Czech government clarifies rules for dependent work and self-employment

The Czech government has approved new rules to clarify the definition of dependent work, aiming to better distinguish between genuine entrepreneurial cooperation and employment relationships disguised as self-employment. Under the proposed changes, the actual nature of the working relationship will remain the decisive factor, regardless of contract wording. Key indicators for assessment include who organizes and controls the work, who sets working hours, and the degree of autonomy and entrepreneurial risk held by the contractor.

Legal and tax experts warn that these changes may not provide the legal certainty businesses expect. Some argue that because existing definitions have been shaped by fifteen years of judicial practice, changing the statutory definition could create uncertainty for long-standing business models.

Furthermore, the implications of misclassifying workers are expanding beyond labor law. If the misclassification is deemed an intentional attempt to evade taxes or social security contributions, it can lead to criminal prosecution. If the evaded amounts reach at least 100,000 CZK, responsible company officials could face up to ten years in prison or bans on professional activities.