Already during the approval process of the austerity package, it was clear to almost everyone that the proposed changes to agreements to complete a job would complicate payroll records and would in some respects be essentially impracticable. The original version would not have been effective at all, as employers would not have known in advance whether or not statutory insurance premiums would be paid from the agreements and how much employment based on an agreement to complete a job would actually cost them.

The Chamber of Tax Advisors of the Czech Republic (“CTA”), together with the support of employers’ representatives, has managed to negotiate a compromise solution with the Ministry of Labour and Social Affairs, which was approved by the Chamber of Deputies on 17 April 2024 under parliamentary print document no.570.

New proposed changes effective from 2025

The essence of the now approved proposal is the introduction of a “notified agreement” regime, in which an employee can designate one main agreement in each month, the so-called notification agreement, for which he or she will pay social and health insurance contributions, if the monthly income exceeds 25% of the average wage (CZK 10,500 for the year 2024). Should the employee work under more than one agreement with one employer, the limit will be assessed cumulatively for all these agreements.

Other agreements to complete a job not operating under the “notified agreement” regime will be treated as general employment, otherwise they will not give rise to participation in insurance contributions in a situation where the monthly income was lower than CZK 4,000 (small-scale employment).

In its report, the CTA specifies that the above-mentioned system will be applied in practice on a first-come, first-served basis. This means that in order to be able to use the notification agreement, the employer must notify the Czech Social Security Administration (“CSSA”) in advance and must also be the first to have announced an agreement. He will then apply the higher limit to the agreement with the employee until the employee terminates the scheme.

Finally, it should be added that as of 1 July 2024, employers will remain obliged to notify the CSSA by the 20th day of the following month of all employees working on the basis of an agreements to complete a job.