Hiring international employees can be an attractive option for growing companies. Countries like Czechia (also known as the Czech Republic) offer more cost-effective skilled talent than the US and Canada as well as a range of other benefits.
While salaries are important, there are many other costs to keep in mind when it comes to global hiring. For example, employers are typically required to make mandatory social security contributions. They may also provide staff with benefits like healthcare when competing for top talent.
This article will walk you through the various fixed and variable costs of hiring in Czechia.
Costs to Consider When Hiring Around the World
The basic hiring costs in Czechia include:
- Employee’s gross salary
- Taxes and benefits
- Vacation pay and other leaves
- Overtime pay
- Severance pay
Plus, you may want to add certain optional costs like benefits, bonuses, and extras.
Mandatory Costs of Hiring an Employee in Czechia
Salary
Czechia is home to highly competitive IT talent, thanks to its thriving start-up scene. Combined with a lower-than-average cost of living, employers can offer competitive salaries to top talent while keeping costs at bay. Currently, the minimum wage in Czechia starts at 17,300 CZK (about US$813) per month.
However, salaries for skilled workers and sophisticated IT talent will vary greatly. You can get an idea of average salaries by doing some market research or partnering with a local staffing agency.
Mandatory Taxes and Benefits
Payroll costs in Czechia add up to about 33.8% of the employee's gross salary. These include:
- 24.8%: Social Security and Pension
- 2.1%: Sickness
- 1.2%: Unemployment
- 9%: Health Insurance
Employers must also withhold taxes and other contributions from their employees:
- 15-23%: Individual Income Tax
- 6.5%: Social Security and Pension
- 4.5%: Health Insurance
Mandatory Bonuses
There are no mandatory bonuses in Czechia. However, the job market there is quite competitive. As such, many employers offer end-of-year bonuses as motivators for their staff. They may also provide other perks, like extra time off or enhanced pension plans.
Paid Leave
There are several types of paid leave in Czechia.
- Public holidays: There are 13 public holidays in Czechia.
- Paid time off: Full-time employees receive 20 days of paid vacation after their first year of service.
- Sick leave: Czech employees can take up to 380 days of paid sick leave. Employers pay for the first two weeks of leave at a rate of 60%. Then, the social security fund takes over payments.
- Parental leave: New mothers are entitled to 28 weeks (37 weeks for multiple births) of maternity leave paid by the Social Sickness Insurance Authority. New fathers can take two weeks of paid paternity leave. Either parent may also request leave at any time until the child reaches three years of age.
- Care leave: Employees can take leave paid by the Social Sickness Insurance Authority to care for a child or family member who is sick.
- Military leave: Employees are entitled to paid leave to perform their military service if necessary.
- Other types of leave: Czechia has several other types of paid and unpaid leave. For example, employees may take time off to perform public or civic duties, volunteering, donating blood, taking classes, and others.
Overtime Pay
The standard working hours in Czechia are eight hours per day for up to five days per week. Employees are entitled to 25% higher wages for overtime or compensatory time off.
Severance Pay
Severance pay in Czechia depends on the employee’s length of service: one month for one year, two months for two years, and three months for three years or more.
Additional Costs of Hiring Czech Talent
Today’s talent market is extremely competitive. To hire top Czech talent, employers may also want to offer a benefits package, which can help both search and retention. Here are some benefits you might consider offering Czech employees along with other possible costs.
Benefits
Offering the right benefits package can help you stand out from the competition. In Czechia, many employers offer benefits like extended retirement plans, meal vouchers, and commuting support. They may also provide perks like funds for training, recreation, cultural activities, and more.
Bonuses and Extras
Finally, you’ll want to think about smaller expenses like gifts for your staff for special occasions, comped meals or coffees for meetings, among other things.
If you hire one or two employees in Czechia, they’ll likely do remote work. Even so, it can be beneficial to pay for a membership at a coworking space or provide funding to set up a home office. Daily rates for coworking spaces in Czechia start at about US$10.
However, you might be hiring an entire team to work on larger projects such as software development. If that’s the case, it can be wise to rent an office space to facilitate collaboration among your staff.
Average Cost of Hiring
Below is an estimate based on a salary of $100,000 for an employee in Czechia. This salary is for ease of calculation and will change based on several factors specific to your hiring goals including employment contract details, the candidate’s experience and education, and the type of position.
Average Cost Of Hiring One Employee in Czechia (Annual in $USD)
- Salary: $100,000
- Employer Taxes: $33,800
- Social Security and Pension
- Sickness
- Unemployment
- Health Insurance
- TOTAL: $133,800 + Benefits and Bonuses (discretionary)
Note that these totals do not include other standard costs like soft benefits commonly offered in Czechia.
A Global EOR Can Help You Manage International Payroll
With so many costs to consider, it may feel overwhelming to start with global hiring. An Employer of Record (EOR) can help. An EOR like Borderless can help you compliantly hire and pay employees in Czechia.
If you’d like to begin global hiring but aren’t sure where to start, book a demo with Borderless. We’ll walk you through every step, so you can reap all the benefits without the added headaches.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
