate for high inflation rates over the past two years. The minimum hourly wage in the Czech Republic is now CZK 112.50 (EUR 4.40) per hour.
Minimum wage in the Czech Republic after tax
The Czech minimum wage is the amount that employers must pay employees before any deductions have been made. A full-time employee making the minimum wage in the Czech Republic would have to pay the following taxes and contributions over the year:
- CZK 39,042 in employee income tax
- CZK 12,487 in employee social security contributions
- CZK 10,206 in employee health insurance
This would give them an annual net income of CZK 165,065, or CZK 13,755 per month. The total cost to the employer would be CZK 76,658 on top of the employee’s salary.
Guaranteed wage in the Czech Republic
In the Czech Republic, some professions have guaranteed wages based on the minimum wage and established by collective bargaining agreements. As of 2024, there are eight guaranteed wages, which range from CZK 18,900 per month (minimum wage) to CZK 37,800 per month (2x minimum wage).
Proposed changes to the minimum wage in the Czech Republic
There is currently a proposal to abolish guaranteed wages and instead bring the minimum wage in the Czech Republic closer to the average wage. To achieve this, the government has proposed gradually increasing the minimum wage, reaching 47% of the national average wage by 2029.
Payroll in the Czech Republic
If you want to hire employees in the Czech Republic, you’ll need to understand the various rules and regulations that govern the payroll process. Read on to find out what you need to know.
Payroll cycle in the Czech Republic
The most common payroll cycle in the Czech Republic is monthly, with employees receiving their wages on a set date each month. However, this isn’t mandated by law, and it’s possible to run weekly or bi-weekly payroll with the employee’s agreement. The Czech Labour Code stipulates that employees must be paid no later than the last day of the calendar month following the month when the work was performed.
Taxes and social security contributions in the Czech Republic
Employers in the Czech Republic must deduct taxes and social security contributions from their employees’ wages and pay them to the relevant authorities. They also have to pay their own social security contributions for each employee.
In total, employer contributions add up to 33.8% of each employee’s salary, which is made up of a 24.8% social security contribution and a 9% health insurance contribution. Employees have to pay a total of 11.5% of their salary in social security contributions (7%) and health insurance contributions (4.5%).
Employees in the Czech Republic also pay income taxes on their wages, which employers must deduct and pay on their behalf. As of 2024, the applicable tax rates are:
- 15% on income up to CZK 1,582,812 per year
- 23% on additional income
Payslips in the Czech Republic
Employers in the Czech Republic must provide employees with a payslip after each payroll run. This can be in either digital or paper format and must include the employee’s gross wages, deductions, and net wages. Employers must keep payroll records for at least 10 years.
13th salary in the Czech Republic
Unlike in some other European countries, there is no legal requirement to pay a 13th salary to employees in the Czech Republic. However, many employees do offer performance-based bonuses as an additional incentive.
Statutory benefits in the Czech Republic
Statutory benefits are benefits that employers are legally obliged to provide for their employees. The exact requirements are different in every country. In the Czech Republic, for example, many employee benefits are paid for through the social security system.
Social security benefits in the Czech Republic
The Czech Republic’s social security system is funded by contributions from both employees and employers, which are paid into three separate funds:
- Pensions: Both employers and employees pay into a compulsory pension administered by the Czech Social Security Administration. Employers contribute 21.5% of their employee’s gross pay, and employees contribute 6.5%. This provides employees with an income after they retire.
- Unemployment benefits: Social security in the Czech Republic also pays for unemployment benefits, which employees can access regardless of the reason for their employment termination. The amount they can receive while unemployed depends on their age.
- Sickness benefits: Lastly, social security contributions also provide employees with sick pay, which is paid for by the Social Security Administration from the 15th day of sick leave. Employees can receive a monthly payment of between 60% and 72% of their usual wages, depending on how long they are on leave.
Other mandatory benefits in the Czech Republic
There are also certain other benefits that employers in the Czech Republic are obliged to provide to their employees. For example:
- Annual leave: Full-time, private-sector employees in the Czech Republic are entitled to a minimum of four weeks (20 days) of paid holiday per year.
- Sick leave: When an employer goes on sick leave in the Czech Republic, their employer must pay them their normal salary for the first 14 days of leave.
- Statutory holidays: Employees in the Czech Republic are also entitled to 13 paid days off work each year for public holidays. If an employee works on a public holiday, they must receive either additional compensation or a day off in lieu.
Other employee benefits in the Czech Republic
There are many employee benefits that employers in the Czech Republic can choose to offer to their employees. While these are not required by law, they can be valuable in attracting and retaining top talent by creating a solid employer value proposition (EVP).
Here are some of the most common employee benefits in the Czech Republic:
- Meal vouchers: In the Czech Republic, providing a meal allowance to employees is common. This usually comes in the form of meal vouchers, which are tax-deductible up to a certain value.
- Public transport allowance: Employers in large cities often provide their employees with a public transport pass or allowance to help them with the cost of coming to work.
- Flexible working arrangements: Allowing employees to work from home or to choose their own working hours can be a valuable employee benefit in the Czech Republic. This helps employees manage their work as they see fit and maintain a healthier work-life balance.
- Professional training: Professional training is a valuable employee benefit in the Czech Republic, which can help employees progress in their careers.
- Language courses: International companies with employees in the Czech Republic often provide their expat employees with Czech language classes to help them integrate. Some employers may also provide classes in English or other languages for Czech employees.
- Supplementary pensions: Some employers set up supplementary pension schemes, to which both employers and employees contribute. It’s common for employers to contribute 1.5x the employee’s contribution up to a set maximum. Contributions are tax-deductible for the employer.
- Additional time off: Employers can choose to offer their employees paid holiday in addition to the statutory minimum of 20 days, which can be a valuable employee benefit in the Czech Republic.
- Life and accident insurance: Some companies in the Czech Republic choose to offer their employees insurance that pays out in the case of their death or accident. The typical payout is twice the employee’s annual salary.
- Financial bonuses: Many employers in the Czech Republic give their employees additional compensation elements, including bonuses. These may be based on performance and are often paid at the end of the year.
Benefit stipends in the Czech Republic
Some companies in the Czech Republic prefer to give their employees a benefit stipend instead of specific benefits. This allows employees to choose from various benefits and ensures they get the most out of their employer’s benefits offering.
Compliant, seamless payroll and benefits in the Czech Republic and beyond
Getting payroll and benefits right is not just a legal issue. Every country also has its own customs, norms and expectations about employee compensation. And if your operations aren’t in line with your workers’ expectations, they may not stick around for long.
Thankfully, we know what we’re doing. When you work with CXC to engage workers in the Czech Republic, we’ll handle everything from tax withholding to employee bonuses on your behalf.
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