Discount on part-time social security contributions put into practice

On 1 February, Act No. 216/2022 Coll. came into force, which introduces a 5% reduction in the employer’s social security rate for a selected group of employees who, for various reasons, cannot work full-time. For the first time, employers can apply the reduced contribution rate of 19.8% when paying the levy for February 2023.

Employers are entitled to a discount on social security contributions for employees in an employment or service relationship who:

a) are over 55 years of age;

b) care for children under 10 years of age;

c) care for a close person under 10 years of age who is dependent on the assistance of another person;

d) are students under Sections 21(1)(a), 22, and 23 of the Pension Insurance Act;

d) have entered retraining as a jobseeker in the 12 months preceding the month for which the discount applies;

e) are a person with a disability under Section 67 (2) of the Employment Act;

f) are under 21 years of age.

In order for the discount to apply in a given calendar month, other conditions must be met, namely:

  • under a) to f), the employee must work part-time for a minimum of 8 hours and a maximum of 30 hours per week;
  • the total of the employee’s assessment bases in the given month cannot exceed 1.5 times the average wage, i.e. CZK 60,486 for 2023;
  • the total of the assessment bases per hour worked cannot exceed 1.15% of the average wage, i.e. CZK 463,726;
  • the number of hours worked per month cannot exceed 138 hours;
  • the conditions for the inclusion in one of the employee categories for which the discount is applicable must be met for the entire duration of the employment relationship in the calendar month;
  • the employer does not draw contribution for part-time employment of the same employee to whom the discount is applied.

How to apply the discount

Only one employer can claim the discount for the same employee. Should an employee have more than one employment relationship where the conditions for claiming the discount are met, the employer who first applied for the discount by submitting a Notice of Intention to Claim a Discount on Employee’s Social Security Contribution form shall claim the discount. In case of multiple submissions, the decisive moment is the time of delivery of the form to the Czech Social Security Administration (CSSA). If an employee has more than one part-time job with the same employer, the periods of employment are added together, regardless of whether the employee is covered by sickness insurance under all employment relationships (e.g. small-scale employment). The employer can choose which employment to apply the discount to.

The employer applies the discount by submitting the Insurance Premium Overview form, which now states the number of employees and the total of assessment bases which serve as the basis for calculating the discount. The form is further extended by a list of employees for whom the discount is claimed. For each employee, the reason for applying the discount and the extent of the reduced working time is stated.

One of the conditions for applying the discount is compliance with the statutory deadlines. Here, the Notice of Intention can be filed no earlier than 1 month before the date from which the discount will be claimed for a particular employee, but no earlier than the date of filing the Notice of Commencement of Work. The Notice of Intention can be submitted no later than the 20th calendar day of the following month, but no later than the date of filing the Insurance Premium Overview.

In connection with the application of the discount, the employer has obligations not only to the CSSA but also to the employees concerned. The employer is obliged to:

  • inform the employee in writing of the intention to claim the discount on his/her behalf, including the reason for claiming it;
  • inform the employee of his/her obligations in relation to proving the entitlement to the discount towards the employer;
  • advise the employee of the consequences of any failure to comply with his/her obligation towards the employer.

The employer is obliged to keep the documents entitling the employer to the discount for 10 years.

Due to inconsistent interpretations of individual conditions, an amendment is currently expected to bring legislative clarification of some problematic provisions of the law, such as the list of obstacles to work that are considered as time worked for the purposes of assessing entitlement to the discount.

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