Are employee benefits coming to an end in the Czech Republic?

As part of the recovery package, the government announced its intention to end employee benefits. It should be clarified that it is not about abolishing benefits as such, but abolishing their favourable tax regime – beneficial mainly for employees, but in fact also for employers, who, although most of the benefits are provided as a non-tax expense, do not have to pay social security and health insurance premiums on them.

In addition, benefits cover areas such as health care, sports and cultural activities, childcare, leisure education, travel, reading, etc., i.e. benefits that support work-life balance (e.g. by paying kindergarten fees), employee health (contributions for the use of sports, recreational and health facilities), education of employees and their children (contributions for the use of educational facilities and libraries or to purchase books), family life (family trips to the zoo, IQ parks, water parks), etc. It is undoubtedly in the interest of employers, both large and small, to support these activities. It can be assumed that, because of the tight labour market, employers will not withdraw support for these activities altogether but will reduce it significantly precisely because of the increased costs, which not every employer can afford. The question remains whether this is a sensible move for the future.

This “cut” will also cause problems for employers who encourage corporate teambuilding, which is so much in demand by the young generation, as the costs of joint sports or cultural activities will have to be allocated according to some formula at the regular price and this amount will represent taxable income on the part of the employee.

On a more positive note, the recovery package also brings some good news. The employer will not be bound by the non-monetary benefits supported by the legislator and will now be able to create an entirely new composition of benefits (e.g. transport allowances). However, it is debatable whether such contributions will fulfil the life-improvement purposes mentioned above.

Please contact us if you are interested in how the new employee benefits rules will affect your company. We will be happy to discuss your situation with you. For more information about our services, please visit our website.

Benefits Remuneration of employees

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