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Discount on insurance premiums for selected groups of employees has been approved

The amendment to Act No. 589/1992 Coll., on social security contributions and contributions to state employment policy, the draft of which we reported on in May HERE, has been approved and published in the Collection of Laws under No. 216/2022.

The main change is the introduction of a discount on employers' insurance premiums for selected groups of employees of 5% of the aggregate assessment bases for insurance premiums. The amount of the employer's levy for these employees will therefore be only 19.8% after the application of the discount.

The general condition for applying the discount is the amount of the employee's assessment base for the calendar month, which must not exceed 1.5 times the average wage for the same employer in total. The amendment contains a further exhaustive list of situations in which the employer cannot apply the discount.

Compared to the original draft of the amendment, the upper age limit of employees who can belong to the selected categories has been lowered to employees over 55 years of age. Another partial change is the extent of agreed part-time work, which will be a condition for all selected categories of employees except for those under 21. The approved amendment foresees a maximum part-time work of 30 hours per week, compared to the originally proposed 32 hours.

The employer will be obliged to notify the Czech Social Security Administration in advance of the intention to apply the discount on insurance premiums. The final version of the amendment also retains other conditions for applying the discount already mentioned in the proposal - for example, mandatory registration on the part of the employer, the obligation to provide information to the employee or the obligation of the employee to pay a penalty to the employer if the discount has been wrongly applied due to incorrect data provided by the employee.

The amendment takes effect from 1 February 2023. Employers who may be affected by the premium rebate and are considering applying it should familiarise themselves in good time with the specific conditions and procedures set out in the amendment. At the same time, these employers will need to adjust their payroll systems in time for the premium rebate to be correctly reflected in their payroll output.

If you have any questions, please contact the authors of this article or the EY team you are working with.

Authors:

Michaela Felcmanová

Radka Růžičková