Discount on social security contributions for part-time work

Act No. 216/2022 Coll., which brings an amendment to the original amendment to Act No. 589/1992 Coll. on social security contributions and contributions to state employment policy, will enter into force on 1 February 2023.

Employers may reduce social security contributions by 5 p.p. if they meet the conditions set out below, and only for employees whose contracted hours of work are at least 8 hours per week and do not exceed 30 hours per week. The exception is employees up to the age of 21, for whom part-time work is not a condition for applying the reduction.

Conditions for entitlement to the premium reduction

The following groups of employees are eligible for a reduction in social security contributions:

• Employees over 55 years of age.
• Employee who is a parent or adoptive parent of a child under the age of 10 – the relationship to the child and the age of the child is proven by the child’s birth certificate and this decision.
• Employee who is caring for a close person under 10 years of age who is dependent on the assistance of another person in Grade I (light dependence), or for a close person who is dependent on the assistance of another person in Grade II (moderate dependence) or Grade III (heavy dependence) or Grade IV (total dependence) – this care shall be proved by a certificate from the regional branch of the Labour Office (not older than 1 month) and an affidavit.
• An employee who is also preparing for a future profession by studying (at a secondary school or university); the study is assessed in accordance with Section 21(1)(a), Section 22 and Section 23 of the Pension Insurance Act – this study is then evidenced by a certificate from the relevant school and, in the case of study abroad, by a decision of the Ministry of Education and Science stating that this study is equivalent to study in the Czech Republic.
• Employee who, in the 12 calendar months preceding the calendar month for which the discount on the insurance premium is claimed, has entered retraining as a jobseeker pursuant to Section 109 or Section 109a of the Employment Act – the facts of this retraining are evidenced by a certificate from the relevant branch of the Labour Office.
• Employee who is a person with a disability pursuant to Section 67(2) of the Employment Act – this disability shall be evidenced by an opinion or certificate of the social security authority on disability or a certificate or decision of the social security authority on disability.
• Employees under 21 years of age.

At the same time, the following conditions must be met:

• Arranging shorter working hours than the weekly working hours. The extent of the shorter working time so agreed must be between 8 hours and 30 hours per week.
• In the case of multiple employment with the same employer, the above range applies to all the jobs taken together, whether or not they give rise to participation in the insurance.
• For employees under the age of 21, the arrangement of a part-time job is not a condition for the granting of the premium reduction.
• The employee’s assessment base or the aggregate of the employee’s assessment bases from all employment with the same employer in a calendar month must not exceed 1.5 times the average wage – in 2023 the average wage
• CZK 40,324, 1.5 times the average wage is therefore CZK 60,486.
• The employee’s assessment base, or the aggregate of the employee’s assessment bases from all employment with the same employer per 1 hour of the aggregate of the hours worked from all such employment in a calendar month, shall not exceed 1.15% of the average hourly wage (the amount is not rounded), i.e. in 2023 higher than CZK 463,726.
• The employee’s hours worked in all employment with the same employer in a calendar month shall not exceed 138 hours (if the employee starts employment during the calendar month, this number is prorated according to the date of employment).
• The premium discount is not available for an employee who is a disabled person if the employer of that employee is recognised as a sheltered employer under Section 78 of the Labour Code. This employer is entitled to receive a contribution to promote the employment of disabled persons pursuant to Section 78a of the Act.
• Furthermore, the premium reduction is not payable on behalf of the employee if the employee is listed in the monthly summary of workers’ compensation costs for the purpose of claiming the part-time allowance pursuant to Section 120e(5) of the Labour Code (coursework).

Notification of intention to apply a discount

• The premium discount is only available to an employer who has notified the Czech Social Security Administration before applying the discount that it intends to apply the discount on behalf of a specific employee who meets the above conditions.
• The amount of the discount on insurance premiums per calendar month is 5 % of the aggregate of the assessment bases of the employees to whom the discount is applied.
• This notification is a consequence of the arrangement whereby the premium reduction can be granted to only one employer per calendar month for the same employee.
• An employer may notify its intention to apply a premium discount for individual employees at the earliest one month before the date from which it will apply the premium discount for specific employees, but not earlier than the date of the notification of the employee’s commencement of employment pursuant to Section 94 of Act No. 187/2006 Coll., on Sickness Insurance (hereinafter referred to as the “SSA”), and no later than the deadline for submitting the premium statement pursuant to Section 9(2) of the SSA for the calendar month for which it applies the premium discount for the employee.
• The notification of the intention to claim the premium reduction may be submitted to the Social Security Administration no earlier than 1 February 2023, electronically on the prescribed form.
• The discount will first apply for the month of February 2023.
• The CSSA will keep a register of employers who have declared their intention to apply the discount first and of employees for whom the discount is applied, and through the CSSA ePortal service (to be launched) allows the employer to check whether or not the intention to apply the discount to an individual employee is already registered.

The amount of the discount:

• The amount of the discount per calendar month is 5 % of the aggregate of the assessment bases of the employees to whom it is applied. If an employee holds more than one job (part-time) with the same employer, only the assessment base of the job on which the employer applies the discount is included in the employee’s total assessment base.
• The premium discount shall be rounded up to the nearest whole crown.
• Any income charged to the employee after leaving employment shall no longer be eligible for the discount.

Redeeming the discount

• The employer applies the discount for the calendar month on the Premium Summary form, deducting the discount from the premium for that calendar month.
• The discount can only be applied up to the due date of the premium for the calendar month for which the discount is due.
• Therefore, the discount can only be claimed on a timely filed premium statement. After the deadline for filing the statement, the discount cannot be claimed, even if the employee has provided the employer with evidence of the facts already existing late.
• In the case of a ‘corrected premium statement’ filed after the statutory deadline, the discount applied on a timely filed regular statement cannot be increased.
• If the employer claims a discount on the premium statement, the employer shall also indicate on this form the number of employees for whom the discount is claimed, the aggregate of the assessment bases of these employees and the details of the individual employees for whom the discount is claimed (see the instructions for completing the form for details).
• If a discount has been deducted from the amount of the premium in excess of the amount by which it could have been deducted, the amount by which the premium has been so reduced shall be treated as an arrear of premium; if a discount has been deducted from the amount of the premium in excess of the amount by which it could have been deducted, no arrear of premium discount shall arise.

Finally, a recommendation to employers

Do not delay in claiming the premium rebate and notify the payroll accountant in time for her to prepare the report to the Social Security Administration and file it at the earliest possible date so that you are among the first, that is, if your employee has another part-time employment relationship with another employer.
Provide employee information and supporting documentation for payroll processing by the agreed-upon deadlines so that payroll is processed in a timely manner and insurance premiums are paid by you by the legal deadline.