At a meeting of the government of the Czech Republic on 20 November 2018, the decree no. 567/2006 was adopted, which makes an expected change in the basic rate of the minimum wage. The lowest admissible sum of remuneration for work in an employment relationship increased to CZK 13,350 per months, or CZK 79.80 per hour, as of 1 January 2019.

The basic rate of the minimum wage is set by the decree the Czech government for weekly working time of 40 hours and relates to all employees in an employment relation, as well as employees in a legal relation based on contracts for works performed outside an employment relation. In the case of employees remunerated with monthly wage, who have negotiated shorter working hours or who did not work for the respective working time corresponding to the determined weekly working hours in the given calendar month, the height of the minimum wage is lowered in direct proportion to the time they worked. The minimum wage is not influenced by the length of the employment relationship stated in the contract with the employer, or by concurrence of labour relations, so entitlement to the minimum wage arises separately in each employment relationship.

In case a situation arises in practice, when the wage, salary or remuneration based on a contract does not reach the minimum wage, the employer is obliged to provide a supplementary payment to the employee, regardless of whether lower performance of the employee was caused by his own fault or it was not. The achieved wage, which is assessed in relation to possible entitlement to supplementary payment, includes all wage transactions with the exception of wage for overtime work, bonuses for work on holidays, for work on weekends, night work, work in arduous working conditions, wage compensation, severance pay, travel cost reimbursement or bonuses for on-call compensation.

In addition to the minimum wage depending on the nature of work, its complexity, responsibility and demandingness during its performance, 8 groups are also specified in the government decree, to which a guaranteed lowest wage level is assigned. The value of these guaranteed wages for weekly working time of 40 hours for the year 2019 reaches:

The increase of the minimum wage has an influence not only on the employer, who is obliged to pay wages to his employees reaching a minimum of CZK 13,350 per month, but at the same time it also has an effect of a number of data important for tax and other levy liabilities. According to the income tax act, in some cases the minimum wage has an influence on the total tax liability, which the taxpayer is obliged to declare and pay to the financial authority. The above-mentioned relates for example to income, which the taxpayer obtains in the course of the taxable period in the form of pension or annuity. The accepted sum, which the taxpayer does not tax in the given taxable period, is set based on the minimum wage. A total sum of this income, which does not exceed 36 times the minimum wage, i.e. in the year 2019 regularly paid pension up to CZK 480,600 (CZK 40,050 per month), is exempt from taxation. 

The increase of minimum wage is also reflected in the area of tax allowances and advantages. The adopted change influences the chance of parents to receive a tax advantage in the form of a child tax credit. With the increase of the minimum wage, the specified limit for the option of obtaining tax credit is raised proportionately. In the course of the year 2019, a taxpayer, whose income in the taxable period reached at least 6 times the minimum wage, that is a parent with annual income exceeding CZK 80,100, is entitled to the tax credit. Here it needs to be noted that this income currently includes only taxable income from employment or self-employment, that is the taxpayer's active income.

The rate of the minimum wage also influences the maximum possible allowance for placing a child in a childcare facility, that is the so-called “nursery school fees”, which is taxpayer is entitled to apply in the year 2019. The allowance for placing a child in a childcare facility corresponds to the expenses provably spent by the taxpayer on placing a dependent child in a pre-school facility, but only up to the level of the specified minimum wage per every dependent child.

The level of the minimum wage influences, among other things, the income of health insurance companies as well, due to the fact that the increase of minimum wage also increases the minimum health insurance payments for employees as well as for persons without taxable income. Persons without taxable income generally do not perform gainful activity, employed or self-employed, during the entire calendar month, but at the same time they do not fulfil the conditions for so-called state-insured persons, for whom the minimum insurance is paid by the state. These persons most frequently include university students above the age of 26 years, persons excluded from the register at the labour office, people who live only off passive income, and also housewives, unless looking after a child/children up to an age stipulated by law. In case of persons without taxable income, the minimum wage is their base of assessment for the purposes of health insurance and in the year 2019 as a result of its increase, they are obliged to pay CZK 1,803 per month to health insurance companies, that is 13.5 % from CZK 13,350. At the same time, this minimum payment needs to be observed at least once, for example in case of an employee, who works with shorter workload for lower than minimum wage, or an employee on unpaid leave. Such an employee should document for his employer that for example at a different employer, the minimum payment of insurance is observed.

Another indirect effect of the increase of minimum wage can also be seen in the case of persons registered at the labour office, who can earn a maximum of CZK 6,675 extra, that is up to a half of the minimum wage.

In connection with the setting of minimum wage, it needs to be mentioned that the amendment of the labour code, which is being prepared and was originally supposed to take effect on 1 July 2019, includes a proposal for a new fixed mechanism of valorisation of the minimum wage and to set conditions for specification of the lowest levels of guaranteed wages. The valorisation mechanism should be set up in the way that an increase of the average wage will simultaneously lead to regular increase of the minimum wage.