DPP vs DPČ vs Employment Contract: Choosing the Right Czech Work Arrangement

Mgr. Jan Pavlík
Mgr. Jan Pavlík
13.5.2026 | ARROWS law firm

Choosing the type of employment relationship may seem straightforward, but it involves a range of legal implications, tax obligations, and business risks that surprise many entrepreneurs. If you choose incorrectly, you may face not only unnecessary costs and complications with the authorities, but also legal disputes, substantial fines, or even the loss of an employee’s rights. In this article, we explain the differences between an Agreement to Perform Work (DPP), an Agreement on Work Activity (DPČ), and a standard employment contract, their practical implications under Czech law, and how to select the right model for your situation.

In the image, we see an expert providing a consultation on the selection of the appropriate type of employment relationship.

Why choosing the type of work arrangement is not just a matter of time

Many business owners view this choice as an administrative routine: “Whether the worker will be with us for a month or a year, I’ll just give them either a DPP or a contract.” In practice, the situation is more complex. The choice of the type of employment relationship affects:

Your financial obligations – How much the worker will cost you. Under an Agreement to Complete a Job (DPP) below a certain income threshold, no social security or health insurance contributions are paid, whereas under an employment contract they are always mandatory and represent a significant additional cost.

The worker’s rights – Whether they are entitled to paid leave, sickness benefits, compensation for workplace injuries, or protection in cases of insufficient safety. This is not only a matter of fairness, but also of your liability as an employer under Czech legislation.

Legal risks – Whether you face a fine from the Czech Labour Inspectorate, a court dispute with the employee, or even criminal liability for so-called “illegal employment”.

Tax obligations – How much tax is withheld and how, and whether you must file reports with the health insurance company and the Czech Social Security Administration.

Our Prague-based attorneys regularly handle cases where a business owner made the “simple” choice and it later turned into a legal conflict lasting months—one that could have been avoided by selecting the correct arrangement from the outset.

Agreement to Complete a Job (DPP): Definition and limits

An Agreement to Complete a Job (DPP) is the most flexible form of cooperation for one-off or short-term tasks. It is not a standard employment relationship—the employee is not part of the organisation, has fewer obligations and rights, and typically performs a specific, clearly defined task.

Main limitations of a DPP

Limit on hours worked

With one employer, you may not work more than 300 hours in a calendar year under the Czech Labour Code. This is a strict limit—once you exceed it, you may not continue working under a DPP and you must choose another type of relationship (for example, a DPČ or an employment contract).

It may happen that a worker completes 150 hours in the first month and you can see they could work longer. It won’t take long before you exceed the limit. If you continue, you risk the labour inspectorate or an insurer finding that you were trying to circumvent the law.

If you have a DPP with multiple employers, the limit is assessed separately for each. That means an employee may work 300 hours for company A and another 300 hours for company B—this is fine, because each is assessed independently.

Monthly income level and contributions

As of 1 January 2026, the threshold for mandatory health and social security contributions with one employer changed significantly. If an employee earns CZK 12,000 or more in a given month with one employer, the employer must pay social security and health insurance contributions. Up to this threshold, no contributions are paid.

This matters in practice: if a person earns CZK 11,999 per month under a DPP, no contributions are paid. Once they reach CZK 12,000, the employer’s obligations change and the employer must file reports with the Czech Social Security Administration.

Income tax

Under a DPP, a 15% personal income tax is typically withheld. This rate is flat regardless of the amount of income (the exception is income exceeding the monthly threshold for applying the 23% personal income tax rate, which for 2026 is indexed depending on the development of the average wage; however, in practice this threshold is rarely reached under a DPP).

Whether the tax is withheld as a withholding tax or an advance tax depends on whether the employee has signed the so-called “pink form” (the taxpayer’s declaration). Without it, the tax is withheld automatically and the matter is settled. With it, the employee can claim tax credits and can later reclaim over-withheld tax in their tax return.

DPP requirements: What must be included in the agreement

A DPP must be concluded in writing and must include at least:

  • The type and scope of work (what exactly the employee will do)
  • The term of the agreement (it may be for a fixed term or an indefinite term)
  • The agreed remuneration (it may be a lump sum or an hourly rate, but it must not be lower than )

Without these requirements, the agreement is considered invalid and you risk that an authority or court will not recognise it, and you will have to prove your case through evidence in court proceedings.

A common mistake: business owners sometimes conclude a DPP only orally or write it so vaguely that it is not clear what was actually supposed to be done. If a dispute then arises as to whether the worker completed the task, or if you find that you interpreted the terms differently, you have nothing to rely on.

Notice period and termination of a DPP

A DPP can be terminated in three ways:

  1. By agreement of the parties – both parties agree that it will end on a specific date
  2. By notice – given with , without stating a reason
  3. By immediate termination – in cases where this would also be possible in an employment relationship

In practice: if you want to terminate a DPP immediately, you must give notice in writing and then 15 days must pass. Once this period ends, the agreement is terminated.

Paid leave under a DPP

Since January 2024, entitlement to paid leave arises under a DPP under certain conditions. An employee is entitled to paid leave if:

  • The employment relationship lasted continuously for at least 4 weeks (28 calendar days)
  • During that time, they worked at least 80 hours

The amount of leave is calculated as a proportional part. For every 20 hours worked, roughly 1.5 hours of leave accrues (rounded up). If the employee does not take the leave, the employer must pay compensation for unused leave after the agreement ends.

A common issue here: business owners assume there is no entitlement to paid leave under a DPP, and are then surprised when an employee asserts the entitlement or when the labour inspectorate finds that they should have provided leave.

Agreement to Perform Work (DPČ): When to choose it

An Agreement to Perform Work (DPČ) differs from a DPP mainly in the scope and duration of the cooperation. While a DPP is suitable for significantly limited hour volumes (300 hours per year), a DPČ is intended for work averaging up to half of the weekly working hours, typically 20 hours per week.

Limit for a DPČ

Work under a DPČ must not, on average, exceed half of the standard weekly working time, i.e., a maximum of 20 hours per week. This average is calculated over the period for which the agreement is concluded, but for no more than 52 weeks.

This means that, in theory, you can work 40 hours in one week if you work fewer hours in the following weeks, but the average weekly hours must remain below 20 hours.

Contributions under a DPČ

For a DPČ, insurance contributions are payable already from a monthly income of CZK 4,500 (this threshold remains the same in 2026 as well, unlike a DPP) – this is a significantly lower threshold than for a DPP, which means the employer’s obligation to pay insurance contributions arises earlier.

In practice: if an employee under a DPČ earns CZK 4,500 per month, participation in social security and health insurance arises automatically and the employer must pay the relevant contributions (the employer pays 24.8% for social security and 9% for health insurance from the employee’s assessment base; the employee then pays 6.5% for social security and 4.5% for health insurance from their gross remuneration).

Practical differences between a DPP and a DPČ

Both agreements are similar in that they are concluded in writing, can be terminated without stating a reason with 15 days’ notice, and both are subject to 15% tax. But they differ in important points:

Element

DPP

DPČ

Hours limit

300 hours per year with one employer

20 hours per week (on average)

Contributions threshold

CZK 12,000 per month

CZK 4,500 per month

Suitable for

Short-term projects, one-off tasks

Regular part-time work, longer-term cooperation

Risk of exceeding limits

You cannot work more than 300 hours per year

You must monitor the weekly average

Attorneys from our Prague-based law firm often see situations where an entrepreneur chooses a DPP even though a DPČ would be more suitable (or vice versa), and then halfway through the year it turns out that the limit has been exceeded. The matter then has to be dealt with urgently by concluding a new employment contract, which is administratively complicated and may lead to a dispute.

Standard employment contract: Full protection and higher responsibility

An employment contract is the traditional and most comprehensive form of an employment relationship. The employee becomes part of your team, has a stable position, and is protected by employment laws under Czech legislation. This means higher costs for the employer, but also greater certainty of the legal framework and a lower risk of disputes.

Mandatory elements of an employment contract

An employment contract must include at least:

  • Type of work
  • Place or places of work
  • Start date

It is also advisable to include:

  • Annual leave entitlement (if higher than the statutory minimum)
  • Method of remuneration and the amount of salary
  • Duration of employment (for a fixed term)
  • Probationary period

Minimum wage and its increase in 2026

As of 1 January 2026, the minimum wage increased to CZK 22,400 per month (or CZK 134.40 per hour for a 40-hour week). This increase of CZK 1,600 is part of an indexation mechanism that ensures wages are adjusted automatically.

In practice: if you have employees on the minimum wage, you must increase their pay to the new level. If you do not, the employee may enforce the claim in court, and you may be ordered to pay the outstanding amount including interest and court fees.

Probationary period

Under an employment contract, a probationary period may be agreed, allowing both parties to verify whether the arrangement suits them. A standard probationary period lasts 3 months, but it may be up to 4 months for regular employees and up to 8 months for managerial employees.

Important: the probationary period must be agreed no later than on the day the employment relationship arises; otherwise, it is invalid. During the probationary period, either party may terminate the employment relationship without stating a reason and without a notice period.

Social security and health insurance

Under an employment contract, insurance contributions are always payable, regardless of the salary amount. The employer must pay:

  •  (31.3% of the employee’s gross salary in total, with the employee paying 6.5% and the employer 24.8%)
  •  (13.5% in total, with the employee paying 4.5% and the employer 9.0%)

This is a significantly higher cost than with a DPP or DPČ, where below a certain income threshold no contributions are paid at all.

Notice period and termination

An employment contract may be terminated:

 – without notice

 – usually with a two-month notice period (or a longer period as agreed)

 – only in serious cases (e.g., theft, repeated breaches of obligations without remedy)

The notice period is generally 2 months from delivery of the notice of termination, but it can be extended by agreement. During the notice period, the employee must continue working and receiving salary.

Most common questions

1. How do I know that I chose the wrong type of cooperation?

Typical signs: The employee works regularly and long-term but does not have an employment contract. You exceed the hours limit under a DPP (300 hours). The employee complains that they do not receive annual leave or sick pay. The Labour Inspectorate (State Labour Inspection Office in the Czech Republic) points out that you have misclassified the arrangement. The insurance company reports that the notification of participation in insurance is missing.

2. Can I change the type of cooperation during the year?

Yes, but you must do it correctly. Ideally, by a new document and by agreeing everything with the employee. Attorneys from our Prague-based law firm can help you make a smooth, non-contentious change to prevent disputes.

3. What happens if an employee works more than 300 hours under a DPP?

The employer is in breach of the law. If the Labour Inspectorate or an insurance company discovers this, the employer may face a fine. In addition, the employee may claim entitlement to an employment contract retroactively, which means paying the difference in social security contributions and other rights.

Who can you contact?

Practical risks and failures in practice

The reality of doing business is that many entrepreneurs do not choose between a DPP and an employment contract based on substance, but rather “ad hoc” depending on the particular person or situation. This leads to typical mistakes.

Case 1: A cocktail of multiple agreements with one person

The employer hires a worker under a DPP, and then, when they see the person is a good fit, also hires them under a DPČ “to have more room”. The result: the income is aggregated (with one employer), the threshold is exceeded, and the obligation to pay insurance contributions arises. The Labour Inspectorate then finds that the employer was clearly trying to circumvent the rules to avoid employment under a contract with full rights.

Case 2: A disguised employment contract: Formally correct, substantively different

The employer concludes a DPP with the worker, which formally meets all requirements. But in substance: the worker comes in every day at a certain time, receives instructions, and has a work regime like everyone else. This is a prohibited situation – a so-called “disguised employment contract”. The Labour Inspectorate may assess it as illegal work.

Case 3: Minimum wage and hourly rate

Under a DPP or DPČ, the hourly rate must not be lower than the minimum wage. In 2026, this is CZK 134.40 per hour. If you think you can agree on less, you risk breaching the law and a dispute with the worker.

Table of practical risks

Possible issues

How our Prague-based law firm helps

Exceeding the hour limit under a DPP or DPČ – You find out that the worker has exceeded 300 hours within six months, or that they are unsure how to calculate the average under a DPČ. Retroactively, this creates an obligation for you to pay social security and health insurance contributions for past months.

We will set up proper hour monitoring, discuss with you whether it is better to switch to an employment contract, and handle communication with the insurance company to minimise penalties.

Incorrect classification of the type of engagement – the worker expects rights (holiday, sick pay) that they are not entitled to under a DPP, and a dispute may arise.

We will review the factual circumstances of the engagement, assess whether it has been classified correctly, and, if necessary, negotiate with the worker based on a legal analysis.

The Labour Inspectorate identifies a “disguised” employment contract – formally a DPP, but in practice it operates like an employment contract.

We will defend you against the inspection finding, and, if necessary, conduct negotiations with the Labour Inspectorate and argue the applicable Czech employment law framework.

Missing notification to the CSSA – you did not report a DPP or DPČ that reached the minimum income threshold.

We will help you file a late notification and negotiate possible mitigation of sanctions with the insurance company; we will ensure the worker is correctly classified for future periods.

Uncertainty around the minimum wage – it is unclear what the correct hourly rate is in 2026.

We will alert you to the new minimum wage level (CZK 22,400/month, i.e. CZK 134.40/hour), review your contracts, and ensure they comply with Czech legislation.

Decision guide: Which option is right for you?

When choosing the type of engagement, ask yourself a few questions:

Is the work one-off or short-term (less than a month)?

Answer YES → A DPP is suitable. It is the most flexible form, the quickest to sign, and does not require complex administration. A good example: one-off help with stocktaking, a one-off analysis, or a consultation from an external expert.

Will the worker be with you long-term and work an average of 20 hours per week?

Answer YES → A DPČ may be suitable. It is intended for regular but limited cooperation. Examples: an external HR specialist on a half-time basis, a consultant coming in 2 days a week, an assistant on a part-time basis.

Will the worker be part of your team, work more than 20 hours per week, or do you want a stable relationship with a clear framework?

Answer YES → An employment contract is the right choice. It involves more administration and higher costs, but you have clarity on rights and obligations and protection against disputes. Examples: an in-office sales representative, an accountant, a project manager you want to keep for longer.

Do you want to retain maximum flexibility and you do not know their needs in advance?

Answer YES → A DPP is your friend. You can use it without knowing the exact scope of work, without a probationary period, and without complications. Once you see it will take longer, you can switch to a DPČ or an employment contract.

Frequently asked questions

1. Can I hire a worker under a DPP and then switch them to an employment contract during the year?

Yes, but you must do it correctly. You should agree with the worker, sign a new employment contract (with a clear start date), and formally terminate the DPP by agreement or notice. If you do not do this cleanly and a dispute arises as to when the employment relationship actually changed, court proceedings may follow. Our attorneys in Prague can help you with a smooth and legally compliant transition.

2. What are the real costs if I hire an employee under an employment contract?

Basic calculation: If you pay the employee CZK 25,000 gross, the employer additionally pays insurance contributions. Social security: 25,000 × 24.8% = CZK 6,200. Health insurance: 25,000 × 9% = CZK 2,250. Total employer cost: 25,000 + 6,200 + 2,250 = CZK 33,450 per month. Under a DPP, up to CZK 12,000 per month, nothing would be paid at all. That is a significant difference in cost.

3. What happens if the insurance company finds out that I reported a DPP, but the worker in fact works like a regular employee?

The insurance company or the Labour Inspectorate will reclassify the relationship as an employment contract retroactively. You will have to pay contributions for all past months plus any penalties. The worker will be able to claim holiday entitlement, sick pay, and other rights. A court dispute and a long-term solution may follow. It is better to choose the correct type from the outset as a preventive measure.

4. If a worker works under a DPP for multiple companies, are their hours added together?

Hours are aggregated only with one employer. So if they work 200 hours for company A and 200 hours for company B, the 300-hour limit is not exceeded with either company separately, so everything is fine. If they had two DPPs with company A (for example, one for analysis and one for writing), both agreements are counted with the same employer and the hours are added together.

5. Am I, as the employer, responsible for occupational safety for an employee under a DPP?

Yes. Even under a DPP, you must ensure a safe working environment, train employees on safety, provide personal protective equipment, and arrange entry medical examinations where necessary. If an accident happens to the employee, you may be liable. That is why it is important for the DPP to clearly define where the work will be performed and what the risks are.

6. What if an employee under a DPP becomes ill?

An employee under a DPP usually is not entitled to sickness benefits unless they participate in sickness insurance (i.e. the minimum income threshold is met). In practice: if they fall ill, you do not have to pay them anything if there is no insurance. If they are insured (income exceeds the threshold), then they are entitled to sickness benefits. For the employee to safeguard their rights, they should know whether they are insured or not. Our attorneys in Prague can help you with clear contracts and proper information.

Changes in 2026: What you need to know

As of 1 January 2026, important changes took effect that many entrepreneurs have not registered:

New threshold for contributions under a DPP: CZK 12,000 instead of CZK 11,500

From 1 January 2026, the income threshold with one employer from which social security and health insurance contributions are paid increased from CZK 11,500 to CZK 12,000 per month. This means that employees who earn up to CZK 11,999 still do not pay contributions. Once they reach CZK 12,000, the change applies.

Practical implications: If you have an employee engaged under a DPP with income between CZK 11,500 and CZK 12,000, in 2025 they were required to pay contributions, but in 2026 they are not. This may sound like relief, but you need to know it is not refunded retroactively – contributions were paid in 2025, and they are not paid in 2026. You must update the notification to the Czech Social Security Administration (CSSA).

The minimum wage increased to CZK 22,400

The minimum hourly rate in 2026 is CZK 134.40. This affects all types of engagement – DPP, DPČ, and employment contracts. If you have an employee to whom you paid a lower hourly rate last year, you must increase it.

Cashless payment of health insurance premiums for self-payers

From 1 January 2026, self-payers (persons without taxable income who pay their own health insurance) must pay premiums only cashlessly – not by postal payment slip or in cash. This is an administrative change, but it is good to know if you have an employee who should register as a self-payer.

Most common mistakes: How to avoid them

Mistake 1: I choose a DPP only because it is the cheapest option

If the worker in fact works long-term and regularly, a DPP is not legally appropriate, even if it is financially attractive. The Labour Inspectorate or the insurance company may later assess this as a legal breach, resulting in fines and retroactive remedial measures.

Mistake 2: I will not report the DPP to the CSSA

Since July 2024, employers have been required to report all DPPs (including those below CZK 12,000) to the Czech Social Security Administration (ČSSZ). If you fail to do so, you risk an inspection and a fine.

Mistake 3: I agree on an unrealistic level of remuneration with a promise to “increase it during the year"

If you agree on CZK 11,000 per month, but then during the year say “I will pay you CZK 12,500", this must be formally recorded in an amendment to the agreement. If you do not do so and the insurance company or the inspectorate discovers it, your intention will look like you are trying to circumvent the law.

Mistake 4: I do not know the difference between a DPP and a DPČ and choose randomly

A DPP has a limit of 300 hours per year with one employer and contributions apply from CZK 12,000. A DPČ has a limit of 20 hours per week and contributions apply from CZK 4,500. If I take on a worker under a DPP when they will be working long-term, I will exceed the limit. If I use a DPČ when they will only work a few hours, I unnecessarily complicate matters due to the lower threshold for contributions.

When a business owner should contact attorneys

If you have any of the following concerns or questions, it is time to contact attorneys from a Prague-based law firm:

  • You are not sure which type of cooperation to choose for a specific worker
  • You want to switch an employee from a DPP to an employment contract and are concerned about a dispute
  • The Labour Inspectorate has pointed out a breach related to the type of cooperation
  • The insurance company or health insurance company is asking you about reporting or contributions
  • An employee is requesting compensation for unused holiday or sick leave
  • You want to verify whether your current agreements meet legal requirements
  • You have an employee working in a “grey zone" between a DPP and an employment contract

Attorneys from a Prague-based law firm can assist you with a legal analysis, drafting the correct agreement, and representation before authorities. We have experience with a thousand similar cases and know which details to watch out for so that problems do not arise later.

Final summary

Choosing the right type of employment relationship is not just administration – it is a strategic decision that affects your costs, legal risks, and relationship with the employee. A DPP (agreement to perform work) is flexible and inexpensive, but it is suitable only for short-term work up to 300 hours per year. A DPČ (agreement on work activity) is a compromise for medium-term cooperation with a limit of 20 hours per week. An employment contract is the safest option for long-term relationships, but it is more expensive and requires more administration.

Key facts for 2026: the minimum wage has increased to CZK 22,400 per month, the threshold for participation in insurance under a DPP is now CZK 12,000 with one employer (change effective from 1 January 2026), and all DPPs must be reported to the Czech Social Security Administration (ČSSZ). Choosing the wrong type of cooperation can cost you thousands of Czech crowns in fines, retroactive contributions, and court disputes.

If you are not sure which type of cooperation to choose or you want your existing agreements reviewed, contact attorneys from a Prague-based law firm. Together, we will assess the factual circumstances, consider your business needs, and prepare a legally compliant solution that protects you. Contact us and we will arrange a consultation.

FAQ

1. What is the practical definition of the difference between a DPP and a DPČ from the employer’s perspective?

You choose a DPP when you need short-term help (up to 300 hours per year with one employer) and want to minimise costs and administration. A DPČ is better when you plan regular cooperation (typically 10–20 hours per week) that will last longer. You choose an employment contract when the worker is to be part of your team and work more than a part-time schedule. In practice: it depends on how often and for how long you will need them.

2. If an employee on a DPP falls ill and cannot work for a week – do I have to pay wages?

If the employee does not participate in sickness insurance (income below CZK 12,000 per month), they are not entitled to sickness benefits and you do not have to pay anything. In practice: it is not their “full-time" job, so the level of social protection is lower. If they are insured (income exceeds the threshold), they are entitled to sickness benefits. If you are not sure how to handle this fairly and in compliance with Czech law, we can advise you.

3. Can I take on a worker first under a DPP, then under a DPČ, and then under an employment contract – gradually during the year?

Yes, in theory it is possible, but you must discuss every change with the employee and formally record it. In practice: if it looks like you are trying to “circumvent” the law by gradually moving between contract types to avoid obligations (especially insurance contributions), you risk it being viewed as an intentional breach. It is better to consult attorneys on how to do the whole process transparently and without the risk of a dispute.

4. What if halfway through the year I see that the worker will work longer than I expected – is it too late to switch from a DPP to an employment contract?

It is not too late, but you must do it correctly from a legal perspective. The best approach is to sign an amendment or a new employment contract with a clear effective date (usually from the first day of the next month) and terminate the existing DPP by mutual agreement. If you do not do this and, in a given month, you engage the worker in parallel under both agreements, the income may be aggregated and an obligation to pay insurance contributions will arise. Our Prague-based attorneys can help you with a smooth conversion without legal risk – contact us.

5. If an employee on a DPP has income aggregated from multiple agreements with one employer – how is it calculated?

If you have multiple DPPs with the same employee with one employer (e.g., one for writing texts for CZK 6,000 and one for copywriting for CZK 5,000), the income is aggregated, and if together it reaches CZK 12,000 per month, you must pay insurance contributions. Hours are also aggregated towards the 300-hour limit.

6. Do I face fines if I find out that I chose the wrong type of contract – is there still time to fix it?

As soon as you find out, you should remedy it as quickly as possible. If the matter is not yet being addressed with the employee or the insurance company, it can often be resolved without major fines. However, if the Labour Inspectorate or the insurance company comes and discovers it on its own, you may face a fine. It is better to contact attorneys who will help you remedy the situation and, if necessary, negotiate with the authorities. Contact us and we will review your situation.

Notice: The information contained in this article is of a general informational nature only and is intended for basic orientation in the matter based on the legal status as of 2026. Although we take maximum care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS, a Prague-based law firm, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS directly (office@arws.cz). We accept no liability for any damages arising from the independent use of the information in this article without prior individual legal consultation.

Read also: