GH 2017 Czech Republic |
a. Introduction
Czech Republic Labour Market – Key Facts
• Czech Population: 10,570,000 citizens.
• Current employment rate: 58,1% (6.141.000 citizens).
• General unemployment rate: 3,6% (380.000 citizens).
• Average Gross wages (3rd quarter of 2016): CZK 27,220, (EUR 1,010); Average Gross wages in Prague (3rd quarter of 2016): CZK: 34,683, (EUR 1,290).
Currently seven percent of the total working population are self-employed workers/independent contractors in information technology. Freelancing is relatively common practice in the service industry.
As in other jurisdictions, the use of self-employed workers/independent contractors instead of, or as well as employees is not, from a legal point of view, risk free. If an agreement with a self-employed worker is intended to act as a substitute for an employment contract, the agreement will be assessed according to its true nature. Therefore, replacing a contract of employment with any civil law contract, (while meeting the usual criteria of labour employment), actually represents an administrative offence. The employer could be fined between CZK 10,000,000 (EUR 370,000) and CZK 50,000 (EUR 1,900) for such an offence. The employer will also be liable for health insurance and social security contributions for the employee, including a duty of payment of overhead surcharges, related interests and sanctions.
At the same time, it should be acknowledged that the distinction between employees and self-employed workers/independent contractors is a legally difficult task. There are usually only subtle differences between a contract of employment and a civil law contract. It is probably no surprise though that there are substantial differences between self-employed workers/independent contractors within various sectors.
It is usually a relatively simple task to correctly distinguish employees from self-employed workers/independent contractors within large sectors such as; industry, construction, health-care provision etc. However, it is much harder to accurately assess the true nature of “soft” services provided by individuals within sectors such as; information technologies, communication, tourism, various sorts of administrative support and other
activities with a predominantly intellectual value added.
Generally speaking, the information technology sector, including areas such as; the internet, modern telecommunication and social networks, has been the one of the first sectors to see an increase in the use of self-employed workers/independent contractors. This may be due to the fact that within these areas, the use of self-employed workers/ independent contractors is easier to defend from a legal point of view compared to the
use of independent contractors within traditional areas with a predominantly manual and/or strictly organised work.