Licencování agentur práce v nové éře MPSV

2024 Rewrote the Rules: Why Should You, as a User, Care About the New Legislation?

A fundamental paradigm shift is that the state no longer views an agency's misconduct as its isolated problem. Now, you, the users of its services, are also drawn into the entire process. The era when it was possible to transfer all responsibility to the agency and rely on the fact that "it is their concern" is definitively over. The state realized that the previous model, where fines were directed only at agencies that often functioned as empty shells and simply disappeared after a sanction was imposed, was not effective.

Therefore, the legislation introduced a mechanism that is much more effective. On one hand, it tightened the conditions for the actual operation of agencies; on the other hand, it introduced direct liability for the user.

If the State Labor Inspection Office (SÚIP) imposes a fine on an agency for serious offenses, such as enabling illegal work, it can demand payment directly from you. This makes you a key element in the state's control mechanism. Your business interest – to avoid drastic financial penalties – now aligns with the state's regulatory objectives.

This change requires a shift in your mindset. Choosing an employment agency is no longer just a matter of price and speed of worker delivery. It has become a strategic decision with significant legal and financial risks. At ARROWS, our Czech legal team encounters these issues daily, and we ensure for our clients that this transition into the new era goes smoothly and safely.

Key Changes in Licensing: Higher Security Deposit, Stricter Supervision, and Zero Tolerance for Debts

The new conditions for obtaining and maintaining an employment agency license are designed to ensure that only stable, financially healthy, and professionally managed entities remain on the market. For you as a user, knowing these conditions is crucial – it will help you identify a reliable partner and avoid cooperating with an agency at risk of losing its license.

Transfer of Agenda to the MPSV

All proceedings concerning employment agencies – from issuing and revoking licenses to inspections and statistical data collection – have been unified under the Ministry of Labour and Social Affairs (MPSV). This centralization allows for more consistent and stricter supervision over the entire sector and prevents differing approaches that may have previously existed at the level of individual labor offices.

Doubling of the Security Deposit to CZK 1,000,000

One of the most significant tightenings is the increase of the mandatory security deposit that an agency must deposit into the ministry's account, from CZK 500,000 to CZK 1,000,000. This is not a fee, but a refundable security deposit, which, however, is forfeited to the state in the event of permit revocation due to a serious breach of the law.

Existing agencies had to pay the difference by April 1, 2024, otherwise their permit automatically expired. This step effectively removes entities without sufficient financial backing from the market.

Requirement of No Outstanding Debt

The new legislation introduces an uncompromising requirement for the agency to remain permanently debt-free towards the state. This is not just a one-time check during the license application. The MPSV now actively verifies at least once every six months whether the agency has outstanding tax, social security, or health insurance payments.

Any detected debt (with the exception of an approved payment schedule) is grounds for the expiration of the permit. For you, this is a strong signal – an agency that is unable to meet its basic financial obligations to the state is a highly risky partner.

Professional Competence and Responsible Representative

Requirements for the responsible representative, who guarantees the professional level of the agency, have also been tightened. Now, they must not only have the appropriate university or secondary education but also relevant professional experience acquired in the last 10 years. If they are not a member of the statutory body, they must be employed by the agency for at least 20 hours per week. This prevents formal "covering" of activities by a person without real influence and responsibility.

Expanded Information Obligations

Agencies must now report more detailed data to the ministry, such as the number of assigned employees for each individual user, broken down by the official classification of occupations (CZ-ISCO). The MPSV thus gains an unprecedented overview of market movements, allowing it to better target inspections and identify anomalies.

These changes function as a financial and professional filter. An agency that passes them and is able to meet these demanding conditions in the long term is highly likely to be stable and trustworthy. 

Our Prague-based legal team at ARROWS will help you set up contractual relationships so that the agency is required to regularly inform you about the fulfillment of these obligations, especially regarding debt-free status. You will thus obtain an early warning system before any potential problem escalates into the expiration of the license and the collapse of your operational capacities.

Illegal Work and Hidden Risks: How to Avoid Million-Crown Fines?

The greatest threat to users of agency services is involvement, even if unwitting, in illegal or disguised employment. The amendment to the law has significantly tightened definitions and sanctions in this area, with the liability falling fully on you as well.

New Definition of Illegal Work

The definition of illegal work has been refined and now explicitly refers to the characteristics of dependent work under the Labor Code. Crucially, it has been added that the duration of the work is not relevant for assessing whether it constitutes illegal work. In practice, this means that even if the labor inspection finds a person without a proper contract at your workplace who has been working there for only their first day, you can be fined the full amount.

Disguised Employment Mediation – A Ticking Time Bomb in Your Contracts

Disguised employment mediation is an activity where someone effectively "leases" labor to you, but this cooperation is masked by another type of contract, most often a contract for work or a service agreement, in order to bypass strict labor regulations. The inspection focuses on the actual substance of the relationship.

For example, if invoicing is based on hours worked by specific people rather than on a completed and delivered work, this is a clear sign of disguised mediation. The statistics are also a warning. In 2023 alone, 183 employers using the services of disguised agencies were uncovered, and fines totaling over CZK 116 million were imposed. This risk is real and financially devastating.

Your Liability is Direct

For enabling illegal work or utilizing disguised mediation, a fine of up to CZK 10,000,000 may be imposed. This sanction can be levied not only on the agency but also on you as the user. Furthermore, as already mentioned, you are now liable for the payment of the fine imposed on the agency. In addition to the fine, the labor inspection can also impose a ban on activity for up to two years, again on both parties – the agency and the user.

Protection against these risks lies in thorough prevention. The ARROWS law firm specializes in preparing and reviewing contractual documentation to ensure that your service agreements cannot be reclassified as disguised mediation. In the event of an inspection, we will then effectively represent you in negotiations with administrative authorities.

Risks Associated with Selecting and Utilizing an Employment Agency

Obtaining and Maintaining a License: A Process That Separates the Wheat from the Chaff

The ultimate risk of cooperating with an unreliable agency is the revocation of its license. For you, this means an immediate and complete collapse of labor supply, which can paralyze your operations. It is therefore essential to understand what misconduct leads to such a fatal consequence.

Grounds for License Revocation – When the MPSV Must and When It May Act

The law distinguishes two categories of grounds for permit revocation. In some cases, the ministry is obliged to revoke the license; in others, it may do so based on administrative discretion.

The ministry must revoke the license if the agency:

• Enables illegal work.

• Engages in disguised employment mediation or enables it.

• Violates the ban on discrimination or fails to ensure equal treatment.

• Repeatedly fails to cooperate with the labor inspection during an audit.

• Is inactive for two years (does not assign any employee).

The ministry may revoke the license if the agency:

• Mediates employment in violation of good morals.

• Violates other obligations set by the Employment Act or the Labor Code.

Consequences for the Agency and for You

If an agency's license is revoked ex officio, neither the agency nor its key individuals (e.g., managing director or responsible representative) can obtain a new permit for three years. For you as a user, this means only one thing: overnight, you will lose all temporarily assigned employees from that agency. This sudden shortage can cause huge operational problems, unfulfilled orders, and significant financial losses.

The best defense is a proactive approach and choosing a stable partner. A thorough legal due diligence of the agency before establishing cooperation is an absolute necessity today. At ARROWS, our Czech legal team will not only help you select and verify partners but also prepare your company for potential inspections, provide professional training for your employees, and create internal guidelines that minimize risks and ensure compliance with the new legislation.

Grounds for License Revocation and How ARROWS Protects Your Business

International Dimension: Employing Foreigners and Posting Workers

In a globalized economy, cross-border labor movement is a common reality. The new legislation brings specific challenges in this area as well, whether it concerns employing foreigners in the Czech Republic or posting workers abroad.

Agency Employment of Foreigners in the Czech Republic

The law allows employment agencies to legally employ and temporarily assign foreigners, including those who require work permits such as an employee card, blue card, or work permit. However, this is associated with extensive administrative and reporting obligations. Since July 2024, employers must report the commencement and termination of employment of foreigners to the Labor Office exclusively in digital form.

Posting of Workers Abroad

An extremely complex and risky area is the posting of agency employees to other EU member states. Here, Czech law clashes with the law of the host country and European regulations. Key obligations for the agency (and consequently for you as the initiator of the posting) include:

• Information obligation: The employee must be informed in detail beforehand about the working conditions in the target country, including the amount of remuneration, working hours, and conditions of return.

• Compliance with local law: The posted worker is entitled to the key labor standards of the host country, such as minimum wage, holiday duration, or overtime rules.

• Social security and the A1 form: It is absolutely essential for the posted worker to carry an A1 certificate. This document proves that social security contributions are paid for them in the Czech Republic, thus preventing double insurance. Foreign inspection authorities require this form, and its absence can lead to high fines.

This issue also hides less obvious risks. For example, a situation where you as the user send an agency employee to a project in Austria creates a complex triangle of liability. The Czech agency becomes the "posting employer" responsible for compliance with Austrian regulations. 

A mistake on your part – for example, a poor estimate of the project duration – can lead to a violation of Austrian laws by the agency. A fine from the Austrian authorities can then threaten the financial stability of the agency and its debt-free status in the Czech Republic, which ultimately can lead to the revocation of its Czech license.

It is precisely in these cases that the strength of our ARROWS International network, built over ten years, is fully demonstrated. Thanks to it, we handle cross-border cases practically every day. Whether you need to secure an A1 form for posting to Germany, verify labor law specifics in Poland, or resolve a tax issue in France, our local partners provide fast and expert assistance that an independent Czech office cannot offer.

ARROWS: Your Partner for Safe and Effective Agency Employment

The new reality of agency employment is clear: the 2024 legislation has significantly raised the bar for agencies and, with it, the risks for you, their clients. A passive approach and relying on the assumption that "it does not concern us" can lead to fatal financial and operational consequences. Proactive risk management, thorough contractual protection, and expert legal advice have become an essential part of a safe and effective business strategy.

At ARROWS, we offer you a comprehensive solution covering all aspects of this complex issue. Our services are designed to protect you and allow you to focus on your business:

• We conduct in-depth legal due diligence of employment agencies to ensure you cooperate with a stable and reliable partner.

• We ensure the preparation and review of all contractual documentation, from framework agreements with agencies to service agreements, aiming to eliminate the risk of disguised mediation.

• We create tailored internal guidelines for your company to prepare you for inspections and ensure compliance with labor regulations.

• We provide professional training for your management and employees in labor law, anti-discrimination, and communication with inspection authorities.

• We effectively represent you in negotiations with authorities, during SÚIP inspections, and in any administrative or court proceedings.

• Thanks to the ARROWS International network, we are your reliable partner for the complex agenda of employing foreigners and posting workers abroad.

Our experience is backed by long-term cooperation with a portfolio of more than 150 joint-stock companies, 250 LLCs, and 51 municipalities and regions. We pride ourselves on speed, high quality, and being more than just lawyers for our clients. We enjoy connecting clients with interesting business opportunities and are always open to discussing new business ideas.

Do not leave the security of your business and the continuity of your operations to chance. The changes in the law are too fundamental to be ignored. Contact us today to arrange an initial consultation. Our specialists will assess your situation and propose specific steps to protect your company in the new era of agency employment.