The number one employee benefits people in the Czech Republic care about is the so-called third pillar pension plan or voluntary supplementary pension plan. The state matches employees’ contributions, up to a certain point, which makes it very attractive. When asked to rank three other common benefits in order of importance, people from the Czech Republic would answer meal vouchers, individual or group life insurance with tax advantage, and Disability/Death.
Most employers pay towards the third pillar pension plan which is usually €30-€50 per employee per month. Meal vouchers are also considered a normal employee benefit at €50-€70 per employee per month.
Mandatory employee benefits in the Czech Republic include retirement, paid time off, and unemployment insurance. Supplementary employee benefits in the Czech Republic include retirement, flexible benefits, and meal vouchers. Perks in the country include gym memberships, language courses, salary continuations plans, transportation, and an additional week of vacation.
Mandatory Employee Benefits in the Czech Republic
Compulsory coverage applies to all employees, including self-employed persons, except casual and seasonal workers. Others can join voluntarily. The system is administered by Czech Administration of Social Security. It is a defined benefit plan (DB).
Retirement ages for men
There are three categories, based on birth year. For persons:
- Born before 1936, the normal pension age is 60.
- Born between 1936 and 1953, the normal pension age gradually increases to 63 years.
- The normal retirement age for men is dependent upon the year of birth and is 63 years for those born in 1953, increasing to 65 years as below.
- Born after 1953, the pension age increases by two months for each year after 1953.
Retirement ages for women
The normal retirement age for women is dependent on the number of children and the year of birth as below:
- Born before 1936, the normal retirement age is 53–57, depending on the number of children raised. *
- Born between 1936 and 1965, the normal retirement age gradually increases to 65.
The normal retirement age for women without children is:
|YEAR OF BIRTH||NORMAL RETIREMENT AGE||ANNUAL INCREASE (MONTHS)|
|1952 to 1955||61 years and 8 months to 62 years and 8 months||4|
|1956 to 1957||63 years and 2 months to 63 years and 8 months||6|
|1958 to 1965||63 years and 10 months to 65 years||2|
The normal retirement age for women with one child is:
|YEAR OF BIRTH||NORMAL RETIREMENT AGE||ANNUAL INCREASE (MONTHS)|
|1953 to 1956||60 years and 8 months to 61 years and 8 months||4|
|1957 to 1961||62 years and 2 months to 64 years and 2 months||6|
|1962||64 years and 6 months||n/a|
|1963 to 1965||64 years and 8 months to 65 years||2|
Maternity / Paternity Pay – Maternity Benefits
Maternity leave is financial support in place of a parent’s salary and is paid for 28 weeks (or for twins, triplets, etc. 37 weeks). The maternity leave period begins at least six and at most eight weeks before the baby is due to be born. An employee is eligible for this benefit if the participation in sickness insurance was at least 270 days before the maternity leave begins, and the person was employed at that time, or the employment ended within the past 180 days. Self-employed parents can also claim maternity leave if they have paid sickness insurance for 270 days before the leave begins, of which 180 days must have been within the year immediately preceding the maternity leave. Maternity leave must be taken before your child is 1 year old. Maternity leave amounts to 70% of an average gross salary, calculated based on the preceding year; for the self-employed, the amount is established based on the level of sickness insurance contributions paid
Paid parental leave is financial support for parents, which usually follows after the end of maternity leave. An employee is eligible to take it if caring for a child at home (not taking him/her to a daycare/nursery/pre-school)
Paid parental leave consists of a maximum of 300 thousand crowns of benefit (CZK 450 thousand in case of multiple births), which must be taken during the first four years of the child’s life
Unemployment benefits are payable for up to five months, regardless of the termination reason. The benefit period may increase in relation to the person’s age:
- Up to age 50: Five months
- Age 50 to 55: Eight months.
- Over age 55: Eleven months.
If the employer ends the employment contract, unemployment benefits are payable:
- For the first two months: 65% of the previous average monthly salary, with a cap at 58% of the average national monthly salary.
- For the next two months: 50% of the national average monthly salary.
- For the rest of the period: 45% of the national average monthly salary.
Supplementary Employee Benefits in the Czech Republic
SUPPLEMENTARY PENSION INSURANCE (CLOSED TO NEW ENTRANTS)
From 1994 to 2012, employees could take out voluntary supplementary pension insurance coverage under the Supplementary Pension Insurance Act. It set conditions for establishing and managing pension funds, stipulated the types of pension provision, and specified the terms under which state incentive contributions are provided.
Pension contributions are payable to authorized pension funds of an employee’s choice. There cannot be a negative return on contributions; all contributions paid, and investment returns already accrued to the account must be paid out to the participant.
Pension funds had to be established as joint-stock companies with a minimum initial capital of CZK500 million. Until the end of 2012, when pension funds were transformed into new “Pension Companies,” nine funds operated in the market, with a total of almost 5.2 million participants (in a population of 10.4 million).
Membership is voluntary. It is not possible to switch between funds anymore unless the insured accepts the conditions of the newly established supplementary pension savings scheme. Contributions to more than one pension fund at a time are not permissible. Plans are defined contribution (DC) plans. Since tax incentives were introduced in 2001, there has been an increasing prevalence of employer-sponsored retirement plans.
SUPPLEMENTARY PENSION SAVINGS (THIRD PILLAR, PENSION REFORM 2013)
The most recent pension vehicle — supplementary pension savings — became effective on January 1, 2013. It substitutes the supplementary pension insurance, which has been closed to newcomers since December 1, 2012. Participants already in the scheme can continue savings under the previous arrangement but must stay with the existing provider. Those willing to change providers must accept the conditions of supplementary pension savings, governed by Law 427/2011.
Persons over age 18 and domiciled in the country, as well as members of the European Union, are eligible if they pay contributions towards the statutory pension scheme or health insurance. The nonnegative return condition has been taken out of the rules for pension savings. The state matches employee contributions with a subsidy of up to a maximum of CZK2,760 per year.
The Czech public health care system covers all needed treatment, so the extended healthcare system is not well developed.
There is a growing interest in above-standard medical care especially in foreign companies in the IT and pharmaceutical industries.
Group Life and Accident Benefit
Typically provided by multinational companies and usually group insurance cover death from any cause, AD&D, and total permanent disability. The insured amount is typically set as a multiple of annual salary (1 or 2 or more). All employees are eligible. Premium is fully covered by the employer and premium paid by the employer is taxable income for the employee.
Flexible benefit plans are common usually in the case of multinational pharmaceutical and IT companies. Each employee has a budget and can spend this budget based on his/her preferences for benefits offered by the employer.
Workplace Canteens/Meal Vouchers
Only larger employers offer workplace canteen for employees. The majority of other employers offer meal vouchers where 55 % of meal vouchers are paid by the employer and 45 % value of the voucher is covered by the employee. Effective January 2021 meal contributions can be added to the salary. The maximum tax-deductible expense is CZK 82,60 for 2022.
Some employers provide gym memberships to employees. Especially in companies where the average employee age is low.
Especially in the case of multinational employers, language courses are provided to employees who need a foreign language to perform their jobs.
Salary Continuation Plan
Multinational employers typically offer salary continuation plans to cover the gap between statutory benefits and salary in case of a lengthy illness.
Employers in larger cities often cover an annual ticket for public transport.
Additional one week of holiday
The majority of employers offer an additional one week of holiday to statutory holiday (4 weeks).
This information about employee benefits in the Czech Republic is provided by MAI CEE, Asinta’s employee benefits consulting Partner in the Czech Republic.