Employer of Record in the Czech Republic
The Employer of Record hiring model is often presented as a quick way to hire staff abroad without opening a local subsidiary. In the Czech Republic, however, there is no standalone legal definition of EOR. The only lawful framework that allows a third party to employ staff on behalf of another company is agency employment (agenturní zaměstnávání), regulated by the Labour Code.
Under this structure, the provider acts as a licensed employment agency, the worker signs an employment contract with that agency, and the client company — known as the “user undertaking” — directs the employee’s day-to-day activities. The arrangement is valid only if the provider holds a licence issued by the General Directorate of the Labour Office and complies with strict rules on contract registration, financial guarantees, equal treatment of agency workers, and limits on assignment length.
This distinction is critical. Using an unlicensed “EOR” in the Czech Republic risks non-compliance, potential fines, and reclassification of the working relationship. A compliant EOR solution, by contrast, provides companies with a legal and auditable way to place staff in the country without setting up their own Czech entity.
Understanding the EOR Model in Czechia
Globally, an Employer of Record (EOR) allows a company to hire staff in a country where it has no legal entity. The provider takes on the formal role of employer, drafting contracts, handling payroll, withholding taxes, and ensuring compliance, while the client company directs the employee’s work.
In the Czech Republic, this arrangement is channelled through agency employment. The law defines three parties:
- The agency (licensed EOR provider): the legal employer that signs the contract, pays wages, and meets all statutory obligations.
- The employee: formally engaged by the agency but assigned to a client.
- The client company (user undertaking): supervises and manages the employee’s daily work.
This structure is strictly regulated. An EOR provider must hold a valid licence from the Labour Office, maintain financial guarantees, and register every contract. Agency workers are entitled to the same pay and core conditions as comparable direct hires at the client company. Assignment length is capped, with only limited exceptions.
In practice, this means that while “EOR” exists in the Czech Republic, it is not a free-form service — it is a regulated legal mechanism with defined roles and boundaries.
Legal Framework for Talent Engagement in the Czech Republic
Czech labour law sets out clear pathways for engaging staff, and any hiring strategy must fit within one of these recognised structures.
The most traditional option is direct employment through a Czech subsidiary (most often a společnost s ručením omezeným, or s.r.o.). This route gives the parent company full control but requires incorporation, tax registration, and ongoing compliance with local employment and corporate obligations.
The second recognised model is agency employment (agenturní zaměstnávání), which underpins all lawful Employer of Record arrangements in the country. A licensed agency employs the worker and assigns them to a client company. The agency handles contracts, payroll, and social contributions, while the client directs the day-to-day work. Licensing by the Labour Office is mandatory, and equal-treatment rules guarantee that agency staff receive the same pay and conditions as comparable direct employees.
Another common route is independent contracting, where individuals operate as self-employed professionals (osoba samostatně výdělečně činná, OSVČ). This is lawful if the work is genuinely independent — meaning the contractor controls their schedule, uses their own tools, and serves multiple clients. If the relationship in practice resembles employment, however, authorities may treat it as the prohibited švarcsystém (disguised employment), exposing both parties to fines and backdated contributions.
Finally, companies may engage through outsourcing or service contracts with Czech suppliers. In this case, the supplier provides a defined output or service and retains full control over its own workforce. What distinguishes outsourcing from agency work is who supervises the staff: if control shifts to the client, the relationship risks being treated as agency employment and subject to licensing rules.
Together, these models form the legal framework. Any arrangement outside them, such as an unlicensed EOR, is not recognised under Czech law and carries compliance risks for both provider and client.
Key Compliance Rules and Restrictions
Agency employment in the Czech Republic is subject to some of the most detailed regulation in the region. Companies considering an EOR arrangement need to be aware of several core restrictions.
Duration of assignments. Agency workers can only be assigned to the same client for a maximum of 12 consecutive months. Extensions are permitted in limited cases, such as covering an employee on parental leave. Repeated use of agency contracts to keep the same worker in place beyond this limit can be treated as an attempt to bypass direct employment obligations.
Equal treatment requirement. The Labour Code requires that agency workers receive the same pay, working time, rest periods, and basic benefits as comparable employees of the client company. This parity must be maintained for the full duration of the assignment, and it is the responsibility of the agency to document and enforce it.
Termination protections. Czech law sets out narrow grounds for dismissal, statutory notice periods, and severance entitlements based on length of service. Only the agency, as the legal employer, can terminate the contract, and it must follow the prescribed procedures. Clients cannot unilaterally dismiss agency workers.
Registration and reporting duties. Employment contracts must be registered with the Labour Office, and the agency must hold a valid licence and maintain financial guarantees. Regular payroll reporting and contributions are mandatory, with strict oversight.
Permanent establishment risk. An EOR arrangement does not eliminate corporate tax exposure. If employees in Czechia perform activities such as contract negotiation, revenue generation, or operational management, they may create a taxable presence for the foreign company, regardless of who is the legal employer.
Together, these rules define the boundaries of lawful EOR use in the Czech Republic. They allow flexibility in market entry, but only if carefully observed.
When Companies Use an EOR in Czechia
The EOR model in the Czech Republic is most useful when speed, compliance, and flexibility are equally important. Common scenarios include:
Testing the market before incorporation. Companies that want to explore opportunities in Czechia without immediately setting up a subsidiary can employ staff through a licensed agency arrangement, giving them a compliant presence on the ground while they evaluate long-term strategy.
Hiring small teams or single employees. Opening a legal entity for one or two hires is rarely cost-effective. An EOR makes it possible to put those employees on payroll and extend statutory protections quickly, without the administrative burden of incorporation.
Converting contractors into employees. The Czech authorities actively police disguised self-employment (švarcsystém). Businesses relying on freelancers who in practice function like employees often need to transition them onto proper contracts, which an EOR can provide.
Employing expatriates. Non-EU nationals require work and residence permits that must be sponsored by a local employer. A licensed agency can take on this role, ensuring that expatriates are employed and registered lawfully.
Project-based or short-term engagements. Temporary projects that require a workforce for months rather than years can be staffed through an EOR, with contracts tied to project timelines and compliance obligations managed centrally.
Coordinating multi-country expansion. For companies entering several new markets at once, using a Global EOR provides a consistent way to employ in Czechia alongside other jurisdictions, with harmonised documentation and risk management.
Global Employment Services in the Czech Republic by Acumen International
As Employer of Record in Czechia, Acumen International assumes the legal and administrative responsibilities that allow you to manage staff on the ground without creating a local entity. Our scope covers:
- Employment contracts and onboarding. Drafting compliant Czech-language contracts, registering them with the Labour Office, and onboarding staff in line with statutory requirements.
- Payroll and tax administration. Running monthly payroll, withholding and remitting income tax and social contributions, issuing payslips, and filing reports with local authorities.
- Working time and benefits compliance. Ensuring adherence to legal rules on working hours, overtime, rest periods, annual leave, and paid public holidays, and other mandatory employee benefits.
- Equal treatment enforcement. Aligning agency workers’ pay and conditions with those of comparable direct employees at the client company, as required by law.
- Immigration support. Sponsoring work and residence permits for non-EU nationals and managing local registrations for expatriate staff.
- Termination and offboarding. Handling lawful notice periods, severance pay, and de-registration with statutory bodies to ensure a clean exit process.
This approach gives international employers a compliant, auditable way to put people on the ground in Czechia while keeping employment risk and administration with Acumen.