Managing Director and Employee Concurrency in Czech Law: Risks and Setup 2026

18.3.2026 | ARROWS law firm

The concurrent holding of roles where a managing director is also an employee exposes companies to significant legal and tax risks under Czech law. An improperly structured agreement may result in additional tax assessments, penalties from the Czech Social Security Administration (OSSZ), or even the invalidity of the entire contract. In this article, we explain the differences between true and false concurrency and advise how to set up the contractual framework so that it can safely withstand inspections by the authorities in the Czech Republic in 2026.

The photograph shows a specialist consulting on the concurrent holding of the positions of managing director and employee.

Article contents

What is and is not a concurrent holding of positions
Legal framework for remuneration of a statutory body member and an employee under Czech law
How to structure a management agreement correctly
Final summary

Key takeaways

The concurrent holding of an employment relationship and a statutory body position is a legally complex concept under Czech law.
The agreement must be correctly classified and approved; otherwise, it may be invalid, or the office may be deemed to be performed free of charge.
For a statutory body member, an employment contract covering activities that fall within the company’s business management is risky.
The Czech tax authorities and the Czech Social Security Administration (OSSZ) review correct taxation and social security contributions from both types of income.
Without a written office-holding agreement approved by the company’s supreme body, the performance of the office is considered unpaid.

What is and is not a concurrent holding of positions

The term “concurrent holding of positions” refers to a situation where one natural person serves as a member of a statutory body and, at the same time, has an employment relationship with the same company. In Czech legal practice, we distinguish two types that must be kept strictly separate.

A “false” concurrency occurs when a managing director performs work for the company under an employment contract that does not fall within the statutory body’s scope, for example as an IT specialist. There is no issue here because the two activities have different content and are governed by different legal regimes under Czech law. One is governed by an office-holding agreement, the other by a standard employment contract.

A “true” concurrency means that, in addition to an office-holding agreement, the managing director has an employment contract for activities that in fact fall within the company’s business management. This typically includes positions such as CEO or Commercial Director. Here, the activities overlap and legal risk arises.

A turning point came with a ruling of the Czech Constitutional Court, which stated that Czech legislation does not explicitly prohibit concurrent holding of positions. Subsequent case law of the Czech Supreme Court clarified the rules, concluding that an employment contract for performing statutory body activities is invalid; however, the parties may agree to apply the Czech Labour Code regime contractually.

For your company, this means concurrency is possible, but an employment contract appointing a managing director as CEO is highly risky in the Czech Republic. A safer route is a comprehensive office-holding agreement, which may include employee-like benefits, but must be approved by the general meeting.

Legal framework for remuneration of a statutory body member and an employee

The relationship between a company and a member of its elected body is governed by the Business Corporations Act (ZOK) and, subsidiarily, by the Czech Civil Code. It is not primarily governed by the Czech Labour Code, which has major implications for liability and benefits.

An office-holding agreement for a statutory body member must be in writing and approved by the company’s supreme body. If no remuneration is agreed, the performance of the office is unpaid. Liability for damage is strict: the body member must act with due managerial care, and is liable for damage with all of their assets under Czech law.

By contrast, an employee’s employment contract is governed by the Czech Labour Code. An employee is liable for negligent damage only up to 4.5 times their average monthly earnings and has statutory entitlements such as paid leave or severance pay.

If a managing director also has an employment contract, it is necessary to strictly separate both legal titles. If they overlap, the Czech tax authority or a Czech court may deem the employment contract invalid and reclassify remuneration paid on its basis.

Incorrectly separated remuneration and contributions

A common mistake is a situation where a managing director receives a salary of CZK 50,000 and remuneration for holding office of CZK 10,000. Accounting software sometimes processes these amounts incorrectly, or contributions are not withheld from the correct base.

The risks are that if the employment relationship is found invalid, social security contributions may be recalculated and penalties assessed by the OSSZ. At the same time, the Czech tax authority may challenge the tax deductibility of wage costs in the case of a fictitious employment relationship.

The attorneys at ARROWS, a Prague-based law firm, will prepare the agreements so they stand as two separate relationships, or recommend consolidation into a single management office-holding agreement. For tax purposes in the Czech Republic, the income is aggregated, but the legal basis must be flawless.

Missing approval or invalid form

A fundamental error occurs when the managing director and the company sign an agreement but it is not approved by the general meeting. Without approval by the general meeting, the remuneration provisions do not become effective and the performance of the office is deemed unpaid.

Remuneration paid then constitutes unjust enrichment of the managing director, which must be repaid. If the sole shareholder is also the managing director, an agreement between them and the company must be in writing and the signatures must be officially certified.

The attorneys at ARROWS, a Prague-based law firm, will ensure the preparation of the general meeting resolution and all documentation so that remuneration is legally enforceable under Czech law. Proper documentation form is key for tax certainty.

How to structure a management agreement correctly

If you want to set up the relationship with a managing director (jednatel) safely in the Czech Republic, follow these proven steps.

Instead of the risky overlap of two contracts, in 2026 the safest option is a management agreement for performance of office. It is concluded under the Czech Business Corporations Act (ZOK), but includes an arrangement that, for matters such as vacation or benefits, relevant provisions of the Czech Labour Code will be applied appropriately.
Every agreement with a managing director (jednatel), and every amendment to it, must be approved by the general meeting and evidenced by minutes.
If you insist on an employment contract alongside the office of managing director, the job description must be strictly separated.
Ensure that payroll correctly aggregates the assessment bases for social security and health insurance contributions and income tax.

Preparing for an audit by the tax authority or the OSSZ

When preparing for an audit, it is essential to have the originals of the agreements on performance of office available, including proof of approval by the general meeting. The actual performance of activities must correspond to the description in the agreement, and contributions must be calculated from all income of the statutory officer.

The Czech legal team at ARROWS, a Prague-based law firm, can prepare a preventive audit in which we review your agreements through the lens of an inspector and propose adjustments. This approach identifies weak points before an actual authority audit takes place.

Final summary

The overlap of roles and remuneration of statutory officers is an area under close scrutiny by authorities in the Czech Republic. An employment contract for a “director” role for a managing director (jednatel) is risky, so a comprehensive agreement on performance of office is safer. Without approval by the general meeting, there is no entitlement to payment and performance of office is unpaid by operation of law.

If you are addressing how to structure relationships within company management, do not hesitate to contact office@arws.cz. A properly structured agreement is the cheapest insurance against future disputes.

FAQ – Most common legal questions on overlapping roles and remuneration of statutory officers

1. Is my managing director (jednatel) entitled to remuneration even if the general meeting approved the agreement on performance of office only a year after they started?
The entitlement arises only once the agreement becomes effective, which is tied to approval. If the general meeting expressly approves remuneration retroactively and the company is not in insolvency, the situation can be remedied. Without this step, the period before approval is considered unpaid performance of office.

2. I am a managing director (jednatel) of an s.r.o. and I also work there as head of sales – do I have to enter into a management agreement?
If the job description of head of sales differs from the company’s commercial management, you may have an employment contract (“false concurrency”). If the activities overlap, it is safer to include everything in the agreement on performance of office.

3. Does anything different apply to members of the supervisory board or the board of directors in a joint-stock company (a.s.)?
The basic principles of the Czech Business Corporations Act (ZOK) apply similarly. In an a.s., agreements on performance of office are typically approved by the general meeting unless the articles of association grant this power to the supervisory board. In the monistic system of an a.s., the agreements are approved by the administrative board.

4. What impact does the overlap have on personal assets in the event of insolvency?
As a statutory officer, you are liable for damages without limitation. If an incorrectly structured overlap led to additional tax assessments that harm the company, you are liable for that damage as the managing director (jednatel).

5. Can we “agree” with the tax authority that we will not deal with it if the error was only technical?
The tax administrator is bound by the principle of legality, and if it identifies an error affecting the tax liability, it must act. Prevention or timely filing of an additional tax return is more effective.

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 advokátní kancelář, 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 advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from independent use of the information in this article without prior individual legal consultation.

Read also:

Potential issues	How ARROWS can help (office@arws.cz)
Invalid employment contract: A court or authority reclassifies the employment contract as performance of office, which was not approved – an obligation arises to repay the remuneration.	ARROWS’ Prague-based attorneys will review the concurrent roles and set up either a safe “false concurrency”, or a robust agreement on performance of office with elements of employee benefits.
Missing approval by the general meeting: Performance of office becomes unpaid by operation of law under Czech legislation. There is a risk of additional tax assessment for the company.	We will ensure a formally correct resolution of the general meeting, or, where appropriate, a “remedy” process in line with current Czech case law.
Tax authority audit: Challenging the factual existence of an employment relationship for a managing director (jednatel).	We will represent you during a tax audit and prepare arguments to defend the tax deductibility of the costs.
Personal liability: The managing director (jednatel) is liable with all personal assets, even though they believed they were protected as an employee.	We will structure the agreement on performance of office so that it includes directors’ and officers’ liability insurance (D&O) and limits risks where Czech law allows.