Actual Legislative Changes Having Impact on Payroll Process in 2020

Minimum Salary, Maximum Base for Social Insurance
Effective from January 1, 2020, the minimum salary has been increased from CZK 13,350 to CZK 14,600. The amount of the minimum hourly salary has been increased from CZK 79.80 to CZK 87.30.

The 2020 maximum annual base for the social insurance and subsequently also the 2020 annual solidarity tax limit is CZK 1,672,080. Monthly limit for the solidarity tax deduction obligation is CZK 139,340.

Social Security Legislation Changes

The main legislative change valid from January 1, 2020, is the obligatory use of electronic sick notes (e-sick notes).

The main purpose of their use shall be simplification of administrative for doctors, employers and employees and faster access to the information about sickness of the employees without a need of personal submission of the paper documents by the employee. There are certain concerns about the implementation of the full process as the testing was originally planned for 2019 and finally there was no possibility to try the new in full extent. Therefore, the following days will show whether the process brings the promised simplification or not.

The paper sick notes will still remain to exist in limited extent, especially for sick notes issued before the implementation date or as a back-up in case of the electronic system failure.

As a result of e-sick notes use, the employer will not accept any documents from the employees for the purposes of sickness compensation payment. However, the employee is still obliged to inform the employer about his/her sickness (e.g. by e-mail or telephone). Further, the employer can access and download the data from the Social Security Authority e-portal. It is possible to set-up the notifications from this portal to the employer data-box or e-mail of the authorized person.

The access to the e-portal is possible either by the employer using the company data-box access or the employer can authorise any individual. The authorised person can enter the system using one of the following methods:

• Login using the personal data-box login details,
• Electronic ID,
• “NIA” user account (instructions how to set-up and use are available at https://info.eidentita.cz/portal/)

After 14 days of sickness, the employer is obliged to submit to the Social Security Authority an Annex to the application for sickness compensation. The submission is now possible electronically only. Paper form is acceptable only in case of technical failure. The employer shall newly fill in the Annex also with information about the way how the salary is being sent to the employee. The sickness compensation will be sent in the same way. In case the employee prefers another way of sickness compensation payment, he/she can apply for this change at the Social Security Authority in the written form. At the end of sickness, the employer shall electronically send a notification containing the data which Social Security Authority needs for payment, especially the information about a date when the employee returned to work after sickness or whether employee was working during the sickness period. This document shall replace the back side or paper sick notes used originally.

In order to correctly issue the e-sick note by the doctor, the employee must be properly registered with the Social Security Authority. The doctor should be then able, when entering the employee birth number, find out the employer data. However, there may arise certain technical problems, e.g. in case the employer is a foreigner without a birth number or in case the employee got sick immediately after his job commencement, that the registration has not been processed yet. For that reason, the employee should know, the full employer name and ID number, when visiting a doctor. This should prevent the mistakes when issuing the e-sick note and speed-up the actual processing and payment the compensation to the employee.

The e-sick notes are currently set-up for sickness only. Other compensations such as, family member care, long-term family member care, maternity leave contribution, father leave compensation or quarantine, are being processed in the paper way without any changes.

Parental Contribution Increase

From 2020 the parental contribution, which the families can claim until their child reaches the age of 4 years, from CZK 220,000 to CZK 300,000, respectively from CZK 330,000 to CZK 450,000 (in case more children are born), shall be increased.

The new contribution amount is applicable for all whose child is born in 2020 and for those who have been already withdrawing the parental contribution in previous years, however continue at the beginning of 2020. On the other side, the families who have a child under the age of four, however fully withdrawn the parental contributions before the year 2020, are not entitled to the increased amount.

There is no need to apply for this increase. The total amount will be automatically increased to all families which fulfil the criteria. These families will be informed by a letter from the Employment Office.

Labour Code Amendment valid from 2021

In December 2019, the government approved the proposal of the Labour Code amendment. It shall be further submitted to the parliament. It is expected to be approved and effective from January 1, 2021. The main changes which are subject of this amendment are as follows:

Shared Job Position
The employer will have a possibility to employ two or more part-time employees on the same job position. They will mutually agree on their working hours so that it is suitable to all of them. The employer should have a guarantee that any of the employees is always available and the flexible working hours can support the employees who cannot manage the full-time job for any reason.

Change of the Vacation Entitlement Calculation
Based on this conception, the vacation entitlement shall be newly calculated from worked hours instead of worked days, as currently done. This change shall ensure higher transparency especially for the part-time employees or short-time employments, which are currently partially disadvantaged.

Documents Delivery
This change shall simplify the process of delivery the documents to the employees which is currently very problematic. Further, it sets-up „delivery fiction“ which shall solve the situation, when the employee cannot be reached on his permanent residency address and the document cannot be properly delivered.

Cancellation of Duty to Issue Confirmations on Employment for Employees Working based on the Agreement on Performance of a Work Assignment
The amendment shall further bring certain simplification for employers employing the employees based on the Agreement on Performance of a Work Assignment. The employer shall not be newly obliged to issue confirmations on employment for these employees. The obligation to issue the confirmation shall remain unchanged for those employees whose income is subject of legally instructed deductions or those who participate on sickness insurance.

Increase of Compensation for Dependants
The amendment shall further change the legal process related to compensations for dependants in case the employee dies as a result of work injury or work disease.

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Anna Vraná Rubínová
Payroll Consultant Senior