At a glance
- Amendments to the Act on Employment came into force on 1 January 2025.
- The changes impact non-compliance with the employment of disabled persons, increasing employers' state contributions according to the level of non-compliance.
- Tax relief will remain available for all agreements to perform work (APW) under a set income threshold.
- The Work Inspection Office now has the power to publish decisions on offences relating to disguised employment on the official board of the State Labour Inspection Office, and to make audio-visual recordings during an inspection without the knowledge of the persons being inspected.
Amendments to the Act on Employment came into force on 1 January 2025.
Increased employer contributions where disability threshold not met
One of the most significant changes relates to the employment of disabled persons. The workforce of employers with more than 25 employees must comprise at least 4% disabled persons. However, if this is not complied with, employers must make a financial contribution to the state. This was previously at a fixed contribution rate of 2.5 times the average monthly salary for each disabled person who should have been employed, but was not.
The amendment introduces a new differentiation in the amount of the employer's contribution to the state budget according to the degree of compliance with the mandatory percentage. The new rates are as follows:
- 1 times the average wage if at least 3% of the workforce is disabled persons.
- 2 times the average wage if at least 1% of the workforce is disabled persons.
- 3.5 times the average wage if less than 1% of the workforce is disabled persons.
The key aim of this reform is to encourage employers to engage in direct employment of employees with disabilities.
Changes to alternative options to employing disabled persons
A further amendment to Act on Employment relates to the introduction of the Act on Integrative Social Enterprise, and is also effective as of 1 January 2025.
The change impacts employers' ability to purchase goods and services from specific employers focused on employing disabled persons, as an alternative to meeting the disabled employee quota. Now, those employers can only provide goods / services to the maximum value of 14 times of the average wage in the Czech Republic per each disabled person (previously the limit was 28 times the average wage).
APWs remain unlimited
In addition to these changes, there have also been further modifications to the taxation of income from APWs. Originally, there was an intention to limit the more beneficial taxation regime of APWs (where no health and social insurance contributions are required, under a certain income threshold) to only one APW per person.
However, from 2025, the tax relief will still apply to all APWs that do not exceed the income threshold, meaning employees can have APWs with multiple employers and all of them can use the tax relief.
There is also now an automatic increase in the threshold for tax relief. Instead of the previously fixed amount of CZK10,000, the threshold will now be set at 25% of the average wage; for 2025, this is CZK11,500.
The obligation to report APWs to the state authorities remains unaffected and is still in effect.
Work Inspection Office publication of illegal employment and disguised employment offences
The amendments to the Act on Employment also include several changes to the Act on Work Inspection. The Work Inspection Office now has the option to publish decisions on offences related to facilitating illegal work and disguised employment on the official board of the State Labour Inspection Office, for a period of one year.
The intention is that this sanction, which may potentially affect an employer's reputation, will further motivate employers to avoid engaging in illegal work or disguised employment practices.
Further, when carrying out an inspection, or as part of actions preceding the inspection, labour inspectors are now also authorised to make audio, visual, and audio-visual recordings without the knowledge of the persons being inspected, unless the purpose of the inspection cannot otherwise be achieved.
