Operating a Business

flag Czech Republic Czech Republic: Operating a Business

In this page: Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labour | Management of Human Resources

 

Legal Forms of Companies

Společnost s ručením omezeným or SRO (Limited Liability Company)
Number of partners: No minimum.
Maximum: 50.
Capital (max/min): CZK 1
Shareholders and liability: Partners' liability is limited to the amount contributed.
Akciová společnost or AS (Public Limited Company)
Number of partners: No minimum: one or more; can be a sole proprietorship.
Capital (max/min): Minimum CZK 2 million when established without public bid and at least 20% must be released before the constituting general meeting. Minimum CZK 20 million with public bid.
Shareholders and liability: Liability is limited to the amount contributed.
Veřejná bchodní společnost or VOS (General Partnership)
Number of partners: At least 2 natural partners.
Capital (max/min): No minimum capital requirement.
Shareholders and liability: Liability is unlimited for all partners.
Limited Partnership (KS)
Number of partners: At least 2 partners: 1 active partner and 1 sleeping partner.
Capital (max/min): No minimum capital but the input of the partner with limited liability must be at least CZK 5,000.
Shareholders and liability: Liability of active partners is unlimited. Liability of sleeping partners is limited to the amount contributed.
 

Business Directories

Financial Information Directories
Dun & Bradstreet - Worldwide directory with financial information on businesses
Justice.cz - Public register of companies

To go further, check out our service Business Directories.


 

Professional Associations

General Professional Associations
SPCR - Confederation of Industry of the Czech Republic
SPCR - Confederation of Industry of the Czech Republic
AMSP - Association of SMEs Crafts of The Czech Republic

To go further, check out our service Professional Associations.


 

Business Setup Procedures

Setting Up a Company Czech Republic Eastern Europe & Central Asia
Procedures (number) 9.00 5.26
Time (days) 24.50 11.78

Source: Doing Business - Latest available data.

 
The Competent Organisation
Ministry of Industry and Trade

Czech Trade Inspection Authority

For Further Information
Consult Doing Business Website, to know about procedures to start a Business in Czech Republic.
Online trade register, in Czech.
Search Czech, online trade register
 

Recovery Procedures

Principle
Basic principle of recovery is equal conditions for all creditors (par conditio creditorum). For a bankruptcy, there are three basic conditions: decay, many creditors and enough assets for covering the costs of bankruptcy procedure. More information is available in the Act. No182/2006 Coll.
There is also the 2007 Bankruptcy law, which addressed important structural impediments such as the slow and uneven performance of the courts, weakness of the legal standing of creditors, and the lack of provisions for corporate restructuring.
Minimum Debt-to-Capital Ratio Triggering Liquidation
Not specified.
Bankruptcy Laws
Act. No 182/2006 Coll.
Reorganization and Rehabilitation Laws
Act. No 182/2006 Coll.

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The Active Population in Figures

201820192020
Labour Force 5,452,9435,441,3325,378,192

Source: International Labour Organization, ILOSTAT database

 
201720182019
Total activity rate 76.11%76.79%76.86%
Men activity rate 83.09%83.49%83.54%
Women activity rate 68.90%69.87%69.95%

Source: International Labour Organization, ILOSTAT database

 
Employed Persons, by Occupation (% of Total Labour Force) 2015
Manufacturing 27.3%
Wholesale and retail trade; repair of motor vehicles and motorcycles 12.2%
Construction 7.9%
Human health and social work activities 7.0%
Education 6.4%
Public administration and defence; compulsory social security 6.3%
Transportation and storage 5.9%
Professional, scientific and technical activities 4.7%
Accommodation and food service activities 3.9%
Agriculture, forestry and fishing 2.9%
Information and communication 2.8%
Administrative and support service activities 2.6%
Financial and insurance activities 2.3%
Arts, entertainment and recreation 1.6%
Water supply; sewerage, waste management and remediation activities 1.1%
Electricity, gas, steam and air conditioning supply 1.0%
Real estate activities 0.9%
Mining and quarrying 0.8%
 

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Working Conditions

Opening Hours
 
  • Legal Weekly Duration
40 hours
  • Maximum Duration
40 hours
  • Night Hours
Not limited if maximum duration is fulfilled.
Working Rest Day
Saturday, Sunday
Paid Annual Vacation
After 3 month of testing period workers have the right for vacation in duration of one-twelfth each worked month. The minimum annual holiday is four weeks (20 working days)
Retirement Age
Men 63 years, Women 59-62 years depending on the number of children. In order to reach retirement age, it is necessary to pay pension insurance (to be employed or to operate one's own business) for at least 25 years.
Since 2008, the retirement age for men has been increasing by two months per year from 62 years. Czech policy stipulates that the retirement age will continue increasing at this rate until it reaches 65 years in 2030.
Child Labour and Minimum Age For Employment
15 years are minimum age for employment of young people, but they may not work overtime and do night shifts.
Informal Labour Market
Informal labor market is more important than EU average, but due to tax reform will probably decrease to average values.

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The Cost of Labour

Pay

Minimum Wage
The minimum wage is set CZK 16,200 per month for 2022 (official governmental source).
Average Wage
CZK 37,929 in Q1 2022, according to the Czech Statistical Office.
Other Forms of Pay
  • Pay For Overtime
25% over the basic rate
  • Pay For Rest Days Worked
10% for overtime work completed on weekends or on days not stipulated in the original employment contract.
  • Pay For Night Hours
10% for overtime work completed between 10 pm and 6 am
  • Pay For Overtime at Night
25% over the basic rate for overtime work.
 

Social Security Costs

The Areas Covered
Both companies and employees are required to contribute payments to social security, including to health insurance, pension, unemployment insurance, sickness insurance and other benefits.
Contributions
Contributions Paid By the Employer: Employers contribute 33.8% of the employee's gross salary to the state health and social security funds (9% to the state health insurance funds and 24.8% the state social security funds).
Contributions Paid By the Employee: Health insurance 4.5%, old-age and invalidity pension between 3.5% and 6.5%.
Competent Organization
VZP - Health Insurance Company
VZP for Foreigners - Health Insurance Company
Czech Social Security Administration

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Management of Human Resources

 

Recruitment

Method of Recruitment
The recruitment process takes place more and more via internet. Selection is made on the basis of a job interview (for SME). But for manufacturing it is better to take a recruiting agency. Also labor office can be used.
Recruitment Agencies
There are only private recruiting agencies. Most important are: Grafton, Robert Half, ManPower, Synergie.
Recruitment Websites
Jobs
Prace
CareerJET.cz
 

The Contract

Type of Contract
Legal clauses regulate employment contracts and to a lesser degree collective agreements and individual negotiations.
The terms of employment contracts are extremely rigid and the limits for dismissal are less strict.

Breach of Contracts

  • Retirement
When reaching retirement age - most of people work one or several years more.
  • Dismissals
  • mutual agreement – terminates the employment contract on an agreed date
  • expiration of employment contract – employment contract concluded for a limited period
  • termination during the probation period . notice of termination – usually 2 month notice period
  • immediate termination - can be used in specific cases (very bad work discipline)
  • Other Possible Methods
Resignation is not standard way of the breach of contract. It is possible only in the case of top management and only in the context of resignation from specific function. That means even if anybody resigns his employment contract still remains valid until other forms of the breach of contract come into being.
Labour Laws
Ministry of Labor and social affairs
Consult Doing Business Website, to obtain a summary of the labour regulations that apply to local entreprises.
 

Dispute Settlement

 

Conciliation Process

  • Procedure
Labor Code (act. No.262/2006 Coll.)
 

Judicial Structures

  • Legal Framework
Labor Code (act. No.262/2006 Coll.), collective agreements, arbitration awards or court decisions
 

Social Partners

Social Dialogue and Involvement of Social Partners
The Czech Republic operates on the principle of free establishment and competition of unions. Establishment of a union is not mandatory in companies. The minimum number of employees needed to establish a company union is three.
Amongst them, the most powerful is Czech-Moravian Confederation of Trade Unions (so called CMKOS). It is an important social partner in tripartite negotiations in the framework of the Council of Economic and Social Agreement of the Czech Republic. It works in the regions of the Czech Republic through Regional Councils of Trade Unions (RROS) and Regional Offices for Legal Assistance (RPP). There are 33 trade unions in the framework of CMKOS.
Unionisation Rate
11% of all employees.
Unions
CMKOS, Czech-Moravian Confederation of Trade Unions
Other Unions affiliated to CMKOS
Regulation Bodies
Ministry of Labour and Social Affairs
Confederation of Industry of the Czech Republic (SPCR)
European Agency For Safety and Health at Work (Czech Republic Page)
 
 

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Latest Update: November 2022