Dutch vs. Czech Employment Contracts:

Are you a Dutch company planning to hire employees in the Czech Republic? While both countries are EU members, their employment laws have critical differences that can lead to costly mistakes. This guide provides specific, practical answers from our English-speaking lawyers in Prague to help you navigate Czech employment law with confidence. As an international law firm operating from Prague, European Union, we specialize in helping foreign clients avoid these pitfalls.

Do you need advice on this topic? Contact the ARROWS law firm by email office@arws.cz or phone +420 245 007 740. Your question will be answered by "Mgr. Vojtěch Sucharda", an expert on the subject.

The Employment Framework: Key Cultural and Legal Starting Points

Understanding the foundational differences in work culture and contract law is the first step to successful hiring in the Czech Republic. Dutch companies often encounter a different set of expectations and legal requirements than they are accustomed to at home.

A Cultural Divide in Work Habits

The Dutch labor market is unique in the EU for its emphasis on work-life balance, reflected in a high prevalence of part-time work. The Netherlands has the shortest average work week in the Union, at around 32 hours, and nearly 50% of the workforce is employed on a part-time basis. This flexible model is deeply integrated into the business culture.

In contrast, the Czech labor market operates on a more traditional full-time model. The standard is a 40-hour work week, and part-time employment is far less common, accounting for only about 5.7% of roles. For a Dutch company used to a large talent pool available for flexible hours, this means recruitment strategies for the Czech market must be adapted to attract candidates who typically expect full-time positions.

Contract Formalities: Written vs. Verbal Agreements

The legal requirements for establishing an employment contract also differ. In the Netherlands, while a written contract is strongly recommended to prevent disputes, a verbal agreement can be legally binding. Dutch employers are, however, obligated to provide a ‘written statement of employment details’ outlining the key terms within one month of the start date.

The Czech Labour Code is stricter. An employment contract is valid only if it is in writing. It must contain three essential elements to be legally compliant: the type of work, the place (or places) of work, and the official start date. Omitting any of these core components renders the contract invalid.

The Critical First Months: Navigating Probationary Periods (Proeftijd vs. Zkušební doba)

The trial period is one of the most common areas where foreign employers make costly legal errors. The Dutch concept of proeftijd and the Czech zkušební doba serve the same purpose—a mutual assessment period—but their legal application is starkly different.

Dutch Rules for Proeftijd: Strict Limitations

Under Dutch law, a probationary period must be agreed upon in writing. The rules on its duration are rigid and depend on the length of the employment contract. Most critically, for any fixed-term contract of six months or less, no probationary period is allowed. Including one renders the clause void.

For longer contracts, the maximum durations are:

• One month for contracts lasting longer than six months but less than two years.
• Two months for permanent contracts or fixed-term contracts of two years or longer.

During a valid proeftijd, either party can terminate the contract immediately, without notice or a stated reason, though the termination cannot be discriminatory.

Czech Rules for Zkušební doba: More Flexibility in Duration

Czech law also requires the probationary period to be agreed in writing no later than the employee's start date. However, the maximum durations are different. For regular employees, the maximum is three months, and for managerial employees, it is six months. An amendment to the Labour Code, effective from June 2025, will extend these to four and eight months, respectively.

A key restriction applies to fixed-term contracts: the probationary period cannot be longer than half the agreed duration of the employment. Termination during this period requires a written notice but is effective upon delivery and does not require a reason. An invalid probationary clause can lead to a court ruling that any termination based on it was unlawful, potentially resulting in significant financial compensation awarded to the employee.

FAQ – Legal tips about probationary periods

1. Can I extend a probationary period in the Czech Republic?
Yes, under the new rules from June 2025, if the initially agreed period is shorter than the legal maximum, it can be extended by written agreement during its term. For help drafting such an agreement, do not hesitate to contact our firm – office@arws.cz.

2. What happens if I agree to a longer-than-allowed probationary period in the Czech Republic?
The clause will be considered partially invalid. The probationary period will be automatically shortened to the maximum length permitted by law. Any termination after this legal maximum but within your agreed-upon (longer) period would be unlawful. To review your contracts for compliance, our lawyers are ready to assist you – email us at office@arws.cz.

Risks of Incorrect Probationary Period Clauses

Risks and penalties	How ARROWS helps
Invalid Clause: Agreeing to a probationary period that violates Czech law (e.g., in a six-month contract where it is not allowed under Dutch-inspired assumptions) renders the entire clause void.	We draft employment contracts that are fully compliant with the Czech Labour Code. Need a contract prepared? Contact us at office@arws.cz.
Unlawful Termination: Firing an employee during what you believe is a valid probationary period, when the clause is legally void, can be challenged as unlawful dismissal, leading to litigation and financial compensation claims.	We provide clear legal opinions on the validity of your current employment clauses to prevent future disputes. Want to understand your legal options? Email us at office@arws.cz.
Significant Financial Penalties: Courts in the EU have awarded compensation equivalent to the full contract salary for unlawful termination based on a faulty probationary clause. Czech courts can impose similar penalties for such errors.	Should a dispute arise, our lawyers will represent you in court to defend your interests and mitigate financial risks. For immediate assistance, write to us at office@arws.cz.

Avoiding the "Permanent Trap": Rules for Fixed-Term Contracts

Both legal systems have regulations to prevent the indefinite chaining of temporary contracts, but the specific triggers that convert a fixed-term contract into a permanent one are different. Misunderstanding these rules can lead to an employee gaining permanent status unintentionally.

The Dutch "Chain Rule" (Ketenregeling)

In the Netherlands, the ketenregeling is a well-known principle. A fixed-term contract automatically converts into a permanent one under two conditions:

1. After three consecutive temporary contracts have been issued.
2. Once an employee has been employed on successive temporary contracts for a total period exceeding three years.

The chain of contracts is considered broken only if there is an interval of more than six months between them.

The Czech "3 times and enough" Rule

The Czech approach is different. A single fixed-term contract cannot exceed three years. This contract can be renewed or extended a maximum of two times. This allows for a total of three fixed-term contracts, with a maximum cumulative duration of nine years.

To break the chain and reset the count, the interval between contracts must be at least three years. The Dutch rule is therefore stricter on total duration (three years vs. nine), but the Czech rule can be stricter if an employer uses multiple short contracts. For example, a fourth one-year contract in the Czech Republic would automatically become permanent, a situation that might not occur under Dutch law depending on the total duration.

The End of the Line: A Comparison of Termination Procedures

Terminating an employment relationship is a legally complex process where the Dutch and Czech systems diverge fundamentally. The Dutch system is characterized by a "preventive check," whereas the Czech system allows for dismissal based on statutory grounds, which can be challenged post-factum.

The Dutch System: Prior Permission Required

In the Netherlands, an employer cannot unilaterally dismiss an employee. They must first obtain permission from a state authority—a process known as a preventieve toets (preventive check). The required route depends on the reason for dismissal:

• UWV (Employee Insurance Agency): Permission is sought from the UWV for dismissals due to economic reasons (redundancy) or long-term illness (over two years).
• Cantonal Court (kantonrechter): The employer must petition the court for dismissals related to personal reasons, such as underperformance, culpable conduct, or a damaged working relationship.

This process is highly formal, requires extensive documentation (such as a detailed performance improvement plan for underperformance), and can take several weeks or months to complete.

The Czech System: Dismissal for Statutory Cause

In the Czech Republic, an employer may issue a notice of termination without prior approval, but only for a limited set of reasons strictly defined in the Labour Code. These include redundancy, business relocation, long-term health issues preventing the employee from working, failure to meet job requirements, or a breach of work duties.

After receiving the notice, the employee has the right to challenge its validity in court within two months. If the court finds the reason for dismissal was not legally sound or sufficiently proven, the termination is declared invalid. For performance-related dismissals, the employer must have issued a formal written warning to the employee within the previous 12 months. This shifts the burden of proof entirely onto the employer to defend their decision in court.

Comparing Notice Periods (Opzegtermijn vs. Výpovědní doba)

The statutory notice periods that employers must observe also differ significantly.

• Netherlands: The notice period is tiered based on the employee's length of service:

• Less than 5 years: 1 month
• 5 to 10 years: 2 months
• 10 to 15 years: 3 months
• 15 years or more: 4 months.

• Czech Republic: A standard notice period of two months applies in most cases, regardless of the length of service.

Our experts on the topic:

FAQ – Legal tips about employee dismissal

1. Can I dismiss an employee for poor performance in the Czech Republic?
Yes, but you must follow a strict procedure. You must first issue a written warning detailing the unsatisfactory performance and give the employee a reasonable time to improve. If performance does not improve within 12 months of this warning, you may have grounds for dismissal. For guidance on this process, get tailored legal solutions by writing to office@arws.cz.

2. What is the most common mistake foreign employers make when terminating an employee in Prague?
The most common error is failing to build a sufficiently strong and documented case for the statutory reason for dismissal. Unlike in the Netherlands, there is no pre-approval, so the entire legal burden falls on the employer in a potential court case. Ensure your termination is legally sound by contacting us at office@arws.cz.

Risks of Unlawful Termination in the Czech Republic

Risks and penalties	How ARROWS helps
Invalid Grounds for Dismissal: Terminating an employee for a reason not listed in the Czech Labour Code, or without sufficient evidence, will result in the dismissal being declared invalid by a court.	We advise on the correct legal grounds for termination and assess the strength of your evidence to ensure your actions are defensible. Need legal help? Contact us at office@arws.cz.
Reinstatement and Back Pay: An employee who successfully challenges their dismissal is entitled to be reinstated in their job and receive full wage compensation for the entire duration of the legal dispute, which can last for years.	We prepare all necessary legal documentation, including written warnings and termination notices, to build a solid and defensible case from the outset. For immediate assistance, write to us at office@arws.cz.
High Litigation Costs: Defending an unlawful termination claim in court is expensive and time-consuming, with significant legal fees and management time diverted from your business operations.	Our experienced litigators will represent your interests in any employment disputes, aiming for the most efficient and favorable outcome for your business. Our lawyers are ready to assist you – email us at office@arws.cz.

 

The Financial Fallout: Understanding Severance Pay Obligations

The financial obligations upon termination represent another major point of divergence. The Dutch concept of a transitievergoeding is fundamentally different from the Czech odstupné, leading to different financial planning for the "cost of exit."

The Dutch Transitievergoeding (Transition Payment)

In the Netherlands, an employee is entitled to a transition payment from their very first day of employment if the employer initiates the termination or chooses not to renew a fixed-term contract. It is a near-universal right intended to help the employee financially bridge the gap to a new job.

The payment is calculated as one-third of a gross monthly salary for each year of service, calculated proportionally for the exact duration of employment. This includes variable components like holiday allowance and bonuses. It is a standard, predictable cost of doing business when an employer ends an employment relationship.

The Czech Odstupné (Severance Pay)

In stark contrast, Czech severance pay is not a universal right. It is a conditional payment, owed only in specific "no-fault" circumstances. An employee is entitled to odstupné only if the termination is due to:

• Organizational reasons (redundancy, business closure, relocation).
• A work-related accident or occupational disease.

Crucially, severance pay is not required for dismissals related to poor performance, misconduct, or other personal reasons. When payable for organizational reasons, the amount is tiered by length of service: one month's average salary for employment under one year, two months' salary for one to two years, and three months' salary for over two years.

Your Expert Partner for Czech Expansion: How ARROWS Protects Your Business

Navigating these differences requires more than a standard contract template; it requires deep local knowledge combined with an understanding of your international business perspective. The risks of getting it wrong are significant, ranging from invalid contract clauses and unintended permanent employment to unlawful termination claims and unforeseen financial liabilities.

As a leading Czech law firm in Prague, EU, ARROWS specializes in guiding foreign companies through the complexities of the Czech legal system. We provide comprehensive preparation of internal company policies that align with the Czech Labour Code and your corporate culture. Our experts handle the drafting of all legally required documentation, from employment contracts to termination agreements, specifically designed to prevent fines and future litigation.

We also offer professional training for your management team on the nuances of Czech employment law, empowering them to make compliant decisions. In the event of a dispute, ARROWS provides robust representation in court or before public authorities. Our expertise is not confined to the Czech border; we leverage our ARROWS International network, built over 10 years across 90 countries, to provide seamless cross-border legal support for clients like you. We proudly support over 250 limited liability companies and 150 joint-stock companies in their operations.

Get tailored legal solutions by writing to office@arws.cz.

Secure Your Czech Workforce with Confidence

Hiring in the Czech Republic offers significant opportunities for Dutch companies looking to expand. However, success depends on understanding and respecting the local legal framework. The differences in contract types, probationary periods, termination rules, and severance obligations are not minor details—they are fundamental principles that carry substantial legal and financial weight.

With the right legal partner, you can avoid these costly pitfalls and build a compliant, productive, and secure team. Don't let legal uncertainty hinder your expansion. Contact ARROWS, your law firm based in Prague, European Union, for expert guidance. Our lawyers are ready to assist you – email us at office@arws.cz.

FAQ – Most common legal questions about hiring in the Czech Republic

1. I have a standard 6-month Dutch employment contract template with a 1-month probation period. Can I use it in the Czech Republic?
No, this is extremely risky. In the Netherlands, a probationary period is illegal in a six-month contract. In the Czech Republic, it is allowed but must not exceed three months. Using a Dutch template could lead you to overlook mandatory Czech clauses, rendering parts of your contract unenforceable. For a fully compliant contract, get in touch with our experts at office@arws.cz.

2. How many temporary contracts can I give an employee before they become permanent in the Czech Republic?
You can have a maximum of three consecutive fixed-term contracts. Each contract can be for up to three years, and the total cumulative duration cannot exceed nine years. Understanding these "3 times and enough" rules is crucial to avoid unintended permanent employment. Need help structuring your contracts? Write to us at office@arws.cz.

3. Do I always have to pay severance when I dismiss an employee in the Czech Republic?
No. Unlike the Dutch transitievergoeding, Czech severance pay (odstupné) is only required for specific organizational reasons (like redundancy) or work-related health issues. It is not payable for dismissals due to poor performance or misconduct. For a detailed analysis of your obligations, contact our firm at office@arws.cz.

4. What is the biggest difference in the dismissal process compared to the Netherlands?
In the Netherlands, you need prior permission from the UWV or a court to dismiss an employee. In the Czech Republic, you can issue a termination notice for a valid legal reason, but the employee can then challenge its validity in court, placing the full burden of proof on you. To ensure your reasons are legally sound, seek immediate assistance by writing to office@arws.cz.

5. Are Collective Labour Agreements (CAOs) as important in the Czech Republic as they are in the Netherlands?
While collective agreements exist in the Czech Republic, they generally do not override statutory employment law to the same extent as many Dutch CAOs can. You must always ensure primary compliance with the Czech Labour Code, which sets the mandatory framework. Get tailored legal solutions for your sector by writing to office@arws.cz.

6. My company is based in Amsterdam. Do I need a Czech legal entity to hire someone in Prague?
No, it is not legally required to establish a Czech entity to hire an employee; a foreign company can handle employer formalities. However, this creates complex tax, social security, and administrative obligations. Our lawyers can advise on the most efficient corporate structure for your needs – email us at office@arws.cz.