Below is a summary of the most important changes applicable to employment relationships in the Czech Republic as of 1st January 2021.
- Prolongation of "Antivirus" regimes – Governmental financial support to employers
- Increase of minimum salary
- Shared jobs
- Changes regarding vacation
- Entitlement to time-off in connection with events for children and youth
- Changes in calculation of the salary withholding tax: Cancellation of the super gross salary, introduction of new tax rates and the tax discount
- Employees' benefit: Lump-sum meal contributions
Prolongation of "Antivirus" regimes – Governmental financial support to employers
On 21 December 2020 the Czech government approved prolongation of the so called “Antivirus” Program to support employers affected by the spread of COVID-19. The Antivirus Regimes A (temporary closure of operations ordered by the government or quarantine of employees), including A plus (increased support provided for a period of forced closure as a result of a governmental shut-down order) and B (obstacles to work on the side of the employer as a result of related economic difficulties due to the spread of COVID-19, including so called “partial unemployment”) will be prolonged until the end of February 2021.
Increase of minimum salary
The minimum salary is newly CZK 15,200 per month or CZK 90.50 per hour.
An employer may agree with two or more part-time employees that they will share one job with the same job description. These employees will then be free to schedule their working time the way that best suits them, provided that they will be required to accomplish the average weekly working hours within no longer than a four-week balancing period.
The Ministry of Labour and Social Affairs expects that this flexible form of work will be particularly helpful for parents with children, persons taking care of family members, and students.
Changes regarding vacation
Vacation is no longer derived from the number of worked days, but is derived from the number of worked hours. In practice, there is no change for employees with an equally scheduled 40-hour working time; however, the calculation is fairer for employees with unequally scheduled working time or for employees with adjusted working time. The minimum duration of vacation is one half of a shift.
It is newly possible to transfer vacation exceeding 4 weeks to the next year based on a written application by an employee. The rules are also adjusted for the reduction of vacation and obstacles to work which are considered as performance of work for the purposes of vacation.
Entitlement to time-off in connection with events for children and youth
Employees organizing events for children and youth are newly entitled to 1 week of time-off with compensation for wages, subject to compliance with the conditions as stipulated by law. An employer is entitled to compensation for related costs by the District Social Security Administration Office.
Changes in calculation of the salary withholding tax: Cancellation of the super gross salary, introduction of new tax rates and the tax discount
The salary withholding tax will no longer be calculated from the super gross salary. The gross salary (increased by non-monetary income) will be considered as a taxable basis.
In addition, the solidarity tax of 7% is no longer applicable. Instead, these 2 personal income tax rates were introduced:
- 15% income tax rate applicable for taxable income up to the amount of CZK 1,701,168 (for 2021); and
- 23% income tax rate applicable for taxable income exceeding the amount of CZK 1,701,168 (for 2021).
Finally, the amount of general yearly tax discount for tax payers was increased from CZK 24,840 to CZK 27,840 for the year 2021.
Employees' benefit: Lump-sum meal contributions
An employer can provide employees with a benefit in the form of contributions for meals in cash from January 2021, i.e. not only in the form of meal vouchers.
The cash contributions for meals are considered as income exempt from the salary withholding tax for employees and the tax deductible costs for employers under similar conditions as the current meal vouchers are, i.e.:
- The employee is present at work for at least 3 hours within a day;
- The amount of contribution does not exceed 55% of the price of one meal whereas the maximum amount is capped at 70% of the boarding allowances as stipulated by the Labour Code.
For the year of 2021, the Labour Code sets the boarding allowances at the amount of CZK 108 per day. This means that the maximum amount of meal contribution that would be considered as tax exempt income for employees and tax deductible cost for employers amounts to CZK 75.6 per day (i.e. 70% of 108). This would correspond to a meal voucher with the value of CZK 137.