Tax 

New law to support part-time work through social security contribution discount

On 22 July 2022, Act No. 216/2022 Coll. was published in the Collection of Laws, which aims to incentivise employers, through a 5% discount on social security contributions, to create a greater number of part-time jobs for people who are, for different reasons, unable to work full-time. This act comes into force on 1 February 2023.

The new legislation amends Act No. 589/1992 Coll., on Social Security Contributions and Contributions to State Employment Policy, as amended, and other related acts.

The 5% reduction in social security contributions applies to specific groups of employees, namely:

  • an employee over 55 years of age;
  • an employee who is the parent or adoptive parent of a child under 10 years of age;
  • an employee who is caring for a close relative under the age of 10 who is dependent on the assistance of another person in Grade I (slight dependence) or for a close relative who is dependent on the assistance of another person in Grade II (medium-heavy dependence), Grade III (heavy dependence), or Grade IV (total dependence);
  • an employee who is simultaneously preparing for a future profession by studying (at secondary school or university); the manner of study is assessed in accordance with Sections 21(1)(a), 22 and 23 of the Act on Pension Insurance;
  • an employee who, in the 12 calendar months preceding the calendar month for which the contribution reduction is claimed, has entered retraining as a jobseeker pursuant to Section 109 or Section 109a of the Employment Act;
  • an employee who is a disabled person pursuant to Section 67(2) of the Employment Act;
  • an employee under the age of 21.

To qualify for the contribution reduction, the employee’s agreed weekly working hours must span between 8 and 30 hours per week, with the exception of employees under the age of 21.

Restrictions on claiming reduced contributions

In addition to the conditions stated above, other conditions shall be met, including the following:

  • to qualify for a contribution reduction, the employee’s contribution basis may not be higher than 1.5 times the average wage;
  • the employee’s working time, including periods which are regarded as work or service, with the same employer must not exceed 138 hours in a calendar month. If the employee starts work in the course of a calendar month, this limit shall be adjusted on a pro-rata basis.

Applying the contribution discount

An employer is entitled to a discount on the employee’s social security contributions only in case they have notified the Czech Social Security Administration of their intention to apply the discount on behalf of the employee prior to the discount application. The amount of contribution discount per calendar month is 5 % of the aggregate of the contribution bases of the employees to whom the discount is applied. The discount can be applicable for the first time in the month of February 2023.

Employees Direct Taxes

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