Substitute wages paid on sick leave will be higher in the Czech Republic as of 2022

As of 1 January 2022, the (employer-paid) substitute wage during sick leave and the (social-security) sick leave benefit will both be higher, thanks to the stipulated increase of the reduction limits.

Thanks to the new reduction limits (which will come into force as of New Year 2022), the substitute pay by employers during the first 14 days of sick leave (due to temporary work incapacity), as well as the subsequent sick-leave benefit (paid by the Czech Social Security Administration), will be higher than today.

In order to adjust the earnings (or, as it were, the assessment base) of employees, a concept is used that is known as reduction limits and set out in Sec. 22 (3) of the Sick-Leave Insurance Act (Act No. 187/2006 Coll.). The limits are being derived annually from the general assessment base (as per the Pension Insurance Act) in the calendar year which lies two years before the calendar year for which one wishes to determine the reduction limits.

Consequently, in order to determine the reduction limits for 2022, one needs to look at the 2020 assessment base, which in turn derives from the average wage as published by the government in decree No. 356/2021 Coll.:

 

Reduction limits for sick-leave benefits

Limit 1st 2nd 3rd
2021 CZK 1 182 CZK 1 733 CZK 3 545
2022 CZK 1 298 CZK 1 946 CZK 3 892

 

The reduction limit for substitute pay (1st through 14th day of work incapacity) can be calculated by multiplying the reduction limit for sick-leave benefits with the factor 0.175:

Limit 1st 2nd 3rd
2021 CZK 206.85 CZK 310.28 CZK 620.38
2022 CZK 227.15 CZK 340.55 CZK 681.10

 

Calculating the substitute pay takes three steps:

1. Determine the average hourly earnings in the same manner in which one would calculate the figure for labor-law purposes, i.e., based on the figures for the past calendar quarter. If the employee did not work 21 or more days during the reference quarter, probable earnings within the meaning of Sec. 356 of the Labor Code shall be used instead.

2. Up to the first reduction limit, 90% of the average hourly earnings will be acknowledged. 60% of the average hourly earnings apply to the difference between the second and first reduction limit, and 30% to the difference between the third and the second reduction limit. Amounts above the third reduction limit will be disregarded. The thus calculated amounts shall then be added up to arrive at the adjusted reduced assessment base.

3. Employees are entitled to continued pay during sick leave in an amount equal to 60% of the adjusted (reduced) assessment base, rounded to hellers (and then rounded up to the nearest crown for the entire calendar month).

 

Source:
https://www.podnikatel.cz/clanky/nahrada-mzdy-se-od-roku-2022-razantne-zvysi/

Author:
Dagmar Kučerová (autor zdroje)

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