Money, banknotes, Czech currency, koruna, savings – illustration photo.
Prague – The threshold of income from which workers with a work performance agreement (DPP) pay levies should be adjusted from next year. Instead of 10,000 crowns, it would be a quarter of the average wage for one employer. From agreements with multiple employers, the insurance premium would then be deducted from earnings above 40 percent of the average wage. So-called contract workers should also pay for health insurance. In total, they would pay 31.9 percent. Work is to be newly registered, the register should be kept by the social administration. This follows from the proposed amendments in the government's consolidation package. According to the Ministry of Labour, the state lost roughly 15 billion crowns in levies from agreements in 2021. According to the department, the workers had about 1.8 million DPP.
“Currently, agreements to carry out work instead of casual employment are the only and frequent source of income for some employees. The reason is primarily the exception in the area of social and health insurance… You can be employed in this way by several employers at the same time. Consequently, insurance contributions are not paid even from relatively large monthly incomes,” the ministry stated in the documents for the package.
Social and health contributions are not paid if the monthly remuneration for the work performance agreement (DPP) does not exceed 10,000 crowns. Newly, for one employer, it should be a quarter of the set average wage, rounded down to five hundred crowns. For multi-employer agreements, the limit should be moved to 40 percent of the average wage. The average salary for this year is 40,324 crowns, after rounding it is 40,000 crowns. If the rules were already in effect, the limit would remain at 10,000 crowns for agreements with one employer. With several employers, it would reach 16,000 crowns. The authors state in the documents that it should be roughly on the minimum wage. This year it is 17,300 crowns. The amounts will be adjusted for next year. In its April prediction, the Ministry of Finance states that the average salary could rise by eight percent this year.
An employee with DPP should pay 31.9 percent. 28 percent would go to pensions and 1.2 percent to employment policy. In addition, the contract holder should pay another 2.7 percent for health insurance.
According to data from the statistical office, which the ministry recently provided to ČTK, in 2020 workers had roughly 1.5 million DPPs. Last year, the number rose to 1.8 million crowns. The resort stated that, according to statisticians' data, levies are not paid on about 54 billion crowns of contractual earnings. The social insurance system thus loses approximately 15 billion crowns. In the documents for the package, the authors also point out that, due to non-payment of levies, contract workers are either not entitled to a retirement pension at all, or receive only a very small amount. They then receive social benefits.
According to the proposal, contract work is to be registered. The register would be maintained by the Czech Social Security Administration (ČSSZ). Employers will have to notify the office of the amount of the contractor's earnings for the given month. The administration, in turn, will inform all the contractor's companies if his income exceeds the limit, so that the levies are paid. The worker must tell the company where he works everywhere according to the agreement. Violations of the rules are subject to fines.
The social administration will be able to hand over the data to the labor inspectorate or labor authorities. Officials who process benefits should thus obtain information about the income of the beneficiary when assessing the right to aid from the state.