Programmers as Employees? The Supreme Administrative Court Sets Clearer Boundaries

A recent judgment by the Supreme Administrative Court ("SAC") indicates that regulatory authorities are tightening their oversight of so-called "bogus self-employment". The SAC decision (7 Ads 52/2025-27, dated March 16, 2026) reclassified the activities of self-employed programmers working for TechFides Solutions s.r.o. as "dependent work" (employment) and imposed a fine of CZK 80,000 on the company. The existence of dependent work was proven through a combination of multiple indicators rather than a single factor.

The main arguments can be summarized as follows:

• Systematic Nature: Continuity of work can be inferred from a single audit and the factual duration of the cooperation.
• Exclusivity: The programmers worked exclusively for one company over a long period.
• Inability to Refuse Tasks: The contractors could not refuse assignments (except for non-payment), which the court identified as a significant sign of subordination.
• Fixed Working Hours: Work was performed for approximately 8 hours a day, which effectively excluded the possibility of doing business for other entities.
• Personal Performance: In the event of illness, they did not seek a replacement but performed the work personally (a typical feature of an employment relationship).
• Integration into Systems: Programmers logged their time on projects in the corporate system alongside regular employees.
• Economic Dependence: Income from the company was the primary source of livelihood for these workers, evoking economic dependence.
• Organizational Integration: Programmers worked on the same projects and under similar conditions as core staff, which was considered integration into the organizational structure.
• Lack of Business Risk: The programmers bore no entrepreneurial risk and did not act in their own name, which does not correspond to the status of a self-employed person.
• Substance Over Form: Formally labeling the relationship as a "business-to-business" contract does not prevent a conclusion of dependent work if the actual characteristics of employment are met.
• Irrelevance of Voluntary Choice: The fact that the parties chose the self-employed regime voluntarily is irrelevant—if the signs of dependent work are met, the mandatory regime of the Labor Code applies.

The Labor Law vs. Tax Law Perspective

This case law reaffirms the distinction between the labor law and tax law interpretations of such decisions. From a tax perspective, IT activities are generally considered "ambiguous", meaning the tax authorities typically tolerate the "free choice of contractual relations"—i.e., the choice of whether a person acts as a self-employed contractor or enters into an employment relationship. However, this holds true only if the key signs of dependent work under the Labor Code (subordination, economic dependence, acting on behalf of the company/customer) are not present.

Although this judgment specifically concerns labor law, and tax case law may occasionally differ in certain aspects, it is difficult to imagine that a tax office during an audit would classify a programmer's activity as "ambiguous" if it is performed based on the parameters mentioned above. If the indicators of dependent work under the Labor Code are fulfilled, the income of a self-employed person from an apparently "ambiguous" activity cannot withstand reclassification into income from employment.

Should you need assistance, we are available to review and potentially adjust your current contractual arrangements with your self-employed suppliers.

This text was translated by AI