Agreement to complete a job (DPP)

Many employers use an agreement to complete a job for a simple reason: it is advantageous for both employees and employers in terms of tax and administration.

DPP – conditions
  • maximum 300 hours/year, 
  • up to CZK 11,499 a month without social or health insurance contributions, 
  • you can have several agreements with one employer for different work, but for the conditions above, all DPP agreements with that employer are added together! 
  • you can have several DPP agreements with different employers; the conditions above then apply separately to each employer.

If a casual worker earns up to CZK 11,499 a month, this income is exempt from health and social insurance contributions. However, you must always calculate 15% income tax. 

There are then two possible tax situations:

  1. The casual worker signs a taxpayer declaration (the “pink form”), agreeing to claim the basic taxpayer credit and, where applicable, other credits. This typically applies to students, mothers on maternity leave or pensioners. → The employer records advance income tax. No tax is deducted from the employee, and their gross earnings are paid in full.
  2. The casual worker does not sign a taxpayer declaration. Why? A taxpayer declaration may be signed with only 1 employer, so the casual worker usually has one signed elsewhere. → The employer records withholding tax. They deduct 15% from the employee, pay 85% of gross earnings and remit the remaining 15% to the tax office after the end of the month.

Regarding health and social insurance contributions, the relevant threshold is a total of CZK 10,000 across all DPP agreements that employee has with you. If the employee does not exceed it in a given month, no contributions need to be dealt with. If they exceed it, contributions must be calculated and paid. At that point, contributions are payable by the employer at a rate of 33,8 % of gross pay, and by the employee at 11% of gross pay. It is therefore essential to monitor this threshold carefully every month and respond promptly when necessary!

Agreement to perform work (DPČ)

If you have a regular casual worker, they will probably eventually stop meeting the DPP conditions by exceeding 300 hours worked in a year. You then have two options: move them to a DPČ agreement or a standard employment contract.

DPČ – conditions
  • maximum 20 hours a week,
  • up to CZK 4,499 a month without social and health insurance contributions (from 2023),
  • you can have several agreements with one employer for different work, but for the conditions above, all DPČ agreements with that employer are added together!
  • you can have several DPČ agreements with different employers; the conditions above then apply separately to each employer – but here, watch out for minimum health insurance contributions if none are paid for the employee elsewhere!

For workers on DPČ agreements, I usually see earnings above CZK 10,000 a month. Health and social insurance are calculated in the usual way, as with any other employment under an employment contract. The advantage of DPČ for employers, however, is the lower level of employee protection under the Labour Code. For example, employees are not entitled to supplements or holiday, either party can give notice without stating a reason, and the notice period is only 15 days, etc.

DPP and DPČ – new obligations

Until now, an advantage of DPP and DPČ for employers was the lower level of employee protection under the Labour Code, but upcoming amendments are starting to change that. Although either party can still give notice without a reason and the notice period remains only 15 days, slowly but surely, agreement workers are gaining more benefits while the advantages for you as an employer are diminishing. 

From 1.10.2023 employees working under agreements (both DPP and DPČ) are entitled to supplements for public holidays, night work, work in difficult conditions and Saturday and Sunday work. Deductions may also be made from their remuneration. This change has brought agreements closer to standard employment. A further alignment of agreement workers’ and regular employees’ rights will be the introduction, from 1.1.2024 of an entitlement to annual leave for agreement workers too. 

Standard employment (HPP)

If 20 hours of work a week is not enough for your employee, you have no choice but to employ them under a standard employment contract. The usual working week is 40 hours, although a shorter schedule can be agreed. 

An employee working under an employment contract has the highest possible level of protection. You must pay them the guaranteed wage, supplements for weekends and overtime, public holiday pay, annual leave pay, pay for the first 2 weeks of illness and severance pay. You may dismiss an employee only for certain reasons, and the notice period is longer, and so on. On the other hand, you as an employer also have more security: the employee cannot simply leave overnight. In other words, the casual worker becomes a fully fledged employee.

Under an employment contract, there is no threshold below which wages are exempt from health and social insurance contributions. 

If you are still unsure which type of contract to use, please contact me. We will work it out together. 🙂