Overview of Legislative Changes in 2026: Payroll and HR| ASB Group

The new year brings extensive changes in the payroll area that will affect both employees and employers. This article summarizes the key legislative developments that need to be reflected in HR practice.

Uniform Monthly Employer Report

One of the most significant and widely discussed changes is the introduction of the Uniform Monthly Employer Report (abbreviated as UMER).

The Act on the Uniform Monthly Employer Report entered into force on 1 January 2026; however, the full implementation will begin on 1 April 2026. In order for the central UMER database to be complete for the entire year 2026, employers will be required to submit UMER reports retroactively for January, February, and March 2026. Employers will be allowed to submit these retroactive reports between 1 April 2026 and 30 June 2026.

We addressed this topic in more detail in our article available at this link.

Maximum Assessment Base for Social Security Contributions for 2026

As of 1 January 2026, the maximum gross income subject to social security contributions amounts to CZK 2,350,416. This amount is derived from the average wage and corresponds to 48 times its value. The average wage for 2026, set at CZK 48,967, is determined based on parameters published in Government Regulation No. 282/2024 Coll.

The basic rates of social security contributions amount to 7.1% of the assessment base paid by the employee and 24.8% paid by the employer. In selected cases exhaustively listed in the Sickness Insurance Act, the employer’s contribution rate may be reduced to 19.8%.

Progressive Income Tax Rate for 2026

According to the approved regulation, in 2026 income exceeding 36 times the average wage is subject to a higher tax rate of 23%. For 2026, this threshold amounts to CZK 1,762,812 annually (CZK 146,901 monthly), while income below this threshold is taxed at a rate of 15%.

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Limit for Exemption of Non-Cash Benefits

For 2026, the annual limit for tax exemption of non-cash employee benefits has increased to CZK 24,483.50, representing an increase of CZK 1,205 compared to 2025.

In addition, another category of employee benefits remains exempt from inclusion in the above limit. These include health-related benefits (e.g. contributions for rehabilitation in healthcare facilities or premium medical care such as Canadian Medical). As of 1 January 2026, a separate tax exemption limit of CZK 48,967 applies to these benefits.

The limit for contributions to pension insurance and similar products remains unchanged at CZK 50,000 and is not included in the above-mentioned limit.

Thresholds for Contributions under Contracts for Work Activity and Contracts for Work Performance

The decisive income threshold for minor employment under a contract for work activity (in Czech: DPČ) remains unchanged as of 1 January 2026 and continues to amount to CZK 4,500.

For contracts for work performance (in Czech: DPP), the decisive income threshold has increased to CZK 12,000. If multiple contracts are concluded with the same employer, the individual incomes are aggregated. Once income reaches the relevant threshold, the employer is required to start paying social security and health insurance contributions.

Obligations related to the registration and reporting of DPP contracts are now changing in connection with the Unified Monthly Employer Report. For the period from January to March 2026, monthly reporting will no longer be submitted; the registration of employees working under contracts will follow the same procedure as for standard employment relationships. Earnings will subsequently be reported within the UMER framework.

Meal Allowance (Meal Voucher Allowance)

A cash meal allowance per shift is exempt from personal income tax (and thus from social security and health insurance contributions) on the employee’s side up to 70% of the upper limit of the meal allowance for business trips lasting 5 to 12 hours, as set for employees remunerated by salary under Section 176(1) of the Labour Code. As of 1 January 2026, this limit amounts to CZK 129.50 (70% of CZK 185).

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Minimum Wage and Minimum Assessment Base

For a full-time workload of 40 hours per week, the minimum wage for 2026 is set at CZK 22,400 per month and CZK 134.40 per hour. Accordingly, the minimum assessment base for health insurance contributions in 2026 equals this amount, and the minimum health insurance contribution is CZK 3,024 (i.e. 13.5% of the minimum wage).

Changes in Public Health Insurance

As of 1 January 2026, an amendment to the Public Health Insurance Acts entered into force, introducing significant changes primarily in the areas of childcare, the minimum assessment base, and notification obligations.

The practical impacts of these changes, which must be taken into account by both employees and employers, are described in this article.

Mandatory Employer Contributions to Pension Savings Products for Selected High-Risk Occupations

On 1 January 2026, Act No. 324/2025 Coll., on Mandatory Contributions to Retirement Savings Products, entered into force. Under this Act, employers are required to pay contributions to pension insurance with a state contribution or to supplementary pension savings for employees performing high-risk work classified in Category 3 for selected workplace risk factors.

The aim of the new legislation is to ensure that these employees accumulate additional financial resources within third-pillar pension products, enabling them to cover living expenses in the years preceding retirement age.

Abolition of Withholding Tax for Managing Directors – Non-Residents

As of 1 January 2026, the first step toward abolishing withholding tax on employment income for individuals has been implemented. The withholding tax will no longer apply to managing directors who are non-residents of the Czech Republic.These individuals may now sign a taxpayer declaration for employment income and will be subject to advance income tax payments. This also entails the application of progressive taxation, with the same threshold for the 15% tax rate as for employees. If their monthly income exceeds CZK 146,901, it will be taxed at 23%.

At the same time, they will newly be required to file an income tax return in the Czech Republic for 2026 (previously, they could choose the country in which to file their tax return).

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New Calculation of the Non-Seizable Amount for Debtors

A government regulation approved on 10 December newly provides that the non-seizable amount will be calculated based on the individual subsistence minimum, normative housing costs, and a flat-rate energy allowance. A key change is that values applicable as of 1 January of the relevant year will be used.

As a result, January values are “frozen” for the entire year, and the planned increase in the subsistence minimum from May 2026 will not be reflected.

The non-seizable amount attributable to the debtor is now set at 85% of the sum of these three components. In 2026, this amounts to CZK 13,200, with one quarter of this amount added for each dependent person.

At the same time, the threshold for unlimited wage garnishments has increased to 1.9 times the above amount.

Directive on Equal Pay

7 June 2026 is the final deadline by which the Czech Republic must transpose the EU Directive on equal pay for women and men. The first mandatory reporting on pay disparities (gender pay gap) will concern data for 2026.

If the reporting reveals an unjustified pay gap exceeding 5%, the employer will be required to remedy the situation within six months.

This is also associated with new employee information rights, of which we highlight the following three:

Information prior to employment: Job applicants will have the right to know at least the pay range for the advertised position before the first interview.
Right to comparison: Employees will be entitled to request information on the average level of remuneration of colleagues in the same or equivalent positions, broken down by gender.
Burden of proof: In disputes concerning pay discrimination, the burden of proof will rest with the employer, who must demonstrate that no discrimination occurred.

Although it is currently almost certain that the Czech Republic will not meet this deadline, this should not be relied upon. We also emphasize that the right to equal pay for work of equal value is already fully enshrined in the Labour Code, and it is therefore not necessary to wait for the exact wording of the transposition. We therefore recommend starting a review of existing pay regulations and remuneration structures already now.