Just like last year, employers had to prepare for several changes in labour law from 1 January, which, although last minute, were successfully passed through the legislative process. Amendment to Act No. 435/2004 Coll., on Employment, as amended (the “Employment Act“), and related legislation, in particular Act No. 251/2005 Coll., on Labour Inspection, as amended, and Act No. 118/2000 Coll., On the Protection of Employees in the Event of Insolvency of an Employer and amendments to certain Acts, as amended, deals primarily with the issue of employment of persons with disabilities (PWD) and inspections and penalties of entities by labour inspection authorities (the “Amendment“). It was approved by Parliament on 18 December 2024 and promulgated in the Collection of Acts as Act No. 470/2024 Coll. on 27 December 2024.
In general
According to the submitter, the Amendment is intended to eliminate the purposeful practices of employers in drawing support for the protected labour market, but also to motivate employers outside the protected labour market to employ persons with disabilities. Ultimately, the changes should help persons with disabilities, as the free labour market brings wider employment opportunities and better wages.
It is also worth mentioning the linking of the Amendment with the new Act on Integrative Social Enterprise, after which the two systems will be gradually linked (also from 1 January 2025) to favour employers activating persons with disabilities for the free labour market.
As far as illegal employment is concerned, the aim is clear – to introduce (even) more effective and efficient control and sanctioning of illegal work and disguised employment.
Employment of people with disabilities
The Employment Act receives relatively fundamental and conceptual changes in THE employment of persons with disabilities.
Grading of the amount of the levy to the state budget when fulfilling the compulsory share of employment of the disabled on the free labour market
Currently, employers in the open labour market with more than 25 employees are obliged to include 4% of people with disabilities in their workforce. They can meet this obligation in three ways:
- direct employment of PWD;
- substitute performance (taking products, services, or contracts from employers in the sheltered labour market);
- a levy on the state budget (2.5 times the average monthly wage for each person with a disability they are expected to employ).
Currently, all three methods of compliance with the mandatory share are considered equivalent and can be combined.
According to the Amendment, the new graduation of the levy to the state budget depending on the performance in the form of direct employment of persons with disabilities is as follows:
- 1 times the average wage if the employer meets the mandatory share of at least 3% through direct employment;
- 2 times the average wage if the employer meets the mandatory share of at least 1% by direct employment;
- 5 times the average wage if the employer meets the mandatory share of less than 1% through direct employment.
The aim of this change, which will ultimately lead to higher financial contributions in absolute terms, is to motivate employers to meet the mandatory share by directly employing such persons.
Introduction of a maximum amount of the operating part of the allowance on the sheltered labour market
Currently, the use of the contribution to operating costs is not limited by any upper limit, which, according to the Ministry of Labour and Social Affairs, opens a great deal of room for purposeful reporting.
The Amendment therefore introduces a “ceiling”, which is related to the amount of the salary contribution for all employees and amounts to 0.8 times the quarterly amount of the salary contribution due. At the same time, the Amendment specifies other eligible costs to increase the allowance.
Inspections and sanctions by the Labour Inspectorate
Another area that the Amendment has “shone a light” on is the punishment of illegal work and the powers of the labour inspectorate during ongoing inspections.
Audiovisual recordings of labour inspection inspections
One of the most controversial changes is the new possibility of covertly making audiovisual recordings during an inspection or as part of the actions preceding an inspection by the labour inspection authorities. Until now, labour inspection authorities have been entitled to make audiovisual recordings during inspections only with the knowledge of the inspected entity.
The Amendment, however, fundamentally changes this by providing that the labour inspection authorities may make audio, visual and audio-visual recordings without the knowledge of the persons inspected when carrying out an inspection or during the actions preceding the inspection unless the purpose of the inspection cannot be achieved otherwise.
The main argument for this “freeing of the hands” of the labour inspectorate, according to the Ministry of Labour and Social Affairs, is that illegal work is by its nature a hidden element, and allowing such recording without the knowledge of the person being inspected will generally make inspections more effective in certain sectors of the labour market where labour inspection authorities may need evidence. Given the hidden nature of illegal work, alerting the inspected entity to the making of such recordings would defeat the purpose of the inspection. The covert recording also has a positive impact on the possible enforcement of the inspected person’s cooperation, as it will document the actions of the person attempting to obstruct the inspection.
Simplifying the handling of minor offences
As part of the fight against illegal work, the Amendment also introduces a measure that will enable the labour inspection authorities to deal with minor offences by employers that formally meet the characteristics of an offence but whose social danger is very low.
The State Labour Inspection Office or a regional inspectorate, without initiating proceedings for an offence, may also postpone the case by a new resolution if, in view of the significance and extent of the violation or threat to the protected interest affected by the act of the inspected person, how the act was carried out, its consequence, the circumstances in which the act was committed, or the behaviour of the inspected person after the commission of the act, it is obvious that the purpose which could have been achieved by carrying out proceedings for an offence has been achieved or can be achieved in another way.
Possibility for the Labour Inspectorate to request information about the subjects of the inspection from the tax administrator
The Office and inspectorates are now entitled to request information necessary for their performance from the tax administrator when performing specific tasks falling within their competence in facilitating illegal work, disguised employment, or facilitating disguised employment. The tax administration should comply with the request unless the provision of the information would be likely to interfere with the proper performance of the tax administration.
Publication of the judgment on the official notice board
The Amendment also expanded the list of penalties for committing selected offences. Newly, the offence of facilitating illegal work and disguised employment mediation will be punishable by the publication of the administrative decision on the official board of the SÚIP for a period of 1 year. Whether a penalty is imposed will be at the administrative discretion of the labour inspection authorities.
The publication will be carried out under the conditions set out in the Offence Act for this type of punishment (see Section 50 of the Offence Act) with special exceptions set out in the Employment Act (manner, place, and time limit of publication). The possibility of publishing the decision is intended to lead to the cultivation of the working environment and to help enforce and protect the rights of employees.
Other important news
During the legislative process, the original text of the proposal submitted by the Ministry of Labour and Social Affairs and subsequently by the Government of the Czech Republic was amended by several other changes, which are more of an employment law nature, namely an increase in the tax exemption limit for selected non-monetary benefits and the creation of an information system on work accidents.
Limit on deductions from work performance agreements
The Amendment abolished the expected regime of the so-called notified agreement and introduced a unified limit for contributions from a work performance agreement to 25% of the average wage by the rules of the Act on Social Security Contributions and State Employment Policy contributions.
The limit for the year 2025 is CZK 11,500.
Increase in the limit for selected non-monetary benefits
The Amendment increases the limit for the exemption of employee income for so-called health and educational benefits (such as education allowance, medicines, medical aids, etc.) to the amount of the average wage, which is CZK 46,557 for the year 2025.
No insurance or income tax is deducted from these benefits up to the limit. It is a tax-deductible expense for the employer.
Information system on accidents at work
With effect from 1 January 2026, an information system on work accidents will be established as a non-public record of the state administration system. Reporting of work accidents, sending of the accident record, and reporting of changes to the information system on work accidents will be carried out by the employer and other obliged persons according to the Occupational Safety Act.
The information system will be used for the needs of the Authority, the Inspectorate, the Ministry, the Czech Mining Authority, and the district mining offices. Data from the information system on accidents at work will be provided to authorities other than those mentioned above only in cases provided for by special laws or in cases where the natural person to whom the data relates has given his consent or who may be affected by the provision of the data.
Application for job placement and unemployment benefits
A new feature of digitalisation is the electronic submission of applications for job placement and unemployment benefits. According to the Amendment, these can now be submitted in two ways, namely (i) through the information system based on proof of identity using a means of electronic identification (e.g. NIA ID, bank identity, etc.) or (ii) through the information system in the form of assisted submission of applications at the Labour Office or selected postal licence holders (i.e. their employees).
Foreign employment
The conditions for entry to the labour market have also been relaxed for foreigners performing artistic activities in the Czech Republic as members of the artistic ensemble of a public cultural institution under the Act on Public Cultural Institutions and for Taiwanese citizens, who, according to the Amendment, do not need a work permit as of 1 January 2025.
Conclusion
The main objectives of the Amendment in all the affected areas were primarily efficiency and avoiding misuse of gaps in employment legislation. As regards the employment of persons with disabilities, employers are to be motivated to employ directly individuals who, even as persons with disabilities, have the potential to participate actively in the labour market, rather than paying a “levy” to the state.
Illegal and disguised employment has long been at the top of the list of employment offences. Even with this argument, the Amendment has expanded the possibilities of labour inspections to include the taking of audio, visual, and audio-visual recordings without the knowledge of the persons inspected. Only practice will tell whether this somewhat invasive measure, as well as the new penalty of publication of the judgment and other related changes, will fulfil the legislator’s announced purpose.
Further loosening and digitalisation of the labour market, whether it is an increase in the limit for selected non-monetary benefits, registration of work accidents, electronic applications for job placement and unemployment benefits, and other above-mentioned innovations can be assessed as positive changes.
We are closely monitoring the employment and labour law area for you, if you have any questions, please do not hesitate to contact us.
Rachel Kouklíková, legal assistant – kouklikova@plegal.cz
Mgr. Jakub Málek, managing partner – malek@plegal.cz
9. 1. 2025