The approved consolidation package also includes an amendment to laws on sickness insurance and social security insurance and allowance for the state employment policy that brings a substantial change in the insurance premium for individuals working on the basis of contracts for work (hereinafter the “CFW”).
The major change in paying the insurance premium in CFWs is cancellation of the fixed amount of CZK 10,000. This amount will now depend on the average salary as follows:
- 25% of the average salary from all CFWs performed with a single employer; and
- 40% of the average salary from all CFWs performed with more than one employer.
For 2024, the payment threshold in the event of a single employer is CZK 10,500 after rounding (all CFWs entered into with the same employer are calculated cumulatively). The threshold for the insurance premium’s payment from CFWs in case of more than one employer is CZK 17,500 after rounding for 2024. If an employee generates income under (b) above with more than one employer, the insurance premium will be paid from the performance of every contract for work.
In the event of performing CFWs with a single employer, the employer continues to be the exclusive payer of both parts of the insurance premium (both the employer’s and employee’s portions) as the case has been so far. Where CFWs are performed with more than one employer, the employer will only pay the insurance premium from the employer’s portion (24.8%) and the employee will be responsible for paying his or her portion of the insurance premium (the premium will be increased from 6.5% to 7.1% for 2024).
As a consequence, the amendment will result in an increase in administrative duties for both employers and employees.
Moreover, employers who will employ employees on the basis of CFWs in a particular month will have to provide the competent Social Security Administration Authority with data about such employees, including the level of income, on a defined form by the 20th day of the following month and keep a register of those employees.
The Social Security Administration Authority will inform employers and employees about exceeding the threshold for CFWs with more than one employer. Based on such notification, the employer will submit a listing of the level of income and insurance premium and will make the payment.
In addition to this, employers will be obliged to inform employees, no later than on the date of their employment’s commencement, about the latter’s potential obligation to pay a social security insurance premium.
