Employment legislation - what changes apply since 2025?
On 1 January 2025, the long-awaited amendment to the Employment Act entered into effect, bringing changes in labour inspection activities and the employment of persons with disabilities. The aim is to encourage employers to employ more persons with disabilities, and to prevent any possible circumvention of the law. The act also tightens checks by the labour inspectorate targeting illegal employment and disguised agency employment, as the legislators have given inspectors further tools to tackle these grey-economy areas.
Employment of people with disabilities
For a while now, employers with more than 25 employees have been obliged to have at least 4 percent of their employees be disabled persons. Alternatively, they could purchase goods or services from recognised employers – typically products from sheltered workshops (alternative supplies) or pay a levy to the state budget.
Starting in 2025, it is no longer possible to purchase these alternative supplies from related parties within the meaning of the Income Tax Act. The amendment aims to prevent abuses in which corporate groups set up their own special purpose entity, and individual group companies then neither employ any disabled persons nor pay any levy to the state.
By increasing the levy to the state budget, the amendment also aims to motivate employers to employ persons with disabilities directly. Under the new rules, the levy will be divided into three bands, depending on the proportion of disabled persons employed:
- 0-1% - 3.5 times the average wage
- 1-3% - 2 times the average wage
- 3-4% - 1 time the average wage
The amendment will thus reduce the levy for employers who are close to meeting the statutory percentage of disabled employees and increase it for those who employ only a very small percentage of disabled persons or have no disabled employees at all.
Furthermore, a limit was introduced for state contributions for the operating costs of the employment of persons with disabilities. In the opinion of the Ministry of Labour and Social Affairs, the absence of any limit on this contribution gave way to abuse and false claims. Thus, a maximum contribution has been set, corresponding to 80% of the contribution for the actual wages and mandatory insurance premium costs. However, the above contributions only concern employees who have concluded an employer recognition agreement with the Labour Office.
Stricter illegal employment checks
Two major changes have been introduced concerning the activity of labour inspectorates when checking employer compliance with labour law. Firstly, labour inspectorates will no longer be obliged to announce the commencement of audio and visual recordings during the inspection or in their activities preceding the inspection. According to the ministry, releasing this information often thwarted the purpose of the inspection. The inspectorate may make recordings in places that are publicly accessible or have been made accessible to the public. The records can then be used as evidence in offence proceedings.
If they suspect illegal work or disguised employment mediation, the inspection authorities will be entitled to cooperate with financial authorities as tax administrators and request the necessary information from them. This is a significant change from the previous situation, as tax proceedings are subject to strict confidentiality and tax authorities cannot usually disclose data to other administrative authorities. It is thus to be expected that inspections aimed at detecting forms of illegal work will increase, as has been the trend in recent years.
For some forms of illegal work and disguised employment mediation, it will also be possible to impose a penalty in the form of posting the decision on the penalty on the official noticeboard of the State Labour Inspection Office for a period of one year. According to the Ministry of Labour and Social Affairs, this is intended to further punish the perpetrators of these offences, as many entities may refuse to cooperate with them, e.g., to protect their own reputation.
However, legislation has also been relaxed in some respects. Inspectorates now may not initiate offence proceedings if the conduct in question shows a low level of social harm. The ministry thus hopes to reduce its own administrative burden when dealing with minor offences. The question remains how often this approach will be used in practice.