29.07.2022 Taxes

[Czech Republic] Social insurance discount for employers


In the second half of June 2022, a new law was published in the Collection of Laws, according to which, effective from February 2023, employers will receive a discount on social insurance if they employ selected groups of the population on a part-time basis. The aim is to increase the employment of these groups and to promote part-time work.

The discount applies to the premiums paid by the employer on behalf of its employees. Employees’ wages will therefore not be affected by this discount. The discount will reduce the employer’s costs, thereby encouraging the employer to employ part-time workers. The discount is 5%.

Basic conditions and supported groups

The discount will only apply to employees with a contracted weekly working time of between 8 and 30 hours, and the employee must fall into one of the following categories:

  1. persons aged 55 and over
  2. persons under 21 years of age
  3. persons caring for a child under 10 years of age
  4. persons caring for close to them who are dependent on the assistance of another person
  5. students
  6. persons undergoing retraining
  7. persons with disabilities

The discount can only be granted for one employment relationship and only with one employer. Therefore, if an employee has more than one employment relationship with the same employer, the discount will only apply to one of them. If the employee has more than one employer, the discount will be applied to the employer who notifies the Czech Social Security first.

At the same time, the law specifies other conditions, e.g. the employee’s wage must not exceed 1.5 times the average wage, the hourly wage must not exceed 1.15% of the average wage, the number of hours worked in a given month must not exceed 138 hours (if the employee started working during a calendar month, this limit is reduced in proportion to the calendar days), etc.

The employer must notify the employee about applying of the discount and advise him of his obligations, such as reporting changes within 8 calendar days. At the same time, the employer must be provided with evidence of the entitlement to the discount (e.g. a confirmation of study, a child’s birth certificate, a certificate from the Employment Office stating that the person is dependent and an affidavit stating that the employee is caring for the person). The law goes into effect on 1 February 2023, so the first payroll period for which the discount can be applicable is 02/2023. However, if an employer wants to ensure the capability of applying the discount for its existing employees who qualify for it, he or she should give a notice of the intent to apply the discount on 1 January 2023, because the law allows to send the notice of intent to apply the discount 1 month before the date from which he or she will apply the discount the earliest. And if an employee has more employers, the employer’s swiftness in sending the notice is crucial.

Author:

Martin Svoboda

Payroll Development Specialist


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