Czechia: Employee sick-leave insurance and more stringent rules for so-called ‘agreements on the completion of a job’ (DPP)

The so-called ‘consolidation package’ of measures designed to curb the shortfall of the national budget has arrived in the Senate, which will discuss the bill on 8 November.

Among other things, the amendment bill introduces sick-leave insurance for employees who, as of 2024, will be obliged to pay a premium toward such insurance calculated from their gross wages as the assessment base.

The amendment bill introduces a 0.6% levy to cover sick-leave insurance for employees. All told, the social security contribution of employees will thus newly amount to 7.1%, of which 6.5% is pension insurance and 0.6% the new sick-leave insurance.

To take the finance ministry’s model case as an example, for an employee with an average gross monthly salary for 2022 in the amount of CZK 40,353, the impact of the new levy on their net earnings will be CZK 242 each month (0.6%), or CZK 2904 over the entire year.

New rules also affect those who are employed on the basis of that special type of contract under labor law known as the agreement to complete a job – especially those who have entered into several of these at once, as they will newly pay contributions to social and health insurance if their monthly earnings attain CZK 17,000. Today, this kind of worker does not have to pay such contributions if their income in the given calendar month stays below 10 000 crowns, even if they have entered into several such agreements. To date, the only mandatory payment on such earnings is income tax. Also, a reporting duty has newly been introduced for employees who work for more than one employer in the same calendar month on the basis of the aforementioned type of contract, primarily so as to be able to monitor whether the threshold for insurance payments is met. Failure to observe this obligation may mean that the employee themselves is held responsible for making payments into the insurance not only for themselves but also on behalf of the employer.

For completeness’s sake, we add that sick-leave insurance is used to cover the following benefits: sick-leave pay, financial support during motherhood, nursing care allowance, compensatory payment during pregnancy and motherhood, allowance for fathers engaging in care for their newborn (paternity benefit) and long-time nursing allowance. These benefits are being paid out by the social security district offices on a per diem basis.

Parliamentary press 488 – consolidation package

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