Hello, dear employers!
UAtalents team together with White&Case company collected frequently asked questions and prepared information about how to hire Ukrainians as a Czech employer. We want to give you more understanding of how it works in Czech Republic. Generally, we divided information into 5 different topics and so each topic we are going to analyze each separately:
- Residence and work permit;
- Employment contract;
- Social security insurance;
- Remote regular employee;
- Remote contract employee.
So, let's understand in more detail!
Residence and work permit
- Are Czech employers allowed to employ refugees from Ukraine?
Generally yes, subject to the following conditions.
The general rule is that Czech employers are allowed to employ citizens from Ukraine in the Czech Republic if they have a residence permit and a work permit.
Further, the Czech government offers a temporary protection visa to all refugees from Ukraine. The temporary protection visa counts as both the residence permit and the work permit. Therefore, once the refugee from Ukraine obtains the temporary protection visa, he/she is allowed to work in the Czech Republic immediately and under the same conditions of employment as foreigners with residence and work permit, i.e. they have free access to the labor market without the need for any further permit. The temporary protection visa also enables them to work as an independent freelancer. However, special professional access requirements (e.g. a license to practice medicine) need to be complied with.
2. Is there a possibility to employ refugees before they receive a visa?
The new arrivals should not work before obtaining the temporary protection visa. However, the request for the temporary protection visa can be made immediately upon arrival in the country at one of the regional hotspots, and the visa is generally issued without delay. The issue of working before obtaining the temporary protection visa should thus not arise in practice.
3. Which documents must the employer request from the employee?
- Is it necessary to provide an employment contract in Ukrainian language?
The employment contract can be in Czech only. It would also be feasible to provide an English language employment contract. On the other hand, as a general rule of private law, the employee – as any other party to a contract – should understand what they have signed. In that respect, Czech language contracts may be signed without further ado with Ukrainians who have a reasonable degree of understanding Czech. For the others, a Ukrainian version should also be provided to avoid a future challenge to the effect that the employee did not understand his/her obligations.
2. Does the employment contract need to provide for specific provisions?
Social security insurance
- Do Czech employers have to pay social security contributions for employed Ukrainian refugees?
For Ukrainian citizens employed in the Czech Republic, the Czech social security and health insurance law provisions apply. All Ukrainian employees in the Czech Republic are subject to Czech social security and health insurance law as any other employee. This includes compulsory Czech health, sickness, unemployment and pension insurance. Therefore, the employer is obliged to pay the statutory employer contribution to these insurance schemes for its Ukrainian employees as well.
2. Which documents must the employer request from the Ukrainian refugee?
See above. In addition, the Ukrainian refugee is obliged to register with the Czech health insurance company (VZP), which is obligated to accept the Ukrainian refugee as a member in the compulsory health insurance benefit scheme. Within 8 days after the commencement of the employment, the Czech employer is obliged to inform the VZP.
Remote regular employee
- Is it feasible for an employer in the Czech Republic to employ Ukrainian citizens that still reside in Ukraine as (regular) employees?
It is generally feasible for a Czech Republic-based employer to remotely employ Ukrainian citizens that still reside in Ukraine. However, since such a Ukrainian citizen does not come to the Czech republic and does not apply for temporary protection visa, such person is not covered by the specific regulations under the “Lex Ukraine”. The situation is the same as with any other employment of people residing in a third country.
2. Is it possible to remotely employ Ukrainian citizens that reside in the neighbour countries of Ukraine as (regular) employees?
3. Is the employer of a (regular) employee obliged to pay tax in Ukraine?
The Czech Republic and Ukraine entered into a double taxation treaty. According to this treaty, profits of an enterprise residing in one treaty country are generally only taxed in such country. However, if the enterprise has created a permanent tax establishment in the respective other country, profits allocated to such tax establishment are taxed in the country in which the tax establishment is situated. Generally, the risk of creating a permanent tax establishment exists notably when (i) an individual is employed for more than six out of twelve months, (ii) the activity is consistent with the core business of the employer and could not be considered as preparatory or auxiliary, or (iii) the work is mostly performed from one place (i.e. office or employee’s own apartment). A case-by-case analysis of the respective tax law situation from a Ukrainian tax law perspective would be recommended.
Remote contract employee
- Is it feasible for a company based in the Czech Republic to employ a Ukrainian citizen that still resides in Ukraine as independent contractor?
Yes, an individual can be engaged as an (independent) “private entrepreneur” if such individual is materially independent from instructions of the Czech company. The individual is then generally responsible for his/her own registrations and legal regime.
2. Is the employer (principal) of a Ukraine based private entrepreneur obliged to pay tax in Ukraine?
This is generally not the case. In case of the engagement of the individual as a private entrepreneur who will be acting independently and provide services to a non-resident entity, such non-resident entity generally does not create a permanent tax establishment of the Czech company in Ukraine. A case-by-case analysis of the respective tax law situation from a Ukrainian tax law perspective is nonetheless recommended.
3. What should be avoided in order to safeguard the status of the private entrepreneur as independent contractor?
The individual must be materially free from instructions of the Czech company. Therefore, specific deliverables should be pre-agreed in the individual contract/order. The individual should use its own equipment, including office/apartment space, and the email address and signatures should make the contractor status visible.