Prague, Czech Republic – August 9, 2023

Czech companies are preparing for significant adjustments in response to proposed changes in labor laws. In anticipation of these changes, companies are strategizing to decrease the utilization of contracts for work and services. This entails redistributing tasks among other employees, engaging more self-employed individuals, offering alternative contractual arrangements, or collaborating with employment agencies.

A survey conducted by the Czech Chamber of Commerce, encompassing 400 companies across diverse sectors and regions, revealed that only around one-fifth of employers have no plans to make adjustments in light of the impending changes.

The proposed modifications in the labor code and the government’s consolidation package focus on regulating employment contracts outside of the traditional employment framework. The proposed rules include scheduling working hours at least three days in advance, granting contract workers the right to vacations and additional compensation for weekend and holiday work.

Within the consolidation package, employers would be mandated to report contract workers to the Czech Social Security Administration. Additionally, in cases of multiple employers with overlapping contracts, social insurance payments would be required if the total exceeds 40% of the average employee wage.

Approximately 26% of surveyed companies intend to decrease their use of contract workers and reallocate tasks among existing employees. A quarter of companies plan to replace contract workers with self-employed individuals, while just under 24% are considering hiring individuals under different contractual arrangements.

Moreover, approximately 16% of businesses are exploring the possibility of converting contracts to part-time positions, and around 8% are contemplating utilizing employment agency services. Meanwhile, 20% of companies have not yet determined a course of action, uncertain about how best to respond to the impending changes.

The survey unveiled that some industries heavily rely on contract workers, particularly in seasonal agricultural or tourism-related work. Redistributing tasks among employees might potentially dilute workforce specialization and productivity. There is also uncertainty about the viability of substituting contract workers with self-employed individuals, which could potentially constrain business growth.

The Czech Chamber of Commerce indicated that the survey reflects the prevalence of contract workers, with 93% of employers using contract arrangements. These proposed changes are estimated to affect over 250,000 companies. Contract workers are often employed for non-highly skilled labor and manual seasonal or peak work, as well as for workers with specialized qualifications that aren’t conducive to traditional employment relationships.

The findings also highlighted that companies frequently engage students, seniors, and mothers on parental leave under contract arrangements. These groups may witness a reduction in their share of the labor market due to these changes. This shift could potentially impact the labor market dynamics and the broader workforce structure, especially considering the aging population and calls to integrate these groups into the workforce.

Article by Prague Forum