Companies Plan to Reduce Number of Contract Workers in the Czech Republic

In response to proposed changes in labor laws, Czech Republic companies plan to decrease the number of contracts for work and services. These companies will redistribute work among other employees, hire more self-employed individuals, offer other contractual relationships to employees, or use the services of employment agencies.

According to a survey of four hundred companies from various sectors of the economy and regions by the Czech Chamber of Commerce, only one-fifth of employers are not planning to make changes due to adjustments to rules.

The proposed changes in the labor code and the government’s consolidation package provide for the regulation of employment contracts outside of employment (known as “dohoda” in Czech). Employers would have to schedule working hours at least three days in advance, and contract workers would have the right to vacation and extra pay for work on weekends and holidays.

In the consolidation package, employers will be required to notify the Czech Social Security Administration of their contract workers and, in the case of multiple employers with overlapping contracts, to pay social insurance if the total exceeds 40% of the average employee wage.

To respond to the proposed adjustments, about 26% of companies surveyed plan to decrease the number of contract workers and redistribute their work among other employees. A quarter of companies plan to replace contract workers with self-employed individuals, and just under 24% plan to hire people under different contractual relationships.

Approximately 16% of businesses plan to convert contracts to part-time positions, and around 8% plan to use the services of employment agencies. Meanwhile, 20% of companies have not planned any changes and are unsure how to respond to the proposed changes.

The survey showed that some industries rely on contract workers, such as seasonal work in agriculture or tourism. Tomáš Prouza, vice president of the Czech Chamber of Commerce and president of the Union of Trade and Tourism, said that redistributing work among employees could reduce the level of specialization of workers and productivity. Moreover, it is also uncertain whether companies can replace contract workers with self-employed individuals, which could limit further business development.

According to the Czech Chamber of Commerce, the survey also showed that 93% of employers provide work on contracts, and adapting to new rules will affect over 250,000 companies. Over two-fifths of businesses use contract workers for non-highly skilled labor, especially for manual seasonal or peak work.

More than a quarter of companies use contracts for workers with higher qualifications, with whom it is not profitable to enter into a regular employment relationship, for example, due to their narrow focus on a specific area not covered by the company or because a regular employment relationship is too expensive for the employer.

The survey also revealed that companies mainly offer contracts to students, seniors, and mothers on parental leave. Due to the planned changes, the share of these groups in the labor market will decrease. The Chamber of Commerce has long recommended increasing the involvement of these groups in the workforce due to the aging population.