Types of employment contracts: DPP, DPČ, HPP

The Czech Republic offers several types of employment contracts that regulate the relationship between employer and employee. Depending on the type of employment, the scope of work and the level of obligations, the parties can choose from the following options: employment contract (HPP), work performance agreement (DPP ) and work activity agreement (DPČ). Each of these agreements has its own peculiarities, which are important to take into account when choosing the most suitable cooperation option.

The employment contract (HPP) is the most common form of employment in the Czech Republic. It is concluded for an indefinite or fixed term and provides the employee with a high level of social protection. The working week in this type of contract is the standard 40 hours, but in individual cases, such as shift work, it can be shortened. The employee is entitled to annual paid leave, which is a minimum of 4 weeks (20 working days), but in some organizations this period can be increased.

Social and medical insurance for employees working under an employment contract is compulsory. The employer deducts 6.5% for social insurance and 4.5% for health insurance from the employee's salary. In addition, the employer contributes 25% to the social insurance system and 9% to the health insurance system. This guarantees the employee's right to medical care, payment of sick leave, and the accumulation of pension points, which will affect the size of the pension in the future.

As for taxes, the income tax rate is 15%, but an increased rate may apply in case of high income (exceeding a certain limit). The employer is also obliged to take into account tax benefits if the employee has taken them into account, such as a tax deduction for children or a non-working spouse.

At the conclusion of an employment contract, a probationary period may be established, which lasts up to three months, and up to six months for managerial positions. During this period, both the employee and the employer may terminate the contract without giving any reasons. However, after the completion of the probationary period, the employment relationship can only be terminated if the notification period, which is usually two months, is observed.

• Working hours: a standard week of 40 hours (or 37.5 hours with a shift schedule).
• Vacation: minimum of 20 working days per year.
• Social and health insurance: mandatory contributions by employer and employee.
• Taxes: income tax 15%, tax exemptions are available.
• Probationary period: up to 3 months (up to 6 months for managerial positions).
• Termination of the contract: the standard notice period is 2 months.

A DPP is a variant of the employment relationship designed for one-off or short-term work. This type of contract is popular among students, retirees and those looking for an additional source of income. The main feature of this contract is the limitation on the number of working hours: the employee cannot work more than 300 hours per year for one employer. Because of this, DPP is rarely used for long-term employment.

If the DPP income does not exceed 10,000 kronor per month, the employer is not obliged to pay insurance premiums. This makes this work format advantageous for both parties, but the employee does not gain seniority and is not entitled to paid sick leave. If earnings exceed the limit, social security and health insurance contributions are deducted.

As far as taxation is concerned, the standard rate is 15%. However, if an employee signs a tax return (known as a "pink form" - růžový papír), he or she can take advantage of tax deductions and receive a refund of part of the taxes paid at the end of the year.

DPP does not provide for a probationary period, nor does it oblige the employer to provide paid vacation. An employee can be dismissed at any time without prior notice, which makes this type of contract flexible but less stable than an employment contract.

• Maximum number of hours: up to 300 hours per year with one employer.
• Social and health contributions: not charged if the salary does not exceed 10,000 kroner per month.
• Taxes: standard rate of 15%, a refund of part of the tax is possible upon signing the tax return.
• Probationary period: none.
• Termination of the contract: possible at any time without notice.

DPČ is a compromise between DPP and HPP. It allows the employee to work part-time, but still receive part of the social guarantees. Under DPČ, an employee can work no more than 20 hours per week on average during the calculation period, which can last up to 52 weeks. This format is often used for long-term but part-time employment, for example, if the employee works on a shift schedule or combines several jobs.

If the DPČ income is less than 3,500 EEK per month, no insurance premiums are charged, but if this threshold is exceeded, the employer is obliged to withhold social and health payments. It is important to take this into account when planning your salary, because as your income increases, the amount of deductions also increases.

The DPČ does not require a mandatory probationary period, but provides for a notice period upon dismissal - usually 15 days. This gives the employee some time to find a new job if the contract is terminated. However, paid vacation is not formally provided for in the DPČ, although in some cases the employer may include it in the terms of the contract.

• Working hours: no more than 20 hours per week on average per year.
• Social and health insurance: compulsory if the salary exceeds 3,500 kronor per month.
• Taxes: 15% rate, with a tax return it is possible to reduce the tax burden.
• Probationary period: none.
• Termination of the contract: the standard notice period is 15 days.