Payroll Newsletter - Summer 2024

Change in the pension savings contribution

Since 1 July 2024, clients receiving a retirement pension are not entitled to state contributions.

As of the same date, the lower limit from which the client will receive a state contribution to pension savings was changed from the original CZK 300 to CZK 500. On the other hand, the upper limit, above which the contribution will no longer grow, was raised from the original CZK 1,000 to CZK 1,700, with the state contribution for the higher amount being CZK 340.

Summer of Mercy IV

The Summer of Mercy IV runs from 1 July to 30 November 2024 and relates to debts recovered through tax enforcement (not through a bailiff) from health insurance companies. The debt relief applies not only to health insurance debts but also to penalties and enforcement fees. Once all conditions have been met, debtors will be exempted from penalties and enforcement costs upon written request and payment of the original amount owed (principal). 

Amendment to the Employment Act

The amendment abolishes the labour market test for employment cards as of 1 July 2024: an employer who wants to employ a foreigner does not have to wait the previously set 10-30 days, but only has to announce the vacancy. The scope of foreigners is expanded to include citizens of a state on the list of states whose citizens are not required to have the authorisations above or cards to be employed or work. As of 1 July, a government decree introducing free access to the Czech labour market for citizens of the following nine countries is in effect:

• Australia
• New Zealand
• USA
• Canada
• UK
• Israel
• Japan
• South Korea
• Singapore

Payroll-related amendment to the Labour Code

As of 1 August 2024, another amendment to the Labour Code came into effect, bringing several important changes. In the previous issue, we wrote about the new regular adjustment of the minimum wage, the cancellation of the minimum guaranteed wage in the private sector, or the employment of foreigners in connection with the computerisation of the information obligation. So now we bring especially the ones we did not mention:

Collective bargaining with union plurality

In a situation where an employer has several trade unions, but they do not agree on the content of the collective agreement, the amendment to the Code offers a solution. If the trade unions do not agree within 30 days of the commencement of negotiations, the employer is entitled to conclude a collective agreement with the trade union that has the largest number of members employed by the employer, or with several trade unions that together have the largest number of members employed by the employer, unless the employees reject this option in writing.

Cancellation of the obligation to prepare a written holiday schedule

The employer is no longer obliged to prepare a written holiday schedule, nevertheless, it should be noted that the obligation to determine the time of leave and to notify the employee at least 14 days in advance remains unchanged. Similarly, the commitment to maintain the possibility of taking leave for at least two full weeks remains unchanged. The amendment is thus intended to reduce the administrative burden of preparing written leave schedules.

Working hours of healthcare sector employees

The working hours of an employee in the healthcare sector are currently up to 24 hours in 26 consecutive hours, which in practice means a combination of shift work and overtime or working outside the shift schedule. It is now also possible to spread working time over a shift of up to 24 hours, which is an exception to the previous rule stating that the length of a shift cannot exceed 12 hours. This can be performed based on a written agreement in a collective agreement or the employer's internal regulations, together with a written agreement with the employee. At present, a written agreement can no longer be immediately cancelled within 12 weeks of its conclusion.

Compensation for increased workload of employees in the healthcare sector 

There is a new obligation to compensate an employee for a shift schedule longer than 12 hours at a rate of at least 20% of the average earnings for each 13th and each additional hour worked by the employee during that shift.

Self-scheduling of working hours

As of 1 January 2025, the possibility for employees to schedule their working hours will be introduced, even if they work at the workplace. Until now, this option has only been available to employees working remotely, i.e. away from the employer's workplace. This is subject to a written agreement between the employer and the employee.

Remuneration based on the Agreement to perform work and the Agreement to complete a job 

Since August, the remuneration based on an Agreement to perform work or an Agreement to complete a job can already be agreed upon, taking into account any additional payments for night work, work in a difficult working environment, or work on Saturdays and Sundays. At the same time, however, it is necessary to agree on the extent of the work in these difficult working conditions and the amount of the additional payments that would otherwise be granted to the employee.

Flexible amendment to the Labour Code

The Chamber of Deputies is now drafting another amendment to the Labour Code. Currently, it does not contain the controversial "termination without cause". However, it contains interesting changes that could make labour relations more flexible. These include a longer probationary period, shorter notice periods for some grounds for termination and its commencement upon delivery, electronic delivery of wage assessments, payment of wages in a foreign currency, and many more. Some aspects of the calculation of average earnings are also clarified. These changes offset some of the changes aimed at greater protection of employees (e.g. entitlement to holidays in the event of invalid termination of employment, reassignment to the original post after return from parental leave until the child is two years old, etc.).

Changes in the Field of Enforcement and Insolvency Proceedings

As of 1 October 2024, several changes will take effect in the field of enforcement and insolvency proceedings. Among other things, the Insolvency Act introduces a shorter debt relief period of three years for all natural persons, and the grounds for revoking approved debt relief will be expanded.

A notable amendment in the Civil Procedure Code is the mandatory deduction of two-thirds of the remaining net wage when at least four enforcement orders are concurrently imposed on the debtor's wage, and the decision regarding the enforcement order or a decision containing a notice of the enforcement order has been delivered to the employer (wage payer). However, this does not apply if the debtor provides proof of receiving an old-age pension, a second- or third-degree disability pension, or an orphan’s pension, and where one-third of the remaining net wage does not exceed the sum of monthly out-of-pocket expenses and the monthly fee owed to the insolvency practitioner under the debt relief plan during the repayment period, increased by VAT. In addition, if the employer discovers that the debtor is receiving a pension, they will automatically follow the aforementioned procedure, even if the debtor does not provide any proof of this fact. Moreover, if the debtor stops receiving a pension, they are obliged to notify the employer of this change.

A completely new provision establishes that the deduction from the debtor's wage will begin on the first day of the first calendar month following the receipt of the decision regarding the enforcement order.