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Labour Office vs. Labour Inspectorate – The Crucial Difference That Protects Your Company

Definitions of key terms: 

• The State Labour Inspection Office (SÚIP) has a very broad mandate. Its main role is to inspect compliance with labour law regulations, such as the Labour Code, occupational health and safety (OHS), detecting illegal employment, inspecting wages and salaries, working hours, and rest periods. Its inspections are often unannounced, especially in cases of suspected illegal work.

• The Labour Office (ÚP), which is the focus of this article, has a significantly narrower inspection scope, focused primarily on financial aspects in accordance with Act No. 435/2004 Coll., on Employment.

The Labour Office and the Labour Inspectorate are two different bodies with different powers. While the Labour Office focuses on financial compliance and subsidies, inspections by the Labour Inspectorate target labour relations and occupational safety — we describe them separately.

Key Competencies of the Labour Office (ÚP)

The inspection activities of the Labour Office focus on specific areas almost exclusively related to the administration of public finances in the field of employment:

1. Inspection of the use of funds from the active employment policy (APZ): This is the main focus of the Labour Office's inspection activities. Inspectors verify whether companies are using subsidies for creating new jobs, retraining programmes, and other targeted projects correctly and in accordance with the agreements concluded.

2. Employment of persons with disabilities (OZP): This is the second key and very complex area. The Labour Office inspects whether employers with more than 25 employees are meeting the mandatory 4% share of employing persons with disabilities.

3. Inspection of compliance with agreements and programmes: The General Directorate of the Labour Office inspects the fulfilment of nationwide programmes and agreements on the provision of material support.

4. Limited individual inspections: Regional branches of the Labour Office may also check whether job applicants are complying with the temporary incapacity for work regime and verify average earnings for the purpose of determining the amount of unemployment benefits, which may also indirectly affect the employer.

A lack of clarity regarding the powers of inspection bodies represents a strategic weakness for companies. Our lawyers are ready to help you navigate these differences and prepare documents tailored precisely to the expected inspection.

Preparing for an Inspection

Inspections from the Labour Office: A Step-by-Step Guide

The entire inspection process is governed by Act No. 255/2012 Coll., on Inspection (the Inspection Code). The very name of this regulation confirms that the focus of Labour Office inspections lies in the financial and documentary sphere. The battle is therefore not fought in the workshop or office, but over accounting books and personnel files. 

This leads to a crucial strategic insight: a preventive audit of this documentation conducted by experts before the inspection arrives can identify and rectify potential problems. The ARROWS law firm can help you with such an audit and document preparation to ensure the inspection is a mere formality. Get in touch with us and get a tailor-made legal solution.

Your Rights and Obligations During an Inspection

During an inspection, you have a number of rights that are important to know and exercise. The most important include:

• The right to demand the presentation of an authorisation for the inspection.

• The right to be present during inspection activities.

• The right to be represented by a legal representative (e.g., a lawyer from ARROWS) on the basis of a power of attorney.

• The right to object to the inspector's bias.

At the same time, you have an obligation to create suitable conditions for the inspection and to submit the requested documents. The presence of our lawyer will ensure that your rights are fully respected and that communication with the authority is conducted professionally.

Illegal employment is primarily handled by the Labour Inspectorate, not the Labour Office. We discuss how an inspection by the Labour Inspectorate for illegal employment is conducted in a separate article.

The Inspection Report and the Power of Objections

The formal output of the inspection is a report that details all findings. It is absolutely crucial to realise that the inspection report is not the final verdict. Your primary and most effective defence tool is to file objections against the inspection findings. By filing them in a timely and correct manner, you can reverse negative conclusions before they become the basis for initiating administrative proceedings.

How to File Effective Objections

• Deadline: Objections must be filed within a strict deadline of 15 days from the date of delivery of the report. Missing this deadline means de facto acceptance of the inspection's conclusions.

• Form and content: Objections must be submitted in writing, must clearly specify what they are directed against, and must contain a detailed and factual justification supported by evidence.

Preparing high-quality objections requires expert knowledge and experience. Our lawyers at ARROWS specialise in drafting objections and are ready to help you protect your rights.

The Phase After Receiving the Report

How to Face Penalties and Request Their Waiver

If the objections were not successful, administrative proceedings will follow, which may result in the imposition of a financial penalty. However, even at this stage, there are effective defence mechanisms, such as an appeal or a request for a waiver.

Levy for Non-fulfilment of the Mandatory Share of Employees with Disabilities

This is one of the most common and financially significant penalties.

• System valid for 2024: For each "missing" person with a disability, the employer is obliged to pay to the state budget an amount equal to 2.5 times the average wage in the national economy for the 1st to 3rd quarters of the given year. For calculations for 2024, this average wage is CZK 45,107, so the levy per person is CZK 112,767.50.

• Fundamental change from 2025: An amendment to the Employment Act introduces a completely new, tiered system of levies designed to incentivise the direct employment of persons with disabilities. The amount of the levy will now depend on how much of the mandatory share the company fulfils through direct employment. Limits on substitute performance (restricting the purchase of products/services from related parties) are also being introduced.

Penalties and the Possibility of Their Waiver

The term "penalty" most often refers to sanctions for late payment of levies. The basic condition for submitting a request for a penalty waiver is that the amount due (the principal) must be fully paid. Although there is no legal entitlement to a waiver, a correctly formulated and justified request can significantly increase the chance of success. 

The Highest Form of Defence: "Mitigation of Hardship of the Law"

This instrument is particularly crucial for employers of persons with disabilities. The law requires an employer to be debt-free to receive a contribution. Even a small underpayment can lead to the loss of entitlement to contributions worth hundreds of thousands of crowns. For these cases, the law allows the Ministry of Labour and Social Affairs (MPSV) to waive the condition of being debt-free. 

However, the practice of the MPSV is often unpredictable, which opens up space for sophisticated legal argumentation. Resolving these issues is a key part of our specialisation in labour law. You can find more about this service on our website.

Conclusion: Turn a Regulatory Challenge into a Demonstration of Your Company's Resilience

Interacting with the Labour Office is not a lost battle, but a test of your company's administrative and strategic prowess. With an expert partner by your side, it is a test you can pass with confidence.

The ARROWS law firm is ready to provide you with comprehensive legal services:

• we will analyse the inspection report,

• we will prepare and file objections based on precise legal argumentation,

• we will draft requests for penalty waivers or mitigation of hardship of the law,

• we will represent you throughout the administrative proceedings and in court.

Our experience from long-term cooperation with more than 150 joint-stock companies, 250 limited liability companies, and 51 municipalities and regions allows us to provide services quickly and at the highest quality. We pride ourselves on building relationships and are happy to connect our clients if we see interesting business opportunities.

The actions of the Labour Office are not the only risk an employer may face in this area. If you need to know how a Labour Inspectorate inspection is conducted in cases of suspected illegal employment, what documents inspectors may request, and what the consequences of an inspection may be, a separate guide follows on this topic.