Due to the number of questions, this article provides you with a more detailed explanation and information on the circumstances, under which employers’ social security contributions can be reduced.
The possibility of reducing the employer’s contribution applies to employees referred to in article 7a(1) of the SSIA:
- a) an employee over 55 years of age,
(b) an employee looking after a child under 10 years of age, of whom he or she is the parent or to whom he/she is providing substitute care based on a decision of the competent authority; a decision referred to in article 7(10) of the Act on State Social Support shall be deemed to be a decision of the competent authority,
(c) an employee who cares for a close person under the age of 10 who is dependent on the assistance of another person with level I (light dependence) or for a close person who is dependent on the assistance of another person with level II (moderate dependence) or level III (heavy dependence) or level IV (full dependence), the close person being assessed according to article 24(1) of the Pension Insurance Act,
(d) an employee who is at the same time preparing for a future occupation by studying (at a secondary school or university); the study is assessed according to article 21(1)(a), 22 and 23 of the Pension Insurance Act,
(e) an employee who, in the 12 calendar months preceding the calendar month in respect of which the premium reduction is claimed, entered retraining as a jobseeker according to article 109 or article 109a of the Employment Act,
(f) an employee who is a person with a disability under article 67(2) of the Employment Act.
- g) an employee under the age of 21 (premiums may be reduced regardless of the amount of working time agreed).
Further conditions for application are set out in article 7a(2) of the SSIA, according to which shorter working or service hours than the specified weekly working or service hours must be agreed with the employee referred to in paragraph 1(a) to (f), and the extent of such shorter working or service hours reaches a minimum of 8 hours and no more than 30 hours per week.
If an employee performs more than one employment with the same employer in an employment or service relationship, the discount on the insurance premium shall be due only in respect to one employment and the limit on the number of hours referred to in the first sentence shall apply to all such employments taken together.
Non-application of the discount is regulated by article 7a, paragraph 3 of the SSIA:
(a) the total of the employee’s assessment bases from all employments (employment and service relationships) with the same employer for a calendar month is higher than 1.5 times the average wage;
(b) the total of the employee’s assessment bases from all jobs (for employment and service relationships) with the same employer per 1 hour of the aggregate of hours worked from all jobs in a calendar month is higher than 1.15% of the average wage;
(c) the employee’s hours of employment or service from all employments with the same employer, including periods that are considered as performance of work or service, exceed 138 hours with the same employer in a calendar month. If an employee commences employment during a calendar month, the limit shall be adjusted in proportion of the number of calendar days of employment to the number of calendar days in the calendar month, rounded up to the nearest whole hour.
(d) the employee referred to in paragraph 1(f) has an employment relationship with an employer, who is an employer recognised as an employer in a protected labour market under article 78 of the Employment Act, if the premium reduction were applied by this employer.
(e) the employee is listed in the monthly summary of workers’ reimbursement of wages for the purpose of claiming entitlement to payment of the contribution during part-time work under article 120e(5) of the Employment Act;
Another important condition is set out in article 7a(4) of the Social Security Insurance Act, according to which only one employer can be granted a discount on the insurance premium for a calendar month for the same employee. If more than one employer intends to claim the social insurance discount, the discount is due to the employer, who first notified the Czech Social Security Administration of the intention. In doing so, however, they must meet the following conditions under article 7a(5) of the SSIA:
- prior to claiming this discount, the employer notified the CSSA of his/her intention to claim this discount on behalf of this employee;
- notification of this intention is understood to refer to the moment of its delivery to CSSA,
- an employer may give notice of its intention to claim a premium reduction for an individual employee no earlier than 1 month before the date, from which he will claim the premium reduction for that employee, but not earlier than the date of the submitting an announcement of the employee’s commencement of employment, and no later than the deadline for submitting the statement for the calendar month, for which he claims the premium reduction for that employee.
- If more than one employer intends to claim a premium reduction for the same employee, the employer, who first notified the Czech Social Security Administration of this intention, is entitled to the premium reduction for that employee.
For the purposes of the social insurance reduction, the employee shall provide the employer with evidence of:
- his/her relationship to the child and the age of the child with the child’s birth certificate and, in the case of substitute care, by the decision of the competent authority to entrust the child to substitute care,
- care for a close person dependent on the assistance of another person by a confirmation from the regional branch of the Labour Office according to article 29(6) of the Social Services Act not older than 1 calendar month and a statutory declaration that he/she is caring for the person,
- continuous preparation for a future profession by studying with a confirmation from the relevant school or, where appropriate, a decision of the Ministry of Education, Youth and Sports issued under article 85 of the Act on the Organisation and Implementation of Social Security stating that the studies are equivalent to studies at schools in the Czech Republic,
- the fact of retraining by confirmation from the regional branch of the Labour Office according to article 109b of the Employment Act,
- disability according to article 67(5) of the Employment Act.
In addition, the employee is obliged to:
- immediately inform the employer, if he or she is simultaneously employed by another employer with a shorter working or service time to the extent determined under article 7a(2), first sentence,
- notify the employer of any changes that affect the application of the discount on the premium, with the exception of the employee’s age and the age of the child, within 8 calendar days of the date, on which those changes occur; and
- immediately, at the employer’s request, substantiate the facts needed to claim the premium reduction.
For the purposes of the premium reduction, the employee does not prove the facts that he or she has already proven to the employer for tax or other purposes.
If the employee has provided the employer with incorrect information for the application of the premium discount or has failed to notify of changes affecting the application of the premium discount and the employer has, as a result, paid the premium less the discount on behalf of the employee without there being grounds for the application of the discount, the employee shall be liable to pay the employer the penalty paid by the employer. The employee’s failure to notify of the changes is subject to the condition that he or she has been informed by the employer under article 23d(2) of the application of the premium reduction.
Obligations of the employer:
If the employer has announced his intention to apply a premium reduction on behalf of the employee, he must inform the employee in writing before the first application of the premium reduction, including the reason for applying the premium reduction.
In this information, the employer shall state the fact, which gives rise to the right to claim the discount on the insurance premium for this employee, shall warn the employee of his/her obligations related to proving this fact and shall instruct him/her on the consequences of not fulfilling his/her obligations.
- (1) The employer shall notify the Czech Social Security Administration of the intention to claim a discount on the insurance premium for the employee on a prescribed form in electronic form.
- (2) The employer shall notify the CSSA of the termination of the application of the discount on insurance premiums for the employee by means of a data message on a prescribed form in electronic form within 8 days after the end of the calendar month, in which the employer last applied the discount on insurance premiums for this employee; the employer’s notification of the termination of the application of the discount on insurance premiums for the employee shall also be deemed to be a cancellation of the intention to apply this discount for this employee. When an employee ceases to be employed, the cessation of the application of the premium reduction on behalf of that employee is not to be reported.
If the conditions are met by the employee for only part of the month, the discount cannot be applied! The conditions for claiming the premium reduction must be met for the entire duration of the employment or service relationship in the calendar month for the employee, for whom the premium reduction can be claimed.
The premium discount can only be applied up to the due date of the premium for the calendar month, for which the premium discount is due, and cannot be applied retrospectively.
The discount cannot be applied in case of contracts for work and contracts to complete a job.