Czech Labour Inspections 2026: Compliant Pay, Bonuses and Transparency

Labour inspections are no longer merely a theoretical threat in the Czech Republic: in the past year alone, the State Labour Inspection Office carried out tens of thousands of inspections and imposed fines totalling hundreds of millions of Czech crowns. Employee remuneration and the design of bonus schemes are among the key enforcement priorities, so you need to know how to set up your system in compliance with the 2026 Czech legislation to avoid sanctions, allegations of discrimination, and litigation in Czech courts.

Quick summary

• Inspectors focus on pay and equal treatment – most often, they find errors in unpaid overtime, incorrect calculation of average earnings, and discriminatory wage setting.
• KPIs and bonuses must have clear rules – the system must strictly distinguish between an entitlement-based and a discretionary component of pay, because vague conditions can make a bonus legally enforceable under Czech law.
• Pay transparency is now a reality – the implementation has introduced a ban on pay confidentiality clauses and an obligation to disclose the salary range already in job advertisements in the Czech Republic.
• The end of guaranteed wage levels in the private sector – for businesses, only the minimum wage now applies, and the system of guaranteed wage levels has been abolished (however, in the public sector the guaranteed salary system remains in place).
• Inspections are thorough – inspectors cross-check data with the Czech Social Security Administration (ČSSZ) and the Financial Administration, reviewing contracts, payslips, working time records, and actual presence at the workplace.

What lies behind the simple word “remuneration”

In practice, we often encounter the idea that remuneration is straightforward: the employer sets an amount, writes it into the contract, and pays it. However, the reality under Czech law is more complex. When labour inspectors arrive, they are not only interested in whether you pay wages, but whether you comply with all the rules of the Labour Code and related regulations.

The Labour Code regulates not only the minimum wage, but also a range of mandatory supplements, such as overtime pay, night work pay, or weekend work pay. Each component has its own calculation rules (often based on average earnings rather than base salary) and links to tax and social security contribution obligations in the Czech Republic.

Inspectors go straight to the point because they know where companies most often make mistakes. The legal team at ARROWS advokátní kancelář deals with these issues daily and helps clients set up a system that will stand up to scrutiny under Czech legislation.

How the approach to pay inspections has changed

In the past, inspections focused on whether employers paid at least the minimum wage and whether they had signed contracts. Today, the approach is more sophisticated. Inspectors focus on equal pay, disguised agency employment, and the so-called “švarcsystém” (misclassification of employees as self-employed contractors) in the Czech Republic.

Authorities share information, so if you report suspiciously low wages for certain professions, the system may flag you for an inspection. The SÚIP priorities for 2026 include checking compliance with the new legislation on pay transparency and the correct calculation of wage supplements.

Reports often come from employees themselves, whether current or former. With strengthened whistleblower protection, employees are less afraid to report irregularities.

Minimum wage and the end of guaranteed wage levels for companies

For 2026, the indexation mechanism for the minimum wage has been fully stabilised; it is now calculated automatically based on the forecast of the average gross wage in the national economy. The current minimum wage is CZK 22,400 per month.

Businesses therefore no longer need to follow the complex system of 8 job groups, because for the private sector the only statutory limit under Czech law is the minimum wage. Wage levels above this limit are determined by the market or a collective bargaining agreement.

Important: In the public sector (state administration and local government), the guaranteed salary system continues to apply. Employees are classified into groups according to job complexity, and their salary must not fall below the prescribed limits.

Incorrect classification of an employee into a pay grade or failure to pay the minimum wage leads to an assessment of arrears and a significant fine.

Related questions on the minimum wage

1. Does the minimum wage also apply to agreements (DPP, DPČ)?
Yes. The hourly remuneration under such an agreement must not be lower than the minimum hourly wage. If you agree on less, the arrangement is invalid and you must pay the difference.

2. What about part-time work?
The monthly minimum wage is reduced proportionally to the working time. For a half-time position, the minimum entitlement is therefore CZK 11,200. The hourly rate remains the same.

3. Do I have to top up to the minimum wage even if the employee does not meet targets?
Yes. If an employee on piecework pay or due to lower performance does not reach the minimum wage, the employer is obliged to pay the difference.

Overtime supplements – common misconceptions

Overtime work is a frequent source of sanctions. The Labour Code provides for entitlement to the earned wage and a supplement of at least 25% of average earnings, or compensatory time off.

Many employers make mistakes in the so-called lump-sum inclusion of overtime. Overtime can be taken into account in wages only if two conditions are met:

1. It must be agreed in the contract (not merely unilaterally set out in a wage assessment).
2. It can be done only up to a limit of 150 hours per year for rank-and-file employees and up to 416 hours per year for managerial employees.

If you do not have this clause validly agreed in the contract, or if you exceed the limit, you must pay for the overtime. Inspectors consistently compare working time records (arrivals/departures, access cards) with payslips. If records are missing or fictitious, substantial fines may be imposed for breach of the record-keeping obligation, including in the area of remuneration under Czech law.

Another risk is incorrect calculation of average earnings for supplements. This is calculated from gross wages in the reference period, including paid bonuses and premiums, which increases its amount (and therefore the cost of overtime).

Related questions on overtime

1. When can I provide compensatory time off instead of the supplement?
Only by agreement with the employee. You cannot unilaterally order time off unless it has been agreed. If the employee does not take the time off within 3 months, you must pay for the overtime.

2. Who is a “managerial employee” for overtime purposes?
Someone who is authorised to assign work tasks to subordinate employees, organise, manage, and supervise their work. The job title “manager” alone is not enough; they must actually manage at least one subordinate.

KPIs and bonuses – a trap for employers

Modern remuneration systems are built on variable components such as bonuses, premiums, or KPIs. From a legal perspective under Czech legislation, it is important to distinguish between:

1. Entitlement-based component of pay: The conditions are set in advance (e.g., “for turnover above CZK 1 million, a 2% commission is due”). Once the conditions are met, the employer must pay the bonus.

2. Discretionary component of pay: Granting it depends on the employer’s decision (e.g., “the possibility of a reward for extraordinary work results”). There is no automatic entitlement to this component.

If your internal policy contains a mathematical formula for calculating KPIs, the bonus will usually become entitlement-based, even if you write “discretionary reward” in the text. The biggest mistake is when an employer believes a bonus is discretionary, but the internal policy or established practice turns it into an entitlement-based component.

The second risk is discrimination. If you pay “discretionary” bonuses only to some people, you must be able to objectively justify why. If the system disadvantages a particular group, you may face a fine for breach of equal treatment of up to CZK 1,000,000.

Correct KPI setup:

• Clarity: The criteria must be understandable and measurable.
• Objectivity: The criteria must not be discriminatory.
• Documentation: The evaluation method must be demonstrable in case of an inspection.

Pay transparency – new obligations for 2026

The transposition of the European Pay Transparency Directive fundamentally changes the rules of the game. From mid-2026, the following fully applies in the Czech Republic:

• Ban on pay confidentiality clauses: Any contractual arrangements prohibiting employees from disclosing their salary amount are invalid under Czech law.
• Advertising obligation: In recruitment, the employer must inform candidates of the starting salary or its range.
• Right to information: Employees have the right to request information on average earnings in comparable positions, broken down by gender.

Transparency will reveal hidden inequalities that previously remained under the radar, and obstructing transparency may result in significant penalties. If an inspection finds that an employer maintains unjustified differences in the remuneration of men and women (the Gender Pay Gap), corrective measures will follow.

Inspection control mechanisms – how it works

An inspector identifies themselves with an official ID and may enter the workplace at any time. They are entitled to request documents, interview employees without management present, and make records.

What inspectors most often request:

• Employment contracts and salary determinations.
• Working time records (must include the start and end of each shift).
• Payroll records and proof of payment.
• Internal policies governing remuneration.
• Documents relating to agency employment.

For obstructing an inspection and failing to cooperate, a procedural fine of up to CZK 500,000 may be imposed, repeatedly if necessary.

Our Czech legal team at ARROWS, a Prague-based law firm, recommends preparing an “inspection file” and appointing a person who will communicate with the inspectors. The presence of legal counsel during an inspection is the employer’s right and often helps prevent misunderstandings or procedural errors by inspectors.

Illegal employment and disguised agencies

In addition to wage-related issues, the State Labour Inspection Office (SÚIP) in the Czech Republic also penalises illegal work strictly. From 2024/2025, the definition of illegal work has been tightened and, in some respects, the burden of proof effectively shifts to the employer.

This conduct may result in a fine of up to CZK 10,000,000 for both parties, i.e., both the supplier and the user of the workforce. Disguised employment mediation is a situation where a company “supplies” people to another company under a commercial contract, although in reality it is effectively labour leasing.

Inspectors now work closely with the Czech Social Security Administration (ČSSZ). If they find a person at the workplace who is not registered for social security, it is an immediate issue.

Not sure what to do? Contact our employment law experts:

Mgr. Jakub Oliva, LL.M., MSc.

associate, partner

• oliva@arws.cz

JUDr. Barbora Kořenářová

associate

• korenarova@arws.cz

Most common employer mistakes in 2026

• Including overtime in salary without a valid agreement. A single sentence in a salary determination is not sufficient.
• Incorrect reduction of guaranteed pay. (Applies to the public sector).
• Fictitious working time records. The inspection compares records with PC logs, access control systems, or GPS data in company vehicles.
• Replacing an agreement to perform work (DPP) with an employment relationship. Especially for activities that recur and form the core of the business.
• Outdated internal policies. Policies do not reflect amendments to the Czech Labour Code (e.g., new rules for remote work and reimbursement of expenses).

Legislative changes: What to prepare for

In addition to the transparency requirements and the indexation of the minimum wage mentioned above, keep in mind:

• Higher contributions for agreements (DPP): The rules for insurance contribution purposes are already fully effective. Employers must report all “agreement workers” to the Czech Social Security Administration (ČSSZ).
• Earlier retirement for demanding professions: Employers in risk-category professions pay contributions .
• HR digitalisation: The Czech Labour Code allows electronic delivery for documents (including salary determinations), but only if strict conditions are met.

Conclusion

Employee remuneration in 2026 requires precision under Czech law. The combination of high fines, active inspections, and well-informed employees means the “trial-and-error” approach is too expensive.

We recommend not waiting for an announced inspection and carrying out an internal audit of contracts, bonus settings, and the accuracy of working time records.

Our attorneys in Prague at ARROWS, a Prague-based law firm, are ready to help you—from contract reviews to representation during an SÚIP inspection. We are insured for professional liability up to CZK 400 million and have an extensive team of employment law specialists.

Want certainty? Email us at office@arws.cz.

FAQ – Essential legal basics on remuneration

1. Do I have to issue a salary determination?
If the wage is not agreed directly in the employment contract or a collective agreement, you must issue the employee a written salary determination on the first day of work. Any wage change made by salary determination must be notified in advance; it cannot be changed retroactively.

2. Can I reduce wages for a breach of work discipline?
Not directly. Fines and wage deductions for breaches of duties are prohibited (with limited exceptions such as compensation for damage based on an agreement). However, you may withhold a discretionary component of pay if this is regulated in an internal policy.

3. How long should payroll records be archived?
Payroll sheets and accounting records containing data required for pension insurance purposes must be kept for 30 years. Other documents are typically kept for 3 to 10 years under the Czech Accounting Act and VAT rules.

4. What if an employee refuses to accept a payslip?
The employer is obliged to issue the payslip. Today, electronic delivery (to a secure email address or via a portal) is standard; employee consent is advisable, although the Czech Labour Code amendment has simplified this process.

5. Can a lawyer assist during an inspection?
Yes, and it is recommended. A lawyer will ensure inspectors do not exceed their powers and will formulate responses for the record so they do not harm you in any potential administrative proceedings. Contact us at office@arws.cz.

Notice: The information contained in this article is of a general informational nature only and is intended to provide basic guidance on the topic under Czech law. Although we strive for maximum accuracy, legal regulations in the Czech Republic and their interpretation evolve over time. To verify the current wording of the relevant regulations and their application to your specific situation, it is therefore necessary to contact ARROWS, a Prague-based law firm, directly (office@arws.cz). We accept no liability for any damages or complications arising from the independent use of the information in this article without our prior individual legal consultation and professional assessment. Each case requires a tailored solution, so please do not hesitate to contact us.

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