[Czech Republic] Payroll changes in 2024

Every year, the basic parameters affecting the calculation of wages are changing. We have already informed you about a large number of legislative changes in our articles on 4.12.2023 and 22.12.2023. If you have not read them yet, we recommend you to have a look at them. However, in this article we will look at the remaining changes.

Update: 15.01.2024

Minimum and guaranteed wage

Since 1 January 2024, the minimum wage has increased from CZK 17,300 to CZK 18,900 per month, respectively from CZK 103.80 per hour to CZK 112.50 per hour. This also increases the minimum assessment base for health insurance, which is equal to the minimum wage. However, the increase in the minimum wage also affects other wage parameters.

For example, the minimum wage that an employee must reach in order to be paid a tax bonus (negative tax) has been increased to CZK 9,450 (half of the minimum wage). Also, the minimum surcharge for work in difficult working environments (10% of the minimum wage) is increasing.

Also, guaranteed wages for certain groups are increasing.

Reduction thresholds

The reduction thresholds for sickness insurance, which affect the maximum amount of sickness benefits and indirectly also the maximum amount of wage compensation for sickness paid by the employer for the first 14 days, have increased by 9%. This is one of the largest increases in the last 8 years. The highest increase was recorded in 2022 when the reduction thresholds increased by 9.8%.

New reduction thresholds for 2024 (in brackets are the hourly rate thresholds for sick pay compensation):

1. reduction limit is CZK 1,466 (CZK 256.55)

2. reduction limit is CZK 2,199 (CZK 384.83)

3. reduction limit is CZK 4,397 (CZK 769.48).

Increase in the exemption limit for meal vouchers and meal voucher lump sums

A decree of the Ministry of Labour and Social Affairs (MoLSA) has increased the values of meal allowances for business trips. Since the limit for the tax exemption amount for meal vouchers and meal vouchers lump sum is linked to the upper limit of the meal allowance that can be provided to salaried employees during a business trip lasting between 5 and 12 hours, this limit is also changed. The new amount of the said upper limit is CZK 166. The limit is set at 70% of this threshold, so the new exemption limit is CZK 116.20.

Maximum assessment base for social insurance

With the increase of the average wage for 2024, the annual maximum assessment base for social insurance has also increased. Once an employee reaches this limit during the year, neither the employee nor the employer will pay social insurance. For 2024, this limit is CZK 2,110,416.

Please note that from this year onwards there is a discrepancy between the maximum assessment base for social insurance and the progressive tax threshold. As we have already reported, the consolidation package has reduced the threshold for the progressive tax from 48 times to 36 times the average wage (respectively from 4 times to 3 times in the case of a monthly period). However, the maximum assessment base for the meal voucher lump sum remained at 48 times. The annual limit for the progressive tax is thus CZK 1,582,812.

Changes in payroll bailiff deductions

The extraordinary increase in the standard housing costs, which applied only for 2023, has been terminated. This has effectively reduced these standard costs and thus the real decrease in non-confiscable amounts for the liable person and each dependent.

The new non-confiscable amount per liable person is CZK 12,705 (a reduction of CZK 933). For a dependent person it is CZK 3,176 (reduction of CZK 234). The amount above which the remainder of the net salary is deducted without limitation is CZK 28,586. The amounts have been mathematically rounded for simplicity, although the Government Regulation does not allow such rounding.

Reduction of the lump sum compensation for home office

The lump sum amount of compensation for working remotely (home office) has been reduced by decree as of 1 January 2024. The new amount is CZK 4.50 for each hour. It is therefore a reduction of CZK 0.10.

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