Another obstacle to posting of workers by Japanese investors gone

On 1 August 2018, a protocol amending the Social Security Agreement between the Czech Republic and Japan entered into force. This step will be most welcome by Japanese workers temporarily posted to key positions in the Czech Republic.

Under the original treaty it was not possible to exclude these workers from obligatory participation in the Czech social security and health insurance system if their employment contracts were concluded directly with a Czech subsidiary of a Japanese enterprise: in these cases, they had to obtain an exception from Czech insurance institutions. Japanese corporations have perceived this as an obstacle to expanding their investments in the Czech Republic. Czech authorities have therefore agreed with Japan on relaxing the administrative rules. Hence, Japanese workers may now be employed in the Czech Republic for up to five years, while at the same time remaining insured exclusively in the Japanese social security system. At the same time, workers must maintain a sufficiently close labour relationship with the posting enterprise, meaning that the workers must continue to be managed by their Japanese employers.

From August 2018, posted Japanese workers may thus remain insured exclusively in the Japanese social security and health insurance system despite their employment contract with a Czech company. This is conditional upon the workers obtaining a certificate designating them as being subject to Japanese social security regulations applicable to posted workers. The respective Japanese institution should also specify how it will collect insurance premiums on wages paid by the Czech company for the Japanese insurance system. 

According to current interpretations, the described approach could also be applied to Japanese workers posted in the Czech Republic to take on an office in a statutory body (for instance a statutory representative of a limited liability company) who have concluded an agreement on exercising the office with a Czech company. The same rules will also apply to Czech workers posted in Japan.

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