[Czech Republic] Abolition of the Guaranteed Wage and Parametric Changes to the Minimum Wage as of 1 August 2024

As of 1 August 2024, the concept of the guaranteed wage in the Czech Republic has been abolished, while the minimum wage remains intact. The guaranteed wage, which classified jobs into eight groups based on complexity and responsibility, is no longer a mandatory element for the private sector. However, guaranteed salaries remain in place for the public sector, meaning that employees of the state and public institutions will continue to be remunerated according to salary scales.

According to the explanatory memorandum, the guaranteed wage was abolished to support collective bargaining on wages, which the Ministry of Labour and Social Affairs (MPSV) identified as an effective tool for protecting against inadequately low wages.

Along with the abolition of the guaranteed wage, several provisions of the minimum wage have been amended. The new law introduces several key changes:

1. The calculation of the minimum wage is now based on a prediction of the average gross monthly wage in the national economy and a newly introduced coefficient. The previous version only provided fixed amounts.
2. The coefficient and criteria for calculating the minimum wage now take into account factors such as purchasing power, living costs, wage growth, and productivity, ensuring a more flexible approach.
3. The announcement of the prediction and final minimum wage amount will be carried out by the Ministry of Finance and MPSV with fixed deadlines (August 31 and September 30).
4. Consideration of the working week length: The new provisions include adjustments for employees with shorter or longer working hours than the standard 40-hour workweek.

These changes are intended to allow for more flexible adjustments of the minimum wage in line with current economic conditions.

For 2024, the minimum wage is set at CZK 18,900 per month or CZK 112.50 per hour.