Employment & HR in the Czech Republic for Hungarian Companies: Key Rules, Risks and Practical Steps

If your Hungarian company is considering hiring employees in the Czech Republic (or you already operate a Czech branch/subsidiary), Czech labour law will impact your contracts, payroll processes, terminations, working time setup and HR compliance.

If your Hungarian company is considering hiring employees in the Czech Republic (or you already operate a Czech branch/subsidiary), Czech labour law will impact your contracts, payroll processes, terminations, working time setup and HR compliance.

This guide gives you a practical overview of what you need to do to stay compliant and how to minimise disputes, fines and invalid terminations under Czech rules.

Table of contents

1. Czech employment contracts: basic structure
2. Indefinite-term employment
3. Fixed-term employment: limits and risks
4. Mandatory terms, onboarding information and probation
5. Working time, overtime and record keeping
6. Notice periods and termination timing
7. Termination reasons: why wording matters
8. Protected periods: when you cannot terminate
9. Wages and minimum wage in the Czech Republic
10. Social security, payroll taxes and cross-border scenarios
11. Annual leave and key employee benefits
12. Employer registrations and statutory HR duties
13. Temporary assignment and agency workers
14. Executive summary for management
15. FAQ: the most frequent questions
16. How ARROWS can support you

Czech employment contracts: basic structure

Czech labour law is largely employee-protective and formalistic. That means many “small” mistakes in contracts or HR processes can become a real legal risk (invalid termination, wage claims, labour inspectorate fines).

In the Czech Republic, an employment contract should be in writing and typically sets at least:

• the type of work (job position / role),
• place of work,
• start date,
• wage/salary terms (or a reference to internal wage rules),
• basic working time arrangements.

If you are used to Hungarian standards or flexible “business-first” templates, note that Czech practice often requires higher precision in termination clauses, working time rules and internal policies.

Indefinite-term employment

Indefinite-term employment is the default standard in the Czech Republic. From a risk perspective, the key point is that termination is not “at-will”. As an employer, you generally need a valid statutory ground for unilateral termination by notice.

In practice, the most common lawful grounds relate to:

• organisational reasons (redundancy),
• insufficient performance (with proper documentation and warnings),
• breach of duties (with correct qualification and evidence),
• medical reasons (occupational health and fitness rules).

Well-prepared documentation and HR process discipline are crucial. This is where many cross-border employers unintentionally create exposure.

Fixed-term employment: limits and risks

Fixed-term employment is permitted in the Czech Republic, but it is not unlimited. The law sets rules that effectively prevent “permanent fixed-term rotation”.

As a practical baseline, you should plan fixed-term roles with these constraints in mind:

• fixed-term contracts are subject to statutory limits (including extensions),
• repeated renewals may be restricted,
• misuse may lead to reclassification and employment claims.

Business risk: if you rely on fixed-term structures to keep maximum flexibility, you may end up with the opposite outcome — higher dispute risk and weaker enforceability.

Mandatory terms, onboarding information and probation

Besides the contract itself, Czech law also expects employers to fulfil certain information duties (e.g., key working conditions, internal rules, salary payout terms, working time patterns). Many international employers underestimate this layer.

Probation period is common and strongly recommended where possible. It gives you the option to terminate the employment in a simpler way during the initial phase (within legal boundaries).

Practical tip: if you operate with multiple sites in the Czech Republic, define the place of work carefully. A vague definition can complicate changes, relocations and travel cost claims.

Working time, overtime and record keeping

Standard working time is typically 40 hours per week, but Czech law allows different working time arrangements (shift work, uneven distribution, part-time). The key is that overtime and records are strictly regulated.

From the compliance perspective, the biggest risk is not “intentional underpayment” — it is missing evidence:

• missing working time records,
• unclear overtime approval rules,
• poorly defined remote work patterns (hybrid work),
• incorrect allowance calculations.

If your Czech operation scales up, it is worth implementing a simple “work time governance” system early.

Notice periods and termination timing

Notice periods in the Czech Republic are structured and cannot be freely “shortened by policy”. The process also has strict timing and delivery rules. Even if your termination reason is valid, the termination can fail if:

• the notice is not delivered correctly,
• the reason is vague or misclassified,
• the employer cannot prove the underlying facts,
• the termination hits a protected period (see below).

Bottom line: Czech terminations are often won or lost on procedure, not on “who is right”.

Termination reasons: why wording matters

Czech labour disputes often focus on whether the employer chose the correct statutory ground and described it precisely enough.

Your termination reasoning should be:

• clear and understandable,
• fact-based and provable,
• legally aligned with a specific statutory category.

“Generic HR language” is dangerous. When disputes arise, courts and labour inspectorates expect legal precision.

Protected periods: when you cannot terminate

Czech law protects employees in certain situations (“protected periods”). During these periods, an employer may be restricted from termination by notice, especially in cases involving:

• temporary incapacity for work (sick leave),
• pregnancy and maternity-related protections,
• parental leave,
• other protected statutory circumstances.

If you are planning a termination and the employee is in a protected period, you should treat the case as high-risk and get a legal assessment first.

Wages and minimum wage in the Czech Republic

The Czech Republic has a statutory minimum wage framework and additional rules affecting payroll compliance (wage components, allowances, pay slips, wage deductions).

For Hungarian companies, the typical risk is not the base salary — it is the payroll “details”:

• unpaid overtime / incorrect overtime rate,
• missing or incorrect wage components (bonuses, allowances),
• incorrect wage deductions,
• incorrect classification of contractors vs. employees (misclassification risk).

Recommendation: run a payroll compliance check when you set up your Czech operations, especially if you hire quickly.

Social security, payroll taxes and cross-border scenarios

If your Hungarian company operates in the Czech Republic, you will usually deal with Czech payroll obligations (social security and health insurance contributions, employer reporting, and wage taxation).

Cross-border scenarios require extra attention:

• employees working partly in Hungary and partly in the Czech Republic,
• short-term assignments / postings,
• group structures with regional mobility,
• use of EU coordination rules for social security.

Errors in registration or reporting can lead to penalties and additional administrative burden, even if the core salary is correct.

Annual leave and key employee benefits

Employees in the Czech Republic are entitled to statutory paid annual leave. Local rules also shape how leave accrues, how it is scheduled, and how you deal with leave balances at termination. From an HR risk standpoint, the most common issues include:

• incorrect leave accrual and tracking,
• unpaid leave balances at termination,
• internal policies not aligned with statutory limits.

Employer registrations and statutory HR duties

When employing in the Czech Republic, employers typically need to ensure compliance in areas such as:

• registration with Czech social security and health insurance systems,
• payroll reporting and monthly obligations,
• occupational health and safety (OHS) arrangements,
• data protection and HR privacy compliance (GDPR),
• workplace documentation and internal regulations where needed.

Practical reality: labour inspectorate controls focus on documentation quality and evidence. If your HR setup is “informal”, you will feel it during an audit.

Temporary assignment and agency workers

Using temporary agency workers is possible in the Czech Republic, but it comes with additional rules and shared responsibilities. The business advantage is flexibility. The legal downside is that compliance is more complex (equal treatment, working time records, OHS duties, documentation).

If you use agency work or temporary assignments, review your contracts and define responsibility clearly: who bears which risk, who keeps which records, and who manages compliance tasks.

Executive summary for management

• No “at-will” termination: terminations require statutory grounds and correct procedure.
• Documentation is critical: disputes are often decided by evidence and process discipline.
• Protected periods matter: terminating during protected periods can be invalid and costly.
• Payroll compliance is detailed: overtime, allowances and deductions drive real exposure.
• Cross-border mobility adds complexity: posting and multi-country work requires careful setup.

FAQ: the most frequent questions

1) Can we use our Hungarian employment contract template in the Czech Republic?

You can use it as a starting point, but it should be adapted to Czech statutory requirements, terminology and termination rules. A direct “copy-paste” approach typically creates hidden risks.

2) Do we need Czech-law contracts if we employ people in the Czech Republic?

In practice, yes — at minimum the mandatory Czech employment standards will apply. Cross-border arrangements and postings may require individual structuring.

3) What is the biggest termination risk for foreign employers in the Czech Republic?

Procedural errors and weak documentation (incorrect statutory ground, vague wording, wrong delivery, missing evidence). Many disputes are not about facts, but about process.

4) What should we do first if we plan to hire in the Czech Republic?

Set a compliant contract template, basic HR documentation, payroll governance and working time record-keeping. This prevents most problems before they start.

How ARROWS can support you

If you are a Hungarian company operating in the Czech Republic, we can help you with:

• employment contract drafting and localisation for Czech law,
• termination strategy and documentation (incl. high-risk cases),
• HR compliance setup (working time, payroll processes, policies),
• cross-border employment structuring and postings,
• labour dispute prevention and representation.

You can also see our dedicated Czech labour law practice area here: Labour Law – ARROWS.

Disclaimer: The information in this article is for general guidance only and does not constitute legal advice. Laws and their interpretation may change over time. For verification of the current legal framework and its application to your specific case, please contact ARROWS. Each case requires an individual approach.