Minimum wage in 2018

Czech government has approved a motion proposed by the Ministry of Labour and Social Affairs that will increase the minimum monthly wage from the current amount of CZK 11,000 to CZK 12,200 with effect from 1 January 2018. This amount applies to work within the scheduled weekly working time of 40 hours, i.e. to full-time employment. Of equal importance as the minimum wage is the guaranteed wage. This is a wage guaranteed for specific work groups. Group 2 is the minimum wage level, while the highest group will be CZK 24,400. The minimum wage adjustment has been reflected in an adjustment of the guaranteed wage, which will affect more employees than the minimum wage. The guaranteed wage levels for scheduled weekly working time of 40 hours are graded by complexity, responsibility and difficulty of the work that is classified into 8 groups:

Work group	Hourly guaranteed wage 2018 in CZK	Hourly guaranteed wage 2017 in CZK	Monthly guaranteed wage 2018 in CZK	Monthly guaranteed wage 2017 in CZK
1	73.20	66.00	12,200	11,000
2	80.80	72.90	13,500	12,200
3	89.20	80.50	14,900	13,400
4	98.50	88.80	16,400	14,800
5	108.80	98.10	18,100	16,400
6	120.10	108.30	20,000	18,100
7	132.60	119.60	22,100	19,900
8	146.40	132.00	24,400	22,000

Impact on the Income Taxes Act The increase in the minimum wage will result in an increase in the minimum assessment basis for health insurance (CZK 12,200). The change will affect insured persons who become employed, save for those for whom health insurance is paid by the state or who are not obliged to pay health insurance at least on the minimum assessment basis. Higher insurance premiums will also be paid by persons registered as having no taxable income. Other minimum wage effects:

• The tax credit for a child attending kindergarten for 2018 will increase to CZK 12,200.
• The limit on the income will increase that must be achieved to claim a child tax bonus, i.e. six times the minimum wage (CZK 73,200 in 2018) or one half of the minimum wage per month (i.e. CZK 6,100 in 2018) for the entitlement to a monthly tax bonus claimed from the employer.
• The limit on the tax-exemption of regular pensions will increase (up to 36 times the minimum wage a year) to CZK 439,200 (this applies only to extraordinary pensions; monthly pensions would have to exceed CZK 36,600).

Just as a matter of interest, currently the lowest minimum wage in the EU is in Bulgaria (€235), Romania (€321), Lithuania (€350) and Latvia (€370). We can help you manage your payroll. Please do not hesitate to contact us.