With effect from 1 January 2024, the social insurance rate for employees is increased to 7.1 % of the employee's social insurance assessment base.
Impact of the consolidation package on sickness insurance contributions
The change comes thanks to a consolidation package that reintroduces the sickness insurance levy for employees in the amount of 0,6 %. This will result in a real reduction in the employee's net pay. The employer's sickness insurance contribution remains unchanged.
Sickness insurance is paid as part of social security contributions. In addition to sickness insurance premiums, this includes pension insurance premiums and, in the case of employer contributions, the state employment policy contribution. The employer pays the employer's contribution on behalf of the employee Czech Social Security Administration.
Who is covered by sickness insurance
The range of persons who are participating in sickness insurance, is listed in § Section 5 of Act No. 187/2006 Coll., on Sickness Insurance. They are both employees and self-employed.
Conditions for employee participation in the insurance
Performance of employment
An employee is covered by sickness insurance if:
- is employed in the Czech Republic (may be temporary performance of work outside the Czech Republic if the place of work is permanently in the Czech Republic
- performs employment abroad for an employer based in the Czech Republic, if the place of work is permanently abroad and he is not compulsorily covered by pension insurance under the regulations of the state in which he is permanently employed, and he resides permanently in the Czech Republic or in another Member State of the European Union
Agreed amount of countable income
An employee is covered by sickness insurance if the agreed amount of countable income from that employment is at least the amount that is eligible for sickness insurance.
Decisive income for participation in sickness insuranceis 4.000 CZK. The average wage is used to determine the qualifying income. The amount of the qualifying income is one tenth of the average wage rounded down to the nearest five hundredth of a crown (Section 6(2) of Act No. 187/2006 Coll. on Sickness Insurance). Average wage for 2024 is 43.967 CZK.
Insurance for small-scale employment
Small-scale employment is employment where the the agreed amount of countable income is less than the qualifying income for sickness insurance (In 2024, the amount or countable income has not been negotiated at all.
Small-scale employment may be employment held under a contract of employment or under an employment agreement. It does not apply to a work performance agreement.
For small-scale employment, the the employee is insured only in those months in which he or she has earned at least the amount of countable income equal to the qualifying income. If an employee has one employer multiple small-scale jobs, the countable earnings from these jobs are added together and, if the total of these earnings exceeds the amount of the qualifying income for sickness insurance, all these jobs are insured in that month.
Insurance for work performance agreements
Employees who work for their employer under a work performance agreement are insured for sickness if they are charged countable income exceeding CZK 10,000.
An employee working under a work performance agreement is insured only in those months in which his or her countable income exceeds CZK 10,000. If the employee works for his employer in one calendar month on more than one agreement to perform work, then the imputed income from these agreements is added together and if the total income from these agreements exceeds CZK 10,000, then these agreements are insured.
As already mentioned, Sickness insurance is paid under social security. The social security contributions paid for both the employee and the employer are shown in A summary of premiums, that the employer sends by the 20th day the calendar month following the calendar month for which it is sent to the relevant District Social Security Administration.
AVENSIO SW programme
Increased rate of social security contributions for employees due to the introduction of the rate of 0.6 % per employee is part of the calculation a program with this rate will automatically count when processing payroll for the month of January 2024.
Therefore, it is important that you have the current version of AVENSIO SW installed for January payroll processing.
