czech workers utilizing the “agreement to perform work” contract – a popular arrangement for students, seniors, and those with supplemental income – can anticipate slightly more take-home pay in 2026. A projected increase in the average national wage will raise the threshold for mandatory social and health insurance contributions, allowing individuals to earn more before those deductions begin. The change, effective January 1, 2026, will increase the earnings exemption to 11,999 Czech koruna, a 500 koruna increase from the current level of 11,499 koruna.
Individuals working under an “agreement to perform work” contract in the Czech Republic could see a slight increase in their take-home pay in 2026, as the income threshold for mandatory social and health insurance contributions is set to rise. Workers will be able to earn more before being required to pay these deductions.
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Currently, those employed under an “agreement to perform work” – a common arrangement for students and seniors – are exempt from social and health insurance payments if their gross monthly earnings do not exceed 11,499 Czech koruna. However, with an anticipated increase in the average wage, that threshold will shift in 2026. Workers will no longer be required to pay these contributions if their earnings remain at or below 11,999 Czech koruna.
This effectively allows individuals to earn an additional 500 Czech koruna without incurring the obligation to pay social and health insurance.
Average Wage Increase Drives the Change
The adjustment is directly linked to the projected increase in the average wage. Czech law stipulates that participation in health insurance is mandatory for those working under an “agreement to perform work” when their income reaches at least 25% of the average wage. The anticipated average wage for 2026 is 48,967 Czech koruna, meaning the contribution requirement will trigger at 12,000 Czech koruna or more.
Consequently, earnings below 11,999 Czech koruna will remain exempt from social and health insurance contributions.
Who Benefits from This Arrangement?
“Agreements to perform work” are particularly advantageous for students, seniors, and parents receiving child benefits. The exemption from insurance payments is a significant benefit for these groups. Furthermore, individuals who submit a tax declaration may also be exempt from income tax and can claim a tax allowance of 2,570 Czech koruna.
This type of contract is also a practical option for individuals in early retirement. Those who have opted for early retirement are generally restricted from earning income that triggers social insurance obligations until they reach the standard retirement age. An “agreement to perform work” with earnings below the specified limit provides a viable way to supplement their income.
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What Happens When the Limit is Exceeded?
Once earnings surpass the 12,000 Czech koruna threshold, the obligation to pay social and health insurance contributions is triggered, with deductions made from the salary. This income will then be factored into future pension calculations. However, it’s important to note that earnings under the specified limit do not impact the calculation of future pension benefits.
Tax advisor Gabriela Ivanco explains, “For example, an employee with a gross salary on an employment contract of 45,000 koruna and remuneration from an agreement to perform work of 20,000 koruna will have the same decisive income for pension purposes as an employee with a gross salary of 65,000 koruna.”
Regarding tax deductions, the situation depends on whether a tax declaration has been signed with the employer. It’s crucial to note that a tax declaration can only be signed with one employer at a time, as the tax allowance cannot be claimed twice.
Key Characteristics of an “Agreement to Perform Work”
- A maximum of 300 hours can be worked with a single employer.
- There is no limit on the amount of remuneration.
- The agreement must be in writing.
- The notice period is 15 days.
- The agreement is subject to average wage calculations.
- Social and health insurance contributions are only due above a certain income level – 12,000 Czech koruna for 2026.
- Entitlement to vacation after a certain period of work.
If you plan to work under an “agreement to perform work” in 2026, remember to monitor your monthly earnings.
