News - Czech Republic

Czech Republic - June 2012

New laws on employing third country nationals

To comply with EU law, amendments have been made to the Employment Act which affects employers who use third-country nationals to perform work without a valid residence permit.

Third-country nationals are individuals or their family members who are not citizens of EU member states, EEA states or Switzerland). The amendment came into force on 5 January 2012.

New employers’ duties

Employers must keep a copy of the residence permit during the employment relationship and for 3 years after employment is terminated. Employers are also required to inform the regional Labour Office in writing that they have employed a third-country national by no later than the day the individual commenced employment.

Sanctions for violation of the employer's duty

Illegally employing foreigners without a residence permit can result in penalties from CZK 250,000 to CZK 10,000,000 (approx. from EUR 10,000 to EUR 400,000).

These penalties are separate from the employers obligation to pay all outstanding remuneration to the employee, and all tax and social and health contributions arising from pay as well as the costs related to sending the individual’s pay to his country of residence. If the employer or foreigner fails to make such payments, it is assumed that the agreed amount of remuneration corresponds to the statutory minimum wage and that the employment relationship lasted 3 months.

Other negative consequences for employers

Employers caught illegally employing third-country nationals could be excluded for up to 3 years from entitlement to public benefits, subsidies and participation in public tenders and may be required to return any public benefits granted to the employer during the 12 months prior to discovery of the illegal employment.

For further information or to discuss any of the issues raised, please contact Matej Danek or Tomas Liskutin at +420 221 430 111.