Another upcoming amendment to the Labour Code – Valorisation of the minimum wage

The draft amendment to the Labour Code, which will introduce predictable rules for minimum wage indexation, was approved by the Government in the last week of March. Under the proposed amendment, the Ministry of Labour and Social Affairs will announce the minimum wage for the following year by 30 September.

The amount of the minimum wage will be the product of a coefficient set by the government and a prediction of the average wage in the national economy for the relevant calendar year, according to the MoLSA proposal. This figure is published by the Ministry of Finance.

The coefficient will represent the targeted ratio of the minimum wage to the average wage in a given calendar year. In setting it, the Government will base it on criteria laid down by law. These include the purchasing power of the statutory minimum wage in relation to the cost of living, the general level of wages and their distribution, the rate of wage growth, the long-term national productivity rate and its evolution.

According to the proposal, the current guaranteed wage will be abolished and a guaranteed salary will be introduced for public service and civil service employees.

The amendment will now go through an inter-ministerial comment procedure. The minimum wage would thus be set for the first time on the basis of an indexation mechanism for 2025.

Source: Ministry of Labour and Social Affairs of the Czech Republic