5% discount on insurance premiums approved

25. October 2022

The draft amendment to Act No. 589/1992 Coll. on social security contributions and contributions to state employment policy has been approved. The amendment has been published in the Collection of Laws under number 216/2022.

The approval of this amendment has a favourable impact on employers, who will be able to apply a discount on insurance premiums for selected groups of employees in the amount of 5% of the total assessment bases for insurance premiums. The employer’s levy will reach 19.8% after application of the discount.

The general condition for applying the discount is the amount of the employee’s assessment base per calendar month, which must not exceed in total 1.5 times the average wage for one employer. 
Categories of employees affected by the amendment:

  • Employees over the age of 55 years,
  • an employee, who is a parent or adoptive parent of a child under 9 years of age,
  • an employee caring for a close person under 10 years of age, with 1st to 4th degree of dependence on the assistance of another person,
  • an employee who is also preparing for a future career by studying, 
  • an employee who, in the 12 calendar months preceding the calendar month, for which the premium reduction applies, has entered retraining as a jobseeker,
  • an employee who is a person with a disability as defined in article 67 paragraph 2 of the Employment Act.

The change compared to the original draft amendment relates to entitlement to the discount. In order to qualify, employees, with the exception of employees under the age of 21, must have agreed weekly working hours of between 8 and 30 hours per week, as opposed to the originally proposed 32 hours.

The employer must notify the Czech Social Security Administration well in advance of the intention to apply the discount on insurance premiums. Other obligations for applying the discount were left the same in the final version of the amendment as in the above-mentioned draft. The employer must therefore keep compulsory records and has an information obligation towards the employee. There is an obligation on the part of the employee to pay a penalty to the employer if the discount was wrongly claimed due to incorrect information provided to the employer. 

The amendment takes effect from 1 February 2023; employers interested in claiming this discount in future should already acquaint themselves with the conditions and procedures for claiming it, set out in Amendment 216/2022. Employers may need to adjust their payroll systems to reflect the discount in their payroll agenda output. 
Author: Roman Burnus, Valérie Kovářová

Author: Roman Burnus, Valérie Kovářová