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Payroll Newsletter

Summer 2025

An overview of the news from the payroll environment in one place. This is our quarterly payroll newsletter. Scroll through the current release.

With effect from 1 June 2025, the flexible amendment to the Labour Code has brought a large number of changes, the aim of which is, among other things, to strengthen the competitiveness of employers and the protection of employees' rights.

Working hours and remuneration

Reduction of uninterrupted daily rest

The flexi-amendment allows for the reduction of uninterrupted daily rest for an employee who is over 18 years of age to up to 6 hours in a 24-hour period, which is a major change compared to the original regulation, where it was possible to reduce the rest period to only 8 hours. However, the condition is that there must be a presumption of necessity to avert an accident, natural disaster or other emergency and mitigate its immediate consequences. At the same time, however, it is necessary to extend the following rest by this shortening period.

Excused time off as part of long-term care

Newly, even serious operational reasons are no longer an obstacle to providing an excused absence from work for the duration of the provision of long-term care. Long-term care is thus the last, so-called other personal important obstacle to work, for which the definition of "unless serious operational reasons prevent it" has been removed.

Continuous employment relationships in connection with leave

For the purposes of leave, the continuous duration of an employment relationship is considered to be the termination of the existing employment relationship and the immediately subsequent establishment of a new employment relationship with the same employer. The law now specifies that any combination as a single relationship, even with unequal lengths of weekly working hours, must be considered as follow-up employment relationships: employment, DPP and DPČ and their mutual combinations.

This rule is also followed by the payment of unused vacation in the event of termination of such employment relationship. Therefore, if one ending employment relationship from which the entire leave has not been taken is followed by another employment relationship, this unused leave cannot be paid from it. Given that employment relationships are consecutive, it is not possible to pay for unused leave during them.

The moment of handing over the salary and salary statement

The moment of issuance of wage and salary statements has been specified. The original handover of the assessment notice no later than on the day of commencement of work was specified to the moment before the commencement of the performance of work, or before the commencement of the performance of work on the day on which the change takes place. This means that the employee must be given these documents before they even start working.

Method of delivery of salary and salary statement

The employer can deliver the salary statement to the employee electronically even without the employee's prior consent, even to the employee's work e-mail or within the internal system. It remains necessary to provide the salary statement with a qualified electronic signature of the employer. However, the actual delivery occurs only at the moment of confirmation of its receipt by the employee, for which the employee has 15 days. A click or other demonstrable confirmation of reading a document within the system can also be considered confirmation. If this is not done, the document is considered undelivered and therefore the fiction of delivery cannot be applied.

Preference for the method of payment of remuneration for work

Preference was newly given to the cashless form of payment of remuneration for work, to a payment account designated by the employee. Any cash form of payment of earnings is possible by mutual agreement of the employee and the employer or only if the employee expresses in writing his disagreement with the cashless form, or refuses to disclose the bank account number or does not have a bank account.

Payout in foreign currency

The range of cases for which an employee and an employer can agree on the payment of wages in a foreign currency is expanding. In addition to existing employees with a place of work abroad, foreigners performing work on the basis of a foreign card or citizens of other EU countries without Czech citizenship or permanent residence in the Czech Republic, as well as employees who live permanently abroad or have other important personal ties there, will now also be able to receive wages in foreign currency.

However, the range of foreign currencies for the possibility of payment of wages is only tied to the so-called currencies of the foreign exchange market, i.e. only to those currencies for which the CNB announces exchange rates. The exchange rate valid for the first working day in the calendar month following the month in which the employee became entitled to wages will be used.

Prohibition of confidentiality clauses

In the context of EU labour law trends in the area of employee protection and emphasis on equality and transparency of remuneration, it is not possible to negotiate a so-called confidentiality clause in relation to remuneration, its amount and the structure of the employee for work.

However, it is still true that restrictions can be agreed in relation to remuneration and handling of information concerning other employees.

Average earnings

Average monthly earnings

The Flexi Amendment introduced a clear rule for calculating the average gross monthly earnings of an employee in the event of a change in their weekly working hours. The established procedure aims to prevent incorrect interpretations and erroneous procedures in determining the method of calculation.

It is newly stipulated that when calculating average monthly earnings, it is necessary to take into account any change in weekly working hours (workload) both during the decisive period and in the case of a change in weekly working hours at the time of calculating average monthly earnings.

Generally speaking, if the employee worked the same time during the decisive period and subsequently when using average earnings, there is no change in the calculation. However, if the weekly working hours have changed during the decisive period, the average weekly working hours of the employee are calculated as the ratio of the sum of the products of the weekly working hours applied in hours and the number of calendar days for which they were applied and the total number of calendar days in the relevant period.

The average gross monthly earnings are therefore based on the amount corresponding to the weekly working hours applied in the decisive period, even though the employee would have worked in a different range of the stipulated weekly working hours at the time of the termination of employment.

Average earnings at termination of employment

The amendment specifies the use of average earnings in connection with the termination of employment. In such a case, the average earnings last determined during the duration of the employment relationship will be used.

Relief for old-age pension beneficiaries and income after termination of employment

In the event of income reconciliation after the termination of employment, the discount on insurance premiums will be payable to an employee who is a beneficiary of an old-age pension, provided that this income is included in the assessment base and that the employee was entitled to the payment of the old-age pension in full for the entire calendar month in the calendar month in which the employment ended.

Commencement and termination of employment

Changes in connection with parental leave

When returning from parental leave at least one day before the child reaches 2 years of age, the employee is guaranteed to return to the original position and the same workplace. The existing regulation is therefore extended to apply only to returning from maternity leave or parental leave for the period during which the employee is entitled to take maternity leave.

An employee on parental leave may now perform for the same employer on the basis of an agreement to complete a job or an agreement to perform work with the same type of work as agreed in his/her employment contract.

The current age limit has also changed from the original 8 years to 9 years for a child whose parent may be sent on a business trip outside the agreed place of work. Pregnant employees and parents caring for such a child may be sent on a business trip only with their consent.

Longer trial period

The probationary period can now be agreed for regular employees for up to 4 months, and for managerial employees for a maximum of 8 months. The probationary period can now be extended by a written agreement between the employer and the employee, but only up to the limits set.

As part of the statutory extension of the probationary period, the rule has been clarified according to which the probationary period is extended by those working days during which the employee did not work due to all-day obstacles to work, taking all-day leave or due to unexcused absence.

Fixed-term employment

The current rule of "three strikes and you're out" applicable to the negotiation and extension of fixed-term employment has been changed by an exception from the number of repetitions in the event that a fixed-term employment relationship is agreed as a substitute for a temporarily absent employee during maternity, paternity and parental leave. The fixed period for the case of compensation for a temporarily absent employee will not be limited by the number of repetitions, but by the maximum limit of each definite period (still 3 years). The total duration of fixed-term employment relationships may not exceed 9 years from the date of commencement of the first fixed-term employment.

Termination of employment for health reasons

Newly, if an employee loses his or her medical fitness, the employer will not examine the reasons for the loss for the purposes of terminating the employment relationship. The employee is obliged to receive special compensation in the form of a one-off compensation in the amount of 12 times the average monthly earnings if the employee terminates the employment relationship due to long-term health incapacity. This compensation is covered by the employer's statutory health insurance.

Running of the notice period

In connection with the notice period, there is a change in the way it is calculated. Instead of the original first day of the following month, it now begins to run on the day on which the employer or employee delivers the notice to the other party.

In the event of termination of employment by the employer for so-called disciplinary reasons or failure to meet the legal requirements or requirements of the employer for the performance of work, the notice period will be reduced to 1 month.

Claims for invalid termination of employment

In the event of invalid termination of employment, the employee was only entitled to wage compensation, provided that the employer did not assign work to him for the duration of the dispute. However, such an employee is now also entitled to leave.

Related changes

Employment of minors

The flexi amendment provides employers with an extension of options in the area of employing juveniles, i.e. children over 14 years of age and adolescents with completed compulsory schooling. It is essential to comply with the basic conditions, which are: 1. performance of only light work that does not harm their health, education and moral development, 2. work only during the summer holidays, with the written consent of the legal representative. At the same time, the employer is obliged to keep a shift of a maximum of 7 hours for this group of employees with a maximum weekly working time of 35 hours in all employment relationships. The minimum length of uninterrupted daily rest must be at least 14 hours within a 24-hour period, all outside of 8-10 p.m.

For employing juveniles in all types of employment relationships, they must also attend an initial medical examination, as well as other periodic examinations as needed, but at least once a year.

Extension of creditable experience

Creditable experience in public services, which may affect the classification of employees in salary grade and the amount of their salary, will now include the period of care for an adult dependent on assistance in level III or IV and the period of doctoral studies.

Relaxation of the rules for public employees

The amendment makes changes to employees in the public sector. These employees can now work in the management or supervisory bodies of business legal entities if they have the written consent of their employer. At the same time, their administrative obligations are simplified, especially when it comes to reporting monetary performances.

An amendment to Government Regulation No. 590/2006 Coll., which determines the scope and scope of other important personal impediments to work, comes into force on 1 June 2025 to regulate certain contexts:

Marriage and registered partnership

The amendment to the government decree newly unifies the interpretation of the terms "husband" and "marriage" so that persons living in a registered partnership are also considered to be them. In practice, this means that where the regulation mentions marriage or husband, registered partners are now also included.

This regulation extends the application of certain provisions – such as those relating to marriage, the death of a partner or an accompaniment – to persons living in a registered partnership. This ensures that registered partners are on an equal footing with regard to the rights and obstacles arising from the Regulation.

Preventing travel to work

The previous wording of the legislation mentioned only bad weather as the reason for the impossibility of coming to work, which in practice caused confusion – it was not clear what exactly fell under this term. The new wording clarifies this situation: in addition to weather conditions, natural disasters and other emergencies are now explicitly mentioned.

This amendment stipulates that situations such as floods, fires, landslides, industrial accidents or other unforeseeable events that are not directly related to the weather but prevent employees – including people with disabilities – from getting to work are excusable obstacles to work.

The amendment also includes a minor language change: the term "non-public transport" has been replaced by the more common and comprehensible designation "personal means of transport".

Change in the impediment "Entering into marriage"

The amendment regulates the rules for taking time off when entering into marriage. It is now clearly stipulated that if an employee takes two days off, he or she is entitled to wage or salary compensation for the day when the wedding ceremony takes place. If an employee takes only one day (for example, if the wedding takes place on the weekend), they will receive compensation for this one day.

This regulation resolves previous ambiguities, especially for employees with irregular shifts, where it was not clear for which day compensation is due.

At the same time, the reference to the Labour Code for employees with flexible working hours has been clarified and the name of the obstacle itself has been changed – instead of "Wedding", the term "Entering into Marriage" is now used. The change reflects the effort to achieve equal status of registered partnerships with marriage and unifies terminology in connection with new legislation.

Death of a loved one – change in the rules

The change responds to the need for greater support for employees in difficult life situations associated with the loss of a loved one.

Previously, employees were entitled to 1-2 days of paid leave depending on the degree of kinship (e.g. 2 days + 1 day for a funeral in the event of the death of a child or spouse). Attendance at the funeral had to be proven, often e.g. by a part or a certificate of attendance. The employee had to document specific days and the extent of the absence, which represented an administrative burden. After the amendment, the entitlement to paid leave remains unchanged. However, employees can now take up to 5 additional days of unpaid leave in the event of the death of their loved ones. It is no longer necessary to prove the "necessary time" – time off is granted as a whole, in whole days, without further evidence.

Time off when accompanying a loved one to a medical or educational facility

With regard to this impediment to work, it is specified that the employee is entitled to time off work not only when accompanying a loved one to a medical or school counselling facility, but also to travel back.

Time off to look for a new job – change in the rules

Newly, the reason for termination of employment will be taken into account when granting time off to look for a new job.

Previously, employees were entitled to up to four days off work (sometimes with wage compensation), which they could use, for example, for job interviews or a visit to the Labour Office – regardless of the reason for terminating the employment relationship. The new regulation is that if the employment relationship ends by notice or by agreement for sanction reasons (e.g. for breach of obligations), the notice period will be reduced by half and the employee will be entitled to only half of the time off – i.e. two days.

In all other cases, the entitlement to four days' leave remains unchanged. After its use, it will now be possible to use an additional two-day unpaid leave intended exclusively for the counselling services of the Labour Office.

Maximum monthly amount of parental allowance

The State Social Support Act introduces minor changes regarding the change in the maximum monthly amount of parental allowance by a parent not entitled to maternity benefit from the original CZK 13,000 to the new CZK 15,000. This change is effective from 1 July.

Extension of the child's attendance limit in a care facility

The condition of "all-day personal care" has been significantly relaxed. Newly, parents can also receive parental allowance if a child under 2 years of age attends a nursery, kindergarten or other similar facility for a total of up to 1,230 hours per year. This change responds to the need for a better work-life balance and represents a significant extension compared to the existing legislation.

Wage claims in the event of employer's insolvency

The Ministry of Labour and Social Affairs has announced that for the period from 1 May 2025 to 30 April 2026, the maximum amount of wage claims that can be paid to an employee by the Labour Office in the event of the insolvency of their employer is CZK 46,165.

This amount serves as a limit for the payment of wage claims under the Act on the Protection of Employees in the Event of Insolvency of the Employer.

Wage increase for Blue Card holders from May 2025

Based on a communication from the Ministry of Labour and Social Affairs, the minimum wage required for the issuance of a Blue Card has increased from 1 May 2025. The average gross annual wage in the Czech Republic for 2024 was set at CZK 553,980, which corresponds to a monthly amount of CZK 46,165. To obtain a Blue Card, it will now be necessary to prove a gross monthly salary of at least CZK 69,247. The decisive factor for the assessment of a Blue Card application is the date of the decision, not the date of application or inclusion in the government program. For this reason, it is necessary to use new affidavit forms and to adapt employment contracts to the new salary amount. The change also applies to applicants who are already enrolled in programmes (e.g. the Key and Scientific Staff Programme or the Highly Qualified Employee Programme) but have not yet been issued a decision on the granting of a Blue Card.

New rules for the taxation of employee shares from April 2025

As of 1 April 2025, there has been a fundamental change in the taxation regime for employee shares, shares and options. It is no longer an obligation of deferred taxation, but an option – the employer chooses whether to postpone the taxation of this income or not. What is changing:

  • The employer may decide to postpone the taxation of this income (so-called deferred taxation).
  • If it decides to do so, it must inform the tax office by means of a notification by the 20th day of the month following the month in which the employees acquired such shares/shares.
  • This change also had a retroactive impact on shares/shares acquired by employees in the period from 1 January 2024 to 31 March 2025, and if a notification was not submitted for this period by 31 May 2025, income realised in this period became taxable for the month of May 2025.
  • The employer may choose a different approach for income realized in different months.
  • The same rules apply to income from employee share plans, which employees must tax through their tax returns. In such a case, the notification is submitted by the foreign entity that provides such shares/shares to your employees.

In connection with the retroactive effect of this amendment, the GFD has published information for employers and employees. There is no mandatory form for the fulfilment of the notification obligation, but the financial administration has published an optional form on its website that can be used for this purpose.

Uniform monthly employer report

At the end of June, the Chamber of Deputies approved a law regulating the uniform monthly employer report. The regulation should be discussed by the Senate in July. If the law is passed, it will come into effect on 1 January 2026.

The essence of the law, consisting in merging the data that the employer is obliged to send to certain public authorities into a single submission, remains unchanged after approval by the Chamber of Deputies. An important change, approved by the deputies, is the fact that from 1 July 2026, the employer will register in the employers' register no later than 2 working days before the day on which the first employee is to start work (today it is within 8 days after the first employee starts work). Furthermore, it will be obliged to register each employee in the register no later than before the moment of the employee's commencement of work (and not within 8 days of commencement of work, as is the case now).

In connection with the Act on Uniform Monthly Reporting, other regulations relating to payroll records will also be amended (e.g. the institute of registration sheets, advance tax, etc.). We will inform you of the details as soon as the bill is approved by the Senate, signed by the President and published in the Collection of Laws.

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