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With the deepening of globalization, when enterprises expand their business in multiple countries, cross-border labor compliance has become one of the most complex and severe challenges. To help enterprises systematically address this issue, we have collaborated with top labor lawyers from over 50 major jurisdictions worldwide (all recommended by Chambers, Legal 500, or equivalent institutions) to jointly compile a Chinese-English labor & employment compliance guide exceeding 1 million words, and we will continuously update relevant key points.

This article publishes the key points of labor & employment compliance in Czech.

01 Overview of the Labor Law System

1.Legal System

The Czech legal system is part of the European continental tradition of civil law, which is based on written law.

2.Resources and Agencies

The main legal regulations in Czech labor law are the Labor Code, the Constitution of the Czech Republic, the Civil Code , the Employment Act , the Labor Inspection Act, laws relating to social security, the Collective Bargaining Act , EU legislation (especially directives and regulations) and a number of other legal regulations, including subordinate legislation, decrees and ordinances. The case law of the Supreme Court and the Constitutional Court of the Czech Republic, as well as the Court of Justice of the European Union and the European Court of Human Rights, has a fundamental influence on the interpretation of legal regulations.

02 Employment Qualifications and Classification

1.Employment Age

In general, minors aged 15 and over who have completed compulsory schooling may perform work in a labor relationship. All employees under the age of 18 have specific working conditions. In particular, they may not perform work that is inappropriate for their physical and mental development. 

2.Classification of Employment

In the Czech Republic, a foreign business can in general directly employ staff without establishing a legal presence. Even foreign entities can be recognized as employers under Czech labor, tax, and social security law.

Once established, a local entity that wishes to hire employees must register with the Commercial Register, the tax authority, the social security administration, the relevant health insurance companies and register for statutory employer liability insurance. Only then can it legally conclude employment contracts, process payroll, and make mandatory tax and insurance contributions.

3.Classification of Employment

In the Czech Republic, the standard form of work is an employment relationship based on an employment contract and governed by the Labor Code.

A specific feature of Czech labor law is what are known as agreements on work performed outside of employment, i.e., an agreement to perform work (“DP?”) or an agreement to complete a job (“DPP”). Relationships based on these agreements are similar to employment relationships but are more flexible in some respects. They are usually used for short-term, seasonal or irregular work.

Another option is cooperation with independent contractors, or self-employed persons (“OSV?”). Contractors invoice for their services, bear their own business risk, labor legislation does not apply to such a relationship, and independent contractors are not entitled to employment protections.

4.Foreign Workers

Foreign workers can be legally employed in the Czech Republic, but the requirements differ depending on their citizenship. Citizens of EU/EEA countries and Switzerland enjoy free access to the Czech labor market and do not require a work or residence permit, although their employers must report their employment to the local Labor Office and fulfil record-keeping obligations.

03 Recruitment and Employment Contracts

1.Background Examination

Background checks on job applicants are permitted in the Czech Republic, but they are subject to important limitations under labor law and data protection rules. Employers may only request information that is directly relevant to the performance of the job or information that is required by law. In practice, employers are usually entitled to verify an applicant's qualifications, professional experience, and skills, but they cannot generally require disclosure of private matters unrelated to work (including social media screening).

2.Contract Types

Both fixed-term and open-ended employment relationships are possible and common under Czech labor law. If the duration of the employment relationship has not been expressly agreed, the employment relationship is for an indefinite period.

Fixed-term contracts can last no longer than three years and may only be renewed twice with the same employer, meaning a maximum of nine years in total. 

3.Probationary Period

The probationary period must always be agreed in writing, typically as part of the employment contract, and it starts on the first day of work.

There are no restrictions or reductions on salary during the probationary period; employees are entitled to full salary. However, this does not prevent the parties from agreeing, for example, on a salary increase after the probationary period has expired. 

04 Working Standards

1.Remuneration

Salary is set and paid in Czech korunas, but in certain cases (typically for foreigners), it may be paid in another currency with the employee's consent.

Salary is due after the work has been performed, no later than in the following calendar month. Salary is paid on the employer's regular payday. 

2.Statutory Benefits and Social Security

In the Czech Republic, there is a mandatory social security and health insurance scheme funded jointly by employers and employees. These contributions cover mainly pensions, sickness, unemployment, and universal health care. There are various social benefits paid by the state, including housing allowance, however these are not exclusively for employees.

3.Working Hours

Standard weekly working hours are 40 hours per week. Employees working in certain industries or with continuous or shift operations have shorter average weekly working hours (37.5 or 38.75 hours). An employee and employer may agree on shorter weekly working hours (part-time work).

4.Rest and Leave

The minimum period of uninterrupted rest between the end of one shift and the start of the next shift is 11 hours, and for employees under the age of 18, 12 hours during 24 consecutive hours.

The key statutory leaves are as follows:

? Annual leave

? Public holidays

? Sick leave:

? Maternity leave:

? Paternity leave

? Parental leave

? Other leaves: Employees may be granted short-term paid or unpaid time off in situations defined by the Labor Code and government regulation (e.g., weddings, funerals, doctor visits)

05 Occupational Health and Special Protection

1.Occupational Health and Security

Occupational health and safety (“BOZP”) is strictly regulated in the Czech Republic, and every employer is obliged to ensure a safe and healthy working environment. Employers are also required to keep records of all workplace accidents in the workplace and to report serious incidents to the relevant authorities.

2.Special Protection

Pregnant women, mothers on maternity leave, and employees on parental leave enjoy strong protection against dismissal, except in very limited cases such as liquidation of the employer. 

06 Personal Information and Privacy

1.General Rules

Employee privacy and personal data are protected under Czech law. The key rules come from the Labor Code, the Civil Code, the Employment Act and the EU General Data Protection Regulation (GDPR), which applies directly in the Czech Republic and is supplemented by the Czech Data Protection Act. 

2.Transnational Transfer

Transfers of employees' personal data outside the Czech Republic are regulated by the EU General Data Protection Regulation (GDPR), which sets strict conditions for cross-border data flows. 

07 Anti-Discrimination and Anti-Harassment

1.General Rules

The law distinguishes between direct and indirect discrimination, both types being prohibited.

Employees who believe they have been discriminated against or harassed may file a complaint with their employer, who is obliged to investigate it and, at the employee's request, involve the trade unions. Such a complaint may also take the form of a report under the Whistleblower Protection Act. Employees also have the option of filing a complaint with the public defender of rights (the ombudsman), with the Labor Inspection, which may impose a fine on the employer, or filing a criminal complaint or report of an administrative offense.

Employees may also seek protection by filing a lawsuit against their employer or the aggressor. 

2.Protective Characters

Czech law protects employees from unequal treatment on grounds defined in the Anti-Discrimination Act, the Labor Code, and the Employment Act. These prohibited grounds for discrimination are sex, gender, sexual orientation, age, race, ethnic origin, nationality, citizenship, religion, belief, disability and health status, language, political opinion, membership of and activity in political parties or movements, trade unions or employers' organizations, social origin, property, marital and family status, and parental or caregiver responsibilities.

08 Internal Policies

1.Applicability

Employers can establish or further regulate employee rights in more detail through internal regulations.

2.Validity

The issuance of internal regulations is generally not subject to the consent of the employees concerned, trade unions, state authorities, or third parties. An exception is the work rules, which are a special type of internal regulation that further specifies the rights and obligations of the employer and employees arising from the Labor Code and other labor regulations. 

3.Whistleblowing

On August 1, 2023, the Whistleblower Protection Act, which implements the European Directive, came into effect. The Act applies to all employers, but individual obligations vary depending on the size of the employer. Employers with 50 or more employees must establish an internal reporting system and appoint a person to handle reports filed in accordance with the Act.

09 Transactions

1.Employment Relationship

If the statutory conditions for transfer are met, the transfer occurs automatically, i.e., neither the original employer, the new employer, the employees, nor the unions can avoid the transfer.

2.Compensation

Employees are not generally entitled to any compensation due to M&A or equity/asset transfer as these are not a statutory reason for terminating employment nor is there any entitlement to any special payment in connection with this.

10 Termination of Employment

1.Termination Grounds

An employer may only dismiss an employee for reasons specified by law, as set out in the Labor Code. Dismissal without stating a reason is not possible, unless the employee is still in the probationary period.

2.Termination  Procedure

Notice of termination must always be in writing. If the employer gives notice of termination, they must state the reason for dismissal. Notice cannot be replaced by financial compensation. However, certain grounds for termination are associated with the employer's obligation to give the employee severance pay. The employer may also agree with the employee to terminate the employment relationship by mutual agreement, which may include the employer's obligation to give the employee severance pay.

3.Termination Protection

Certain categories of employees enjoy special protection periods during which unilateral termination by the employer is not permitted, except in limited circumstances。

4.Severance and Compensation

An employee dismissed by an employer due to the closure or relocation of the employer or a part of it, and due to the redundancy of employees as a result of the employer's decision on organizational changes or by agreement for the same reasons is entitled to severance pay from the employer upon termination of employment.

The severance payment amount differs based on the length of employment as follows。

5.Wrongful Termination

An employee may challenge the validity of a dismissal if they consider that the statutory conditions were not met. First, an employee who wishes to remain employed must inform their employer that they insist on continuing their employment. Second, the employee must file a lawsuit at the district court according to the employer's seat (residence or registered address). The lawsuit must be made within two months following the date on which the employment should have ended. After two months, the right to file the lawsuit expires.

6.Mass Termination and Layoffs

Czech law provides a special procedure for "collective dismissal" in cases of termination due to the closure or relocation of the employer or a part of it, and due to the redundancy of employees as a result of the employer's decision on organizational changes. The threshold is:

? ten employees if the employer has 20 to 100 employees;

? 10% of employees if the employer has 101 to 300 employees; and

? 30 employees if the employer has more than 300 employees.

11 Confidentiality, Non-Compete, and Non-Solicitation

1.Confidentiality

Confidentiality obligations are not automatically implied for all employees under Czech law. The Labor Code itself imposes a general duty of loyalty on employees, which includes the obligation not to disclose information that could harm the employer’s legitimate interests. 

2.Non-Compete and Non-Solicitation

For the time after the termination of employment, the employer and employee may conclude a non-compete clause/agreement which is permissible under Czech law but subject to strict statutory limits.

12 Work Representation and Trade Unions

1.Work Representation

Czech labor law regulates the activities of employee representatives in the workplace, distinguishing between several forms of representation. 

2.Trade Unions

Trade unions in the Czech Republic are based on the principle of free association. They can be established at any level in any workplace by as few as three employees and do not require prior approval from public authorities. Many local unions affiliate themselves with larger sectoral or national federations, the most prominent being the Czech-Moravian Confederation of Trade Unions (?MKOS), which represents a wide range of industries. Other federations exist but are less influential.

13 Dispute Resolution

1.Procedures & Enforcement

Labor disputes in the Czech Republic are resolved through the ordinary court system, as there is no separate labor court or tribunal. Proceedings are governed by the Civil Procedure Code, which, together with the Labor Code, sets out some special rules for employment-related cases.

2.Waiver & Enforcement

Employees cannot validly waive their statutory rights. An employee also cannot waive rights granted to them by a collective agreement or their employer’s internal regulations or release their employer from the obligation to provide them with salary or remuneration under an agreement and their compensation, severance pay, remuneration for on-call duty, and reimbursement of expenses incurred by the employee in connection with the performance of work.

14 Others

1.Latest Development & Trends

The most significant trends in labor law are equality and transparency in remuneration, flexibility of work, and digitization.

2.Cultural and Religious Considerations

Czech labor law is highly protective and compliance-driven, with limited room for deviation from statutory standards. Employers are expected to treat employees fairly, transparently, and in line with equal-opportunity principles.

* To avoid ambiguity, this article should not be regarded as legal advice.

Authors

Marie Jan?ová is the Managing Partner of LEGALITé and Head of the firm’s Labor & Employment Law Department. She provides clients with comprehensive advice on labor and HR law, including labor law aspects of business transactions, the specifics of legal relationships with managers and statutory directors, remuneration and know-how protection, collective bargaining, and representation in labor disputes and administrative proceedings. Marie also focuses on personal data protection and litigation.

Martin Jirsa, LEGALITé’s associate, specializes in employment and labor law (day-to-day employment matters, employment aspects of M&A transactions, dismissals); civil, commercial and insolvency law with a focus on representing clients in litigation, drafting contractual documentation and corporate documents; compliance law including whistleblowing or international sanctions. 

Translator

Zhou Hao, Master of Laws, Associate at Anli Partners. Areas of expertise: Labor Law, Dispute Resolution, ESG Compliance.