Polish vs. Czech Employment Contracts:

Expanding your business into the Czech Republic offers significant opportunities, but navigating its employment law requires careful attention. As a leading Czech law firm in Prague, EU, with extensive experience assisting foreign clients, we understand that Polish and Czech legal frameworks have critical differences. This guide provides specific answers to help your company hire staff in the Czech Republic compliantly and confidently, avoiding common and costly legal pitfalls.

Do you need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "Mgr. Vojtěch Sucharda", an expert on the subject.

The Standard Employment Relationship: Pracovní Smlouva vs. Umowa o Pracę

At first glance, the Czech standard employment contract (pracovní smlouva) appears to be a direct counterpart to the Polish umowa o pracę. Both form the basis of a standard employment relationship, governed by a Labour Code that provides significant employee protections. However, assuming they are interchangeable is a frequent and expensive mistake for companies entering the Czech market. The Czech Labour Code mandates a leaner, more specific set of core requirements for a contract to be valid.

A valid Czech employment contract must be in writing and contain three essential elements: the type of work (job title), the place or places of work, and the date of commencement. While these seem straightforward, the employer has a further, separate legal duty to inform the employee in writing about other key conditions. These include details on annual leave, notice periods, weekly working hours, and salary information. This information can be included in the contract or provided in a separate document, but it must be provided.

The rules for fixed-term contracts also diverge significantly. In the Czech Republic, a fixed-term contract is limited to a maximum duration of three years and can only be renewed twice. This creates a total maximum duration of nine years with the same employer. This contrasts with the Polish system's limit of 33 months and a maximum of three contracts. A recent amendment to the Czech Labour Code introduces an important exception: the renewal limit does not apply when hiring a temporary replacement for an employee on maternity or parental leave.

Finally, while the contract does not need to be in Czech, it must be in a language the employee understands. For Polish companies hiring Polish-speaking staff or other foreign nationals, this is a key consideration. To prevent misunderstandings and ensure legal clarity, a bilingual version (e.g., Czech-Polish or Czech-English) is the recommended best practice.

FAQ – Legal tips about standard contracts

• Q: Must a Czech employment contract be in Czech?

A: No, it must be in a language the employee understands. However, for legal certainty, our law firm in Prague always recommends a bilingual Czech-Polish or Czech-English version. Need help drafting a compliant bilingual contract? Contact us at office@arws.cz.

• Q: What happens if we renew a fixed-term contract too many times?

A: If you exceed the "three times and out" rule (a maximum of two renewals), the contract automatically transforms into an open-ended one. This grants the employee full protection against dismissal and entitlement to severance pay, which can be a costly, unplanned outcome. Get tailored legal solutions by writing to office@arws.cz.

The Illusion of Flexibility: Czech DPP/DPČ vs. Polish Civil Law Contracts

Polish companies frequently use flexible civil law contracts like umowa zlecenie (contract of mandate) and umowa o dzieło (specific-task contract) for projects, freelance work, and part-time roles. It is crucial to understand that the Czech Republic has no direct legal equivalents to these. Instead, Czech law offers two specific types of agreements that exist outside a standard employment relationship but are still governed by the Labour Code: the Agreement to Complete a Job (Dohoda o provedení práce - DPP) and the Agreement to Perform Work (Dohoda o pracovní činnosti - DPČ).

The DPP is designed for short-term, specific tasks. Its use is strictly limited to a maximum of 300 hours per calendar year for a single employer. If an employee's monthly income under a DPP does not exceed a set threshold (CZK 10,000 in 2024, rising to CZK 11,500 in 2025), neither party pays social security or health insurance contributions, making it financially attractive for small tasks.

The DPČ is intended for more regular, but still limited, part-time work. Under a DPČ, an employee's work cannot exceed an average of 20 hours per week over the duration of the agreement (which can be up to 52 weeks). The income threshold for mandatory insurance contributions is much lower than for a DPP (CZK 4,000 in 2024, rising to CZK 4,500 in 2025), meaning it is suited for very low-hour, regular engagements. Recent legal changes have also granted workers on these agreements new rights, such as entitlement to paid leave and wage supplements for holiday or weekend work, bringing them closer to standard employment.

Misusing Flexible Work Agreements in the Czech Republic

Risks and Penalties	How ARROWS Helps
Exceeding the 300-hour annual limit on a DPP contract. This can lead to the agreement being reclassified as a full employment relationship, requiring back-payment of social security and taxes.	Legal Analysis: We assess your staffing needs to determine the correct type of agreement (DPP, DPČ, or full employment). Want to understand your legal options? Email us at office@arws.cz.
Incorrectly calculating the 20-hour weekly average on a DPČ. This is a common error that can invalidate the contract and trigger inspections from the Labour Office.	Contract Drafting: We draft legally sound DPP and DPČ agreements that clearly define the scope and limits of work.
Failing to pay social/health insurance when income exceeds the monthly threshold. This results in financial penalties and interest charges from state authorities.	Legal Consultations: We provide ongoing advice to ensure you remain compliant with changing income thresholds and regulations. For immediate assistance, write to us at office@arws.cz.
Treating a DPP/DPČ worker as a full employee (e.g., demanding exclusive service). This is a key indicator of disguised employment, leading to significant fines.	Preparation of Internal Policies: We help you establish clear guidelines for managers on how to interact with contract workers to avoid misclassification. Get tailored legal solutions by writing to office@arws.cz.

The "Švarc System": Avoiding the Multi-Million CZK Fine

One of the most severe compliance risks for foreign companies in the Czech Republic is the prohibition of the so-called Švarc systém. This is the illegal practice of engaging individuals as independent contractors (i.e., self-employed individuals with a trade license, or živnostenský list) when the nature of their work constitutes "dependent work" that legally requires an employment contract. This is done to avoid paying social security, health insurance, and other employer-related costs.

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This issue is particularly relevant for Polish companies, where using B2B contracts with self-employed individuals is a common and legitimate business practice, especially in sectors like IT. However, applying this model in the Czech Republic is extremely dangerous. Czech labor inspectorates are highly vigilant in identifying disguised employment. They assess the actual nature of the working relationship, not just the title of the contract.

The key signs of "dependent work" that authorities look for include a relationship of superiority and subordination, work performed personally by the individual according to the employer's instructions, in the employer's name, using the employer's tools and resources, and at the employer's expense and risk. If these characteristics are present, a B2B contract is illegal. The penalties are severe: fines can reach up to CZK 10,000,000 (approximately EUR 400,000) for the company, with potential criminal liability for management in serious cases.

Avoiding the Švarc systém is more than a legal formality; it is an operational challenge that affects your management culture. A Polish manager accustomed to giving direct instructions to B2B contractors could, through their daily interactions, inadvertently create a subordinate relationship that Czech authorities would deem illegal employment.

At ARROWS, an international law firm operating from Prague, European Union, we provide Professional training for employees or management to ensure your entire team understands these critical boundaries. Protect your business by emailing us at office@arws.cz.

Navigating Key Employment Stages: Probation and Termination

The initial and final stages of employment—the probationary period and termination—are governed by rules that differ significantly between the Czech Republic and Poland. A misunderstanding of these rules can lead to invalid contracts and wrongful dismissal claims.

In the Czech Republic, a probationary period (zkušební doba) must be agreed upon in writing no later than the employee's first day of work to be valid. Recent legislative changes (the "flexi-amendment") extended the maximum duration to four months for regular employees and eight months for managerial staff. This contrasts with the Polish system, where the probation length (1, 2, or 3 months) is directly linked to the intended duration of the subsequent fixed-term contract.

Termination is one of the most strictly regulated areas of Czech labour law. An employer can only terminate an employee for a limited number of statutory reasons explicitly listed in the Labour Code. These reasons fall into clear categories: organizational changes (e.g., redundancy, relocation), health reasons, failure to meet job requirements or poor performance, and breach of duties. There is no concept of "at-will" employment.

Furthermore, terminating an employee for poor performance or minor breaches of duty requires a strict, documented process. The employer must first issue a formal written warning detailing the shortcomings and giving the employee a reasonable chance to improve. This warning is a prerequisite for any subsequent termination notice. 

The standard notice period is two months, but the 2025 amendment introduces a shorter one-month notice period for terminations related to disciplinary issues or failure to meet job requirements. Critically, the notice period now begins on the day of delivery, not on the first day of the following month, accelerating the timeline.

FAQ – Legal tips about probation and termination

• Q: Can we extend a probationary period in the Czech Republic?

A: Yes, the 2025 amendment allows for an extension, but only up to the statutory maximum of four or eight months. This extension must be agreed upon in writing before the original period expires. Our lawyers are ready to assist you – email us at office@arws.cz.

• Q: What is the most common mistake in employee dismissals?

A: Failing to properly document the legal reason for termination. Czech courts scrutinize the employer's justification, and using a reason not listed in the Labour Code will lead to a wrongful dismissal claim. For immediate assistance, write to us at office@arws.cz.

Critical Errors in Employee Termination

Risks and Penalties	How ARROWS Helps
Wrongful dismissal lawsuit. Using a reason not listed in the Labour Code will lead to the termination being declared invalid by a court, forcing you to pay wage compensation.	Representation in Court: Our experienced litigators defend your interests in employment disputes. Need legal representation? Write to office@arws.cz.
Procedurally flawed termination notice. Failure to issue prior written warnings for poor performance or minor misconduct renders the dismissal invalid.	Drafting Legally Required Documentation: We prepare termination notices and warning letters that meet all statutory requirements.
Dismissing an employee in a "protected period" (e.g., pregnancy, sick leave). This is strictly prohibited and leads to automatic invalidity of the termination.	Legal Opinions: We provide clear legal opinions on the validity and risks of a planned dismissal before you take action.
Disputes over severance pay. Incorrect calculation or failure to pay statutory severance for organizational-reason dismissals leads to financial claims and penalties.	Legal Consultations: We ensure your termination process, including severance calculations, is fully compliant with the law. Get tailored legal solutions by writing to office@arws.cz.

Your Core Duties as an Employer in the Czech Republic

Beyond contract types and termination rules, Polish companies must adhere to a set of core, non-negotiable employer obligations under the Czech Labour Code. Failure to comply with these day-to-day duties can result in significant financial penalties during a labour inspection.

The standard work week is set at 40 hours. Any work performed beyond this is considered overtime and is strictly regulated. An employer can only order up to 150 hours of overtime per calendar year. Additional overtime, up to a total of approximately 416 hours per year, is possible but requires the employee's explicit consent. Overtime work must be compensated with a premium of at least 25% of the employee's average earnings or, by agreement, with compensatory time off.

Regarding paid leave, employees are entitled to a statutory minimum of four weeks (20 working days) of paid vacation per year. However, it is important for Polish companies to know that the market standard in the Czech Republic is five weeks of paid leave. Offering this additional week is often essential for attracting and retaining qualified talent.

A critical administrative duty often overlooked by foreign companies is the obligation to report the employment of any foreign national—including Polish citizens—to the relevant regional branch of the Czech Labour Office. This notification must be made no later than the employee's first day of work. 

A new regulation, effective October 2025, will tighten this deadline, requiring notification at least one day prior to the employment start date. Finally, employers must keep accurate, detailed records of all working hours, overtime, and breaks for each employee. Labour inspectorates frequently audit these records, and failure to maintain them can result in fines of up to CZK 400,000.

Penalties for Non-Compliance with Employer Duties

Risks and Penalties	How ARROWS Helps
Fines up to CZK 100,000 for late or non-reporting of a foreign employee to the Labour Office. This is a common and easily avoidable penalty.	Help with Regulatory Approvals: We handle all necessary notifications to the Labour Office, ensuring your hiring process is compliant from day one. Our lawyers are ready to assist you – email us at office@arws.cz.
Fines up to CZK 400,000 for improper record-keeping of working hours. Labour inspections frequently check these records.	Preparation of Internal Company Policies: We draft clear, compliant internal policies for time tracking, overtime, and breaks. Get tailored legal solutions by writing to office@arws.cz.
Employee claims for unpaid overtime premiums. Failure to pay the statutory 25% premium (or provide time in lieu) can lead to costly back-payment claims.	Contract Review: We review your employment contracts to ensure clauses on overtime and remuneration are legally sound.
Disputes over annual leave entitlement. Miscalculating leave entitlement, especially for part-time staff or those starting mid-year, can lead to employee disputes and financial liability.	Legal Consultations: We provide clear guidance on calculating all employee entitlements to prevent disputes. For immediate assistance, write to us at office@arws.cz.

Your Strategic Partner in Prague: Securing Your Czech Operations

The legal differences between Polish and Czech employment law—from contract structures and the high-risk Švarc systém to strict termination rules—present manageable challenges, but only with expert local guidance. Attempting to navigate this landscape with assumptions based on the Polish system is a direct path to fines, litigation, and operational disruption.

ARROWS is the premier legal partner for Polish companies expanding into the Czech Republic. We combine deep knowledge of Czech law with a practical understanding of the specific challenges that foreign businesses encounter. Through our ARROWS International network, built over 10 years and operating in 90 countries, we are equipped to handle the most complex cross-border employment matters.

From our headquarters in Prague, the safe European harbour for your business, ARROWS provides comprehensive legal support. Our firm supports over 150 joint-stock companies and 250 limited liability companies, giving us unparalleled insight into the needs of businesses like yours. We can provide:

• Drafting and reviewing all types of Czech employment contracts and agreements.
• Providing legal opinions on worker classification to avoid Švarc systém risks.
• Preparing compliant internal policies for HR management.
• Representing your company before Czech Labour Offices and in court.
• Delivering professional training for your Czech-based management team.

Don't let legal complexities hinder your expansion into the Czech Republic. Secure your investment and ensure a smooth start. Contact our expert team today at office@arws.cz for a preliminary consultation.

FAQ – Most common legal questions about hiring in the Czech Republic

1. What is the biggest legal mistake Polish companies make when hiring in the Czech Republic?

A: Assuming Czech and Polish employment laws are similar. The most dangerous mistake is using B2B-style contracts for dependent work, which is illegal (Švarc systém) and carries massive fines up to CZK 10,000,000. To ensure your hiring model is compliant, get a legal review by writing to office@arws.cz.

2. Can I hire someone on a flexible contract like an umowa zlecenie?

A: No. The Czech Republic has its own "agreements" (DPP and DPČ) with strict hourly and income limits. They are not direct equivalents to Polish civil law contracts and must be used correctly to avoid legal trouble. 

3. How difficult is it to terminate an employee in the Czech Republic?

A: It is more difficult than in many jurisdictions. You must have a legally valid reason from a closed list in the Labour Code and follow a strict procedure, often including prior written warnings. For guidance on a compliant termination process, email our lawyers at office@arws.cz.

4. What is the minimum paid vacation I must provide?

A: The statutory minimum is four weeks per year. However, the market standard in the Czech Republic is five weeks, and offering this is crucial for attracting qualified employees. For more insights into local employment practices, do not hesitate to contact our firm – office@arws.cz.

5. Do I need to report my Polish employees to the Czech authorities?

A: Yes. You must notify the local Czech Labour Office of any EU citizen you employ, no later than their first day of work. Failure to do so results in fines up to CZK 100,000. Let us handle the paperwork for you; get in touch at office@arws.cz.

6. What are the standard working hours and overtime rules?

A: The standard work week is 40 hours. Overtime is strictly regulated and must be paid at a premium of at least 25% of the employee's average earnings, or compensated with time off. To ensure your payroll is compliant, get tailored legal solutions by writing to office@arws.cz.

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