First employee: how to become an employer?
The business is growing, so you decide to hire reinforcements. However, with the first employee comes a fair amount of administration. Here's what to remember.
As an employer, you have a number of obligations to:
- Czech Social Security Administration (ČSSZ),
- health insurance companies,
- the tax office
- and other institutions.
Your first step is to contact the relevant institutions. You will also have to prepare the necessary documentation. What to do first?
Social Security and Social Insurance Institutions
Before you start communicating with the CSSA, you need to find out which district social security office (OSSZ) you fall under - it will be your main point of contact. You can find the relevant office and its mailbox number on the CSSA's map of offices. Local jurisdiction is based on your registered office or the location of your payroll office (if not at your registered office). For self-employed persons, everything is based on the address of your permanent residence.
Next comes the actual paperwork. The first step is to apply online to the employers' register on the CSSA website, which you must do within 8 days of taking on your first employee. Once registered, you will receive an employer variable symbol which you will use for further communication with the CSSA. If you are self-employed, you use the same variable symbol as when submitting your annual income and expenditure statement.
You also report the arrival of each new employee to the Social Security Institution within the aforementioned 8 days. This is done using the online form 'Notification of entry into employment (termination of employment)'.
If a foreigner from the EU or third countries joins your company, you must also report them to the local employment office.
First, you must register as an employer with all your employees' health insurance companies (you do not have to register with others) using the "Employer's Registration and Registration Form". You must then notify each employee's insurer of this fact within 8 days of the employee starting work using the 'Employer's Bulk Notification' form.
The documents are usually online on the insurers' websites. For example, you can find the forms for the VZP here.
No later than 8 days after each employee starts work, you must register as a payer of employment tax. The fastest way to register is online via the tax office's website, where you can fill in the tax application form (note that there are two versions of the form: for self-employed persons and for corporations). If you also have employees who will not claim the taxpayer's rebate, be sure to register as a withholding taxpayer as well.
The employee can also sign a pink taxpayer's declaration with you claiming tax credits.
Employers' liability insurance
Your workers may suffer an occupational accident or illness while on the job - and subsequently be entitled to claim compensation. This is covered by statutory employers' liability insurance, which is compulsory for everyone who employs at least one worker in the Czech Republic.
The insurance can currently be arranged with a single provider, Kooperativa.
It is necessary to sign an employment contract with each employee , which regulates the terms and conditions of the employment relationship, no later than on the date of hire. The employment contract must contain the following information:
- type of work,
- place of employment,
- date of commencement of employment.
The salary calculation is not a mandatory part of the employment contract - however, you must inform the employee of the amount of the salary within 1 month of the start of the employment relationship. In practice, the wage is often determined by means of a wage assessment.
If a new employee joins you on a permanent basis, he or she must first undergo an initial medical examination at your expense. Only after the doctor has cleared her can she start work.
The examination is only compulsory in specific cases (e.g. hazardous work) for employees on fixed-term and permanent contracts.
Occupational safety and fire protection
On the day of commencement, new employees (irrespective of the type of job) must be given occupational health and safety (OHS) and fire protection (FP) training. OHS and FP training can be both face-to-face and e-learning.
The employer is obliged to keep H&S documentation - and also keep an Accident Book where all work-related accidents are recorded.
Onboarding sorted: what next?
With the initial formalities completed, the administrative round is just beginning. Find out what your employer's obligations are during the employment relationship.
Our specialists will be happy to help you with your employee-related accounting. Just contact us using the form below.