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Mercans offers complete payroll, PEO and HR services in The Czech Republic

Having joined the European Union (EU) in 2004, the Czech Republic is a highly developed economy and the employment rate is high and was steadily increasing prior to the pandemic. Structural reform priorities include making the labor market more fluid and inclusive, enhancing R&D investment, reforming the pension system and improving public sector efficiency through consolidation of local government services.

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Doing Business in The Czech Republic

The process of opening a company can be more cumbersome than most OECD countries and innovation activity is moderate. There is scope to make R&D support a lot better. That said, CzechInvest, the business and investment development agency, plays a key role in supporting business and investments.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in the Czech Republic is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.


Banking Hours: Monday - Friday from 8.00 am-5.00 pm

Working Week

The standard working week is from Monday to Friday from 8.00 am-6.00 pm

Labor Law

The most important changes to labor law came with amendments to the Labour Code in June 2020 which affect new holiday calculations, the shared workplace, new rules for the Transfer of Undertaking and posting of employees.

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Main Industries

High tech engineering, electronics and machine-building, steel production

GDP Growth


Dates & Numbers


Official State Name



10.7 million



Major Languages



Czech Koruna Kč

Internet Domain


International Dialing Code


Czech Republic
Prague, CZ
1:02 pm, June 14, 2024
temperature icon 18°C
light rain
Humidity 56 %
Wind Gust: 0 mph


Employment contracts typically include the following elements: type of work, place of work, date that work commenced and other conditions related to work and remuneration. This may include remuneration, benefits, mutual rights and obligations as well as overtime and travel. Companies that operate multi-country payroll should be aware that these terms can also be set out unilaterally by the employer in its internal policies.

It is acceptable to provide employees with online payslips


Payroll reports must be kept for 30 years


Four weeks

Annual Leave

First 14 days are paid at 60% of the regular salary

Sick Leave

28 weeks of paid maternity leave and one week of paid paternity leave

Maternity & Paternity Leave

On provision of two months notice

Employee Termination

Although there is no legal requirement to pay a 13th month salary, a performance-based bonus can be paid

13th month salary

15,200 CZK per month

Minimum Wage

25% of average earnings


Based on one year of employment: one month’s gross salary

Severance Pay


Tax and Social Security

Czech tax residents are generally subject to Czech income tax on their worldwide income. Tax non-residents are generally taxed only on income that is considered derived within the Czech Republic.


In 2021, the Czech Republic returned to progressive taxation which is applicable to all types of income (such as capital gains, rental income or employment income).


Corporate Income Tax


Personal Income Tax


Sales Tax



Social Security

State social support provides benefits such as child allowance, housing allowance, parental allowance, birth grant and death grant. Czech citizens and foreigners have a right to benefits if they and the family /household members assessed jointly with them are registered as permanent residents in the Czech Republic.


Social Security Rate


Social Security Rate for Employers


Social Security Rate for Employees


Employment Law

Generally, it is the Labour Code which applies and covers all employment relations between employer and employee. Employee protection provided by the Code is based on international standards.

Employment agreement

A contract of employment must include certain prerequisites such as the type of work to be performed, the place of work and start date. Even though the Code does not specify that the agreement should be in writing, Council Directive 91/533/EEC of 14 October 1991 requires employers to provide employees with a written statement of the terms and conditions of employment.

Working conditions

Regulations concerning overtime cover all employees in an employment relationship and are contained in the Labour Code. Overtime work must be performed outside the established shifts.


The employer decides the period when an employee takes their annual leave but is required to enable the employee to take the full four or five weeks of leave to which they are entitled within the respective calendar year. There are also other leave entitlements as set out in the Code.

Employment termination

Termination of employment is accomplished by agreement concerning severance of the employment relationship, notice of dismissal, immediate cancellation as well as cancellation during the probation period.


2 months

Minimum notice period for terminating an employee



Total number of public holidays



Working hours per week


3 days

Total number of days for Compassionate & Bereavement Leave



There are a number of visa types which allow foreigners to enter and temporarily stay in the country. This includes the Schengen Visa which can go up to 90 days and is issued as a short term visa for various purposes (including tourism, medical treatment, culture, sport, study or more). Long-term visas ( over 90 days) are issued for purposes such as medical treatment, visits, official trips, study or internship, working holidays, training, seasonal employment and more.


Residency permits

A long-term residence permit allows the holder to travel and stay on a short-term non profit basis in other Schengen Area States and is issued for the purpose of employment, investment, family unification, study, scientific research and more.

Work Permit validity

Two years

Required Documents

A completed application form

A passport that is valid for at least three months prior to departure

Two passport-sized photos

Documents outlining the nature of the applicant’s stay, such as a work permit

Proof of travel medical insurance

Proof of intent to leave the country once the visa expires (including a plane ticket)

Proof of accommodation for the duration of the stay

A document outlining the nature of the applicant’s stay

A criminal record from the country of residence (where applicable)

Proof of financial security

Proof of payment of the visa application fees.

Compliant, reliable, error-free and touchless payroll in Czech Republic

Build the best team and hire top talent compliantly in Czech Republic. Get in touch with Czech Republic payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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