Work performance agreements in 2024

Changes in the area of work performance agreements with effect from 1 July 2024 are likely to be postponed until 1 January 2025. What more? They will most likely be replaced by a new concept.

New rules for performance agreements should be in force from July. They foresee the introduction of two limits above which premiums will be paid. However, due to criticism from experts and employers, the ministry is planning further changes.

Agreements held outside of the employment relationship, called FTCs, will be affected by a number of major changes from the end of 2023. Firstly, there are the changes triggered by amendments to the Labour Code. Some of them are already effective as of 1.10.2023 or (as far as holiday entitlement is concerned) as of 1.1.2024, and secondly, the changes contained in the 2024 consolidation package with effect from 1.7.2024. However, it is very likely that the changes in the field of performance agreements, which are to be effective as of 1.7.2024, will be postponed to 1.1.2025 and, moreover, will be replaced by a new concept. Which changes will be postponed and whether, for example, the obligation to notify performance agreements will be maintained from 1.7.2024, only future legislative developments will tell us.

Part of the so-called consolidation package 2024 is a conceptual change concerning participation in sickness insurance (and the related social security contributions) for employees working on the basis of work performance agreements. This change is followed by a regulation on the reporting of all work performance agreements to the Social Security Administration – every employer using work performance agreements would thus have to be registered as an employer with the relevant Social Security Administration.

The current limit, which is set until 30 June 2024 as a monthly income exceeding a fixed amount of CZK 10,000, is, according to the regulation currently in force, linked to the development of the average wage from 1 July 2024. Above all, it is to be aggregated:

  • income from work performance agreements from a single employer
  • income from work performance agreements from all employers

According to the average wage for 2024, participation in sickness insurance from 1 July 2024 would be based on, for example:

  • Income from one agreement on work performance with one employer reaching CZK 10,500 per month (until 30 June 2024, participation in sickness insurance is only based on exceeding the limit of CZK 10,000, according to the new regulation it is decisive to reach the limit)
  • Income from several agreements on work performance with one employer amounting to CZK 10,500 per month
  • income from agreements for the performance of work from several employers, if the monthly income of CZK 17,500 is reached

In all likelihood, by the end of the first half of 2024, a completely different form of participation in sickness insurance for work performance agreements will be adopted. Moreover, the changes will probably be postponed until 1 January 2025 and from 1 January 2025 participation in sickness insurance for employment contracts could be regulated in a similar way as for employment contracts (in 2024, i.e. by achieving an income of 4. 000 CZK), where only one of the employers could apply a limit for participation in sickness insurance of 25% of the average wage (according to the average wage applicable in 2024, i.e., reaching an income of 10,500 CZK) – this would be a so-called reservation for one employer. In case the worker has multiple agreements with multiple employers, the first-come first-served will get the reservation.

For other agreements, insurance would not be paid up to CZK 4,000. Above this amount, tax and insurance premiums would already be paid.

However, it is also possible that the approved amendment regarding agreements will remain unchanged.