Following the consolidation package, the Senate of the Parliament of the Czech Republic approved on 29 May 2024 further amendments to the legal regulation of agreement to complete a job (hereinafter referred to only as „ACJ“) as part of the amendment to the Investment Companies Act (hereinafter referred to as the „Amendment“).

So what do employers currently have to comply with for employees working on a ACJ?

Under the current legislation, an employee working based on ACJ (hereinafter referred to as „employee“) starts to participate in the insurance from a countable monthly income exceeding CZK 10,000, and there is no limit to the number of the ACJ that an employee may have. In practice, this often results in the employee working for several related entities at the same time, thus avoiding the employer’s participation in the employee’s insurance. If, for example, an employee works for three entities at the same time, he or she does not qualify for insurance even if the employee has a total income of, for example, CZK 30,000 for the relevant month.

To eliminate this practice, the legislator pushed through changes to the regulation of the ACJ as part of the consolidation package, which was to take effect on 1 July 2024. However, the proposed changes contained a number of shortcomings that were widely criticized by the professional community. In response to the criticism, the legislator passed an amendment that further modified the ACJ and delayed the effective date of some of these changes. Part of the amendments will thus come into force on 1 July 2024, while another part of the amendments will not come into force until 1 January 2025.

As of 1 July 2024, the employer will be newly obliged to notify the relevant district social security administration of information about the employee, even if the employee is not covered by sickness insurance. The employer will thus be obliged to submit the following information on the employee to the competent district social security administration no later than on the 20th day of the calendar month following the calendar month in which the employee was employed:

• name and surname,
• personal identification number or date of birth,
• place of birth
• the date of commencement of employment
• the date of termination of employment; and
• the amount of income he/she has paid to the employee for the month in question.

As of 1 January 2025, the amount of income from which an employee’s participation in the insurance begins will be changed. Under the current legislation, an employee’s participation in the insurance starts from a monthly income exceeding CZK 10,000. As of 1 January 2025, two ACJ schemes will be introduced, namely:

• the scheme of the announced ACJ, in which the amount of income from which the employee’s participation in the insurance would be determined at 25% of the average monthly gross wage (for 2024 CZK 10,500) and
• the scheme of the non-notified ACJ scheme in which the amount of income from which the employee’s participation in the insurance would start would be determined at CZK 4,000.

Under this arrangement, each employee would thus be able to work under a notified ACJ scheme for only one employer, and the employee’s participation in the insurance would be based on that employer only if the employee’s income for the reference month exceeded 25% of the average monthly gross wage. To apply this scheme, the employer will have to notify the Czech Social Security Administration in advance.  If more than one employer wishes to apply a notified ACJ scheme to the same employee in the same month, only the employer who requested it first will be allowed to do so.

In the event that ACJ does not operate under the notified ACJ scheme, the employer’s participation in the insurance will be established if the employee’s income reaches at least CZK 4,000 in the relevant month.