Changes to Agreements on Work Performance (DPP) for 2024-2025
Amendments to the Labor Code of the Czech Republic introduce significant changes to the conditions for using agreements on work performance (DPP), a popular form of temporary employment or supplementary income. These changes will affect both employers and employees, with new requirements for central reporting and limits on contributions.
What is a DPP?
An agreement on work performance (DPP) regulates the relationship between an employer and an employee, typically used for temporary or occasional work. This format is commonly used by students, retirees, and individuals on parental leave. Unlike the agreement on work activities (DPČ), DPP is generally used for one-off tasks and has specific conditions.
DPP from the Employer’s Perspective
A fundamental feature of DPP is the limitation of 300 hours of work per year for a single employer. While an employee can have multiple DPPs with different employers, they cannot exceed 300 hours per year with any one employer. Exceeding this limit invalidates the agreement and may result in penalties for illegal employment.
DPP agreements must be made in writing and should include the following key details:
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Identification of both parties
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Description of the work and scope of duties
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Location of work
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Working hours and breaks
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Salary and method of payment
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Terms of vacation
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Procedures for terminating the employment
Starting from January 2024, DPP agreements can also be concluded electronically, which simplifies the organization of remote work.
Changes Effective January 1, 2024
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Minimum and Guaranteed Wage: From January 2024, the hourly wage for DPP must not be less than 112.50 CZK. If a lower wage is agreed upon (excluding overtime, holidays, night shifts, weekends, or work in challenging conditions), the employer must compensate the difference.
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Remote Work: Certain categories of employees, such as pregnant women and those caring for young children or dependent relatives, can request remote work. Employers must compensate related expenses, either as actual costs or a fixed amount (4.50 CZK per hour in 2024).
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Vacation Entitlement: Employees on DPP are entitled to vacation if they work at least 80 hours during the calendar year and the agreement lasted for at least 4 weeks. This applies to continuous agreements, including a combination of DPP and DPČ. Unused vacation must be compensated at termination based on average earnings.
Changes Effective July 1, 2024
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Centralized Reporting: Employers must report all DPP agreements to the Czech Social Security Administration (ČSSZ). This centralized reporting aims to monitor contribution limits and prevent illegal work. The reporting includes agreements made before July 1, 2024, that are still active.
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Electronic Reporting: From August 2024, ČSSZ will implement a new electronic reporting system (VPDPP) for income reporting for employees working under DPP agreements.
Changes Effective January 1, 2025
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“Declared” and “Undeclared” Agreements: Employees can only have one “declared” DPP per calendar month. The specific DPP must be chosen by the employee each month, but the employer must register it with ČSSZ. If the income from the declared DPP does not exceed 25% of the average wage (approximately 10,500–11,000 CZK per month in 2025), no social or health insurance contributions are required. This condition also applies to simplified tax regimes.
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“Undeclared” Agreements: For all other DPPs with the same employee, standard social and health insurance contributions and income tax withholdings are required, except for DPPs with “small-scale” income (up to 4,000 CZK per month).
