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Home > Country profiles > Operating a Business

Czech Republic: Operating a Business

Legal Forms of Companies | The Active Population in Figures | Working Conditions | The Cost of Labor | Management of Human Resources

Legal Forms of Companies

Types of Companies and Capital (Max/Min)	Number of Partners/Shareholders and Liability
Private Limited Company Minimum CZK 200,000	No minimum. Maximum: 50. Partners' liability is limited to the amount contributed.
Public Limited Company Minimum CZK 2 million, at least 30% must be released before the constituting general meeting.	No minimum; can be a sole proprietorship. Liability is limited to the amount contributed.
The general partnership No minimum capital.	At least 2 Liability is unlimited.
The limited partnership No minimum capital but the input of the partner with limited liability must be at least CZK 5,000.	At least 2: 1 active partner and 1 sleeping partner. Liability of active partners is unlimited. Liability of sleeping partners is limited to the amount contributed.

Enterprises Federation: Confederation of Industry of the Czech Republic (SPCR)
Association of small and medium-sized enterprises and crafts of the Czech Republic
Czech Confederation of Commerce and Tourism (in Czech only)
Search a Company or a Financial Report: Portal Justice

Business Setup Procedures

Setting Up a Company	Czech Republic	Eastern Europe & Central Asia
Procedures (number)	9.00	6.30
Time (days)	20.00	16.30

Source: Doing Business.

For Further Information: Consult Doing Business Website, to know about procedures to start a Business in Czech Republic.
Trade Register, in Czech.
The Competent Organization: Ministry of Industry and Trade (in Czech and English)

Database of the Commercial Register (in Czech)

Forms of offices, e.g. the Financial Authorities and Trade Licence Offices Trade License Offices – on the web sites of municipal authorities

Recovery Procedures

Principle: Basic principle of recovery is equal conditions for all creditors (par conditio creditorum). For a bankruptcy, there are three basic conditions: decay, many creditors and enough assets for covering the costs of bankruptcy procedure. More information is available in the Act. No182/2006 Coll.
Minimum Debt-to-Capital Ratio Triggering Liquidation: Not specified.
Bankruptcy Laws: Act. No 182/2006 Coll.
Reorganization and Rehabilitation Laws: Act. No 182/2006 Coll.

The Active Population in Figures

	2010
Labor Force	5,370,000

Source: CIA - The world factbook

	2009	2010
Total activity rate	-	57.90%
Men activity rate	67.60%	-
Women activity rate	48.80%	-

Source: UN - United Nations

Employed Persons, by Occupation (% of Total Labor Force)	2006
Legislators, senior officials and managers	6.6%
Professionals	10.8%
Technicians and associate professionals	21.9%
Clerks	7.0%
Service workers and shop and market sales workers	12.1%
Skilled agricultural and forestry workers	1.5%
Craft and related trades workers	18.2%
Plant and machine operators and assemblers	14.3%
Elementary occupations	7.3%
Armed forces	0.3%
Not identified	0.0%
Total	100.0%

Source: Czech statistical office

For Further Statistics: Ministry of Labor and Social Affairs
Czech statistical office

Working Conditions

Opening Hours
Legal Weekly Duration: 40 hours
Maximum Duration: 40 hours
Night Hours: Not limited if maximum duration is fulfilled.

Working Rest Day: Saturday, Sunday
Paid Annual Vacation: After 3 month of testing period workers have the right for vacation in duration of one-twelfth each worked month. The minimum annual holiday is four weeks (20 working days)
Retirement Age: Men 63 years, Women 59-62 years depending on number of children. In order to reach retirement age it is necessary to pay pension insurance (to be employed or to do own business) for at least 25 years. It is planned to change retirement age for 65 Years.
Child Labor and Minimum Age For Employment: 15 years are minimum age for employment of young people, but they may not work overtime and do night shifts.
Informal Labor Market: Informal labor market is more important than EU 27 average, but due to tax reform will probably decrease to average values.

The Cost of Labor

Pay

Minimum Wage: 8,000 CZK (EUR 300).
Average Wage: Average monthly gross earnings in Czech Republic is CZK 21,470 (1,100 USD).
Other Forms of Pay
Pay For Overtime: 25% over the basic rate
Pay For Rest Days Worked: 10% for overtime work completed on weekends or on days not stipulated in the original employment contract.
Pay For Night Hours: 10% for overtime work completed between 10 pm and 6 am
Pay For Overtime at Night: 25% over the basic rate for overtime work.

Social Security Costs

The Areas Covered: Companies must contribute to state social security and health schemes for each employee. The total contribution amounts to 35% of an employee’s gross wages: 21.5% for pension insurance, 9% for health insurance, 3.3% for sickness insurance and 1.2% for employment insurance.
Contributions: Contributions Paid By the Employer: 35%
Contributions Paid By the Employee: 12.5%
Competent Organization: VZP
Social Security Administration

Management of Human Resources

Recruitment

Method of Recruitment: The recruitment process takes place more and more via internet. Selection is made on the basis of a job interview (for SME). But for manufacturing it is better to take a recruiting agency. Also labor office can be used.
Recruitment Agencies: There are only private recruiting agencies. Most important are: Grafton, Robert Half, ManPower, Synergie.
Recruitment Websites: Jobs
Prace

The Contract

Type of Contract: Legal clauses regulate employment contracts and to a lesser degree collective agreements and individual negotiations.
The terms of employment contracts are extremely rigid and the limits for dismissal are less strict.

Breach of Contracts

Retirement

When reaching retirement age - most of people work one or several years more.

Dismissals

mutual agreement – terminates the employment contract on an agreed date
expiration of employment contract – employment contract concluded for a limited period
termination during the probation period . notice of termination – usually 2 month notice period
immediate termination - can be used in specific cases (very bad work discipline)

Other Possible Methods

Resignation is not standard way of the breach of contract. It is possible only in the case of top management and only in the context of resignation from specific function. That means even if anybody resigns his employment contract still remains valid until other forms of the breach of contract come into being.

Labor Laws

Ministry of Labor and social affairs

Dispute Settlement

Conciliation Process

Procedure: Labor Code (act. No.262/2006 Coll.)

Judicial Structures

Legal Framework: Labor Code (act. No.262/2006 Coll.), collective agreements, arbitration awards or court decisions

Social Partners

Social Dialogue and Involvement of Social Partners: The Czech Republic operates on the principle of free establishment and competition of unions. Establishment of an union is not mandatory in companies. The minimum number of employees needed to establish a company union is three.
The most powerful is Czech-Moravian Confederation of Trade Unions (so called CMKOS). It is an important social partner in tripartite negotiations in the framework of the Council of Economic and Social Agreement of the Czech Republic. It works in the regions of the Czech Republic through Regional Councils of Trade Unions (RROS) and Regional Offices for Legal Assistance (RPP). There are 33 trade unions in the framework of CMKOS.
Unionization Rate: 11% of all employees.
Unions: CMKOS, Czech-Moravian Confederation of Trade Unions
Other Unions affiliated to CMKOS
Regulation Bodies: Ministry of Labor and Social Affairs
Confederation of Industry of the Czech Republic (SPCR)
Czech Council for Safety, Hygiene and Health at Work

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