When working in the Czech Republic, you will automatically pay contributions to the Czech social security system. Make sure you’re familiar with what this system covers, so you can decide whether you need to take out any additional insurance policies.
The Czech social security system is built on three pillars. The first pillar is compulsory social insurance, which covers sickness benefits, unemployment benefits and pension insurance. The second pillar is state social support, covering the cost of subsistence and other basic personal needs of children and families. Finally, there is the social assistance provided to people in need.
Everyone working in the Czech Republic is insured with the Czech Social Security Administration. The social security contribution is 8% of your gross salary. It will automatically be taken off your monthly pay by your Czech employer. Employers also have to pay social insurance for their employees from their own funds amounting 26% of gross wages.
If you work freelance you will have to pay 28% of your declared monthly earnings. If your declared earnings are less than 25% of the national average monthly wage a minimum tax applies. This is a flat-rate tax.
To be entitled to unemployment benefits, you have to be in the job seekers registry. To be registered, however, you need to be a Czech citizen or have a permanent residence in the Czech Republic.
In order to receive unemployment benefits, you must have worked at your last job for at least twelve months within the last three years. If you are offered a suitable job and decline it without proper reason you will no longer receive unemployment benefits. Unemployment benefits are not paid out overseas.
The amount of unemployment benefit is calculated by the net income of your last job. You receive 50% of your average monthly earnings for the first three months of unemployment. After that, the benefit is 45% of your average earnings. The maximum support is 2.5 times the subsistence level.
The duration of unemployment payments depends on your age. Till the age of 50 you receive benefits for six months. If you are between 50 and 55 the period extends to nine months and if you are older than 55 you receive benefits for twelve months.
The monthly retirement pension consists of two elements. There is a monthly payment of around 1,700 CZK. The second element is an earnings-related amount which is calculated on the basis of 1.5% of the personal assessment base per year of coverage. The minimum monthly pension in 2007 was 2,470 CZK.
People without permanent residence in the Czech Republic are entitled to a pension corresponding to the amount of time they spent in employment in the Czech Republic. Pensions may also be paid out abroad.
Some employee groups are eligible for more protection. These include pregnant women, juveniles and also employees taking care of children. These special provisions do also apply to people who are employed by a Czech employer but who do not permanently reside in the Czech Republic.
Maternity leave entitles you to 28 weeks. For multiple births the maximum amount of weeks off that can be taken is 37. Within that time you receive financial support from the government, which is usually around 69% of your average monthly income of the last twelve months.
After maternity leave parental leave may be granted. This has to be requested. It can be taken by either mother or father until the child reaches the age of three. The monthly state support within this time was around 7,500 CZK in 2007.