How Czech employment rules affect Icelandic employers

Employment contract pitfalls

|Attorney|Czech Bar Association Reg. No. 14551

Published:3/12/2026

The Czech labour law system is built on protective principles that prioritize employee security and statutory compliance in ways that differ markedly from Iceland's approach. The primary legislation governing all employment relationships in the Czech Republic is the Labour Code (Act No. 262/2006 Coll.), supplemented by the Employment Act (Act No. 435/2004 Coll.).

Key takeaways

Non-Negotiable Minimums: Czech law sets hard floors for wages (22,400 CZK in 2026), vacation (4 weeks), and safety. These cannot be waived by contract.

Written Contracts are Critical: Three essential elements (Type, Place, Date) + mandatory info must be precise. Bilingual drafts are highly recommended.

Termination is Restricted: "At-will" employment does not exist. You need specific statutory grounds and must follow strict notice period rules (now starting from delivery).

Electronic Compliance: Reporting of foreign workers and managing remote work agreements requires adherence to strict digital protocols.

Professional Setup Saves Costs: Correcting a botched entry into the market is significantly more expensive than initial compliance.

ARROWS law firm

245 007 740 consultation@arws.cz

FAQ – frequently asked legal questions

1. Can I employ Czech residents without establishing a Czech subsidiary?

Yes. A foreign entity can register as an "employer" with the Czech Social Security Administration and Health Insurance companies without a local branch. You will be assigned a Czech Employer ID. However, you must comply with all Czech payroll and labour laws.

2. What documents must I maintain at the workplace?

Copies of employment contracts, proof of identity (passport), and for non-EU citizens, copies of work permits/residence cards. These must be available for inspection at the place of work.

3. Are electronic signatures on contracts valid?

Yes, but with caveats. The Labour Code permits concluding contracts electronically. However, delivery of documents (especially terminations) via email requires strict consent protocols (separate written consent from employee). Using a qualified electronic signature (QES) or recognized electronic signature is recommended for the employer.

4. What is the difference between DPP and DPČ?

DPP (Agreement on Work Performance) is limited to 300 hours/year. Social security applies only if earnings exceed the threshold. DPČ (Agreement on Working Activity) allows up to 20 hours/week on average, with social security applying if earnings are 4,500 CZK+ per month.

5. Is the "Information on Entry" mandatory even for Icelandic citizens?

Yes. You must submit the "Information on entry into employment" (Informace o nástupu) to the Labour Office electronically on the day of commencement.

ARROWS law firm

245 007 740 consultation@arws.cz

About the author

JUDr. Jakub Dohnal, Ph.D., LL.M.

Associate, managing partner

LinkedIn|Czech Bar Association Reg. No. 14551

Jakub Dohnal is a founding member of our law firm and our entire consulting group. He is primarily involved in real estate development and advising on the complex setup of commercial projects.

dohnal@arws.cz 245 007 742

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Disclaimer:

The information contained in this article is for general informational purposes only and serves as a basic guide to the issue as of 2026. Although we strive for maximum accuracy, laws and their interpretation evolve over time. We are ARROWS Law Firm, a member of the Czech Bar Association (our supervisory authority), and for the maximum security of our clients, we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of the regulations and their application to your specific situation, it is necessary to contact ARROWS Law Firm directly (consultation@arws.cz). We are not liable for any damages arising from the independent use of the information in this article without prior individual legal consultation.