HR management, Hiring process, Probationary period, Paid leave, Remuneration, Benefits in kind, Dismissal process
1 Hiring process
Authority registrations of new joiners are due within 8 days of starting date.
Hiring EU citizens shall be reported to the labour authorities. Non-EU nationals need to comply with immigration procedures, e.g. transfer of work permit from previous to new employer if already working in the country.
Executives can have a contract regulated by Civil Code, unlike regular employees.
2 Probationary period
Statutory probation period of 3 month applies for regular employees and 6 month for management positions. Resignation anytime during the probation period is possible. Mutual consent of employee and employer is not required.
3 Paid leave
Minimum statutory annual paid leave is 20 days with no increase based on period worked. Benefit of additional 5 days is very common.
The days of paid annual leave are calculated in proportion of the days of employment within that calendar year (for details see our previous blog post).
Official sick leave is not limited. Discretionary benefit of ‘sick days’ is considered as regular days worked.
Statutory standard is 12 monthly salaries. 13th salary or annual bonus is not statutorily required. Industry and regional remuneration practices and salary levels shall be respected though even if not statutorily required. Salary survey results are published by some recruitment agencies or industry associations.
5 Gross to Net salary
In 2021, employee tax burden is between 15 and 25% with peak at around 1,7 million of annual salary due to ceiling on social security contributions. Employer’s contributions are 33,8 % of employees gross salary, out of which 24,8 is social security contribution.
6 Benefits in kind
Typical benefits in kind are: company car, contributions to sport, culture, training, holiday travel. Most benefits in kind are exempt for employee but tax non-deductible for employer without threshold. Contributions to private pension and life insurance has thresholds. 1% of car value is considered benefit in kind in case private usage of company car. Unlike the company car benefit, most other benefits with preferential tax treatment are exempt from social security and health insurance.
7 Overtime compensation
With employee’s consent overtime can be compensated with time off in lieu. Otherwise, minimum 25% premium applies. Strict overtime limitation based on the labour law shall be observed.
8 Dismissal process
Strict termination rules apply for non-probation period employees. Poor performance needs to be documented, notified, action plan given and evaluated. Termination for ‘organizational reasons’ is subject to 2 months notice and up to 3 month severance pay.
Most often used dismissal reasons are poor performance and organizational change (cancelling position, winding up of employer…). Termination notice has to be handed over in person or delivered by registered mail.
Litigation risk high and thus termination by mutual consent shall be used whenever possible. The most common grounds for litigation started by an employee are: employer’s proof does not have substance or termination notice has wrong wording.
Other blog posts from Czechia: