With the consolidation package coming into force, there have been extensive changes in many areas of current legislation, in particular in tax law and in the area of health insurance and social security. The new legislation also affects the taxation of employee benefits. Much has already been written about benefits such as contributions for meals, cultural and sporting events, life and pension insurance and others – but on this occasion, it is also worth mentioning one type of benefit that is no longer so widely discussed: professional development of employees.

But is professional development a benefit at all or is it an obligation of the employee, or of the employer, as the case may be? Does an employer have to provide professional development for his employees?  What belongs under professional development and where is the line between a legal imperative and a non-binding benefit? When is an employee entitled to be reimbursed for the costs of training or conferences attended? Is the employer obliged to give the employee time off for this purpose? In what cases can an employer order an employee to attend a course, training or perhaps a conference? When will participation in this training be considered performance of work and when will it be a private activity of the employee?

Although the Labour Code does not contain a precise definition of the term professional development, it does provide a demonstrative list of what belongs under this term: training and mentoring, professional experience for school graduates, deepening and increasing qualifications.

Training, mentoring and professional practice

The terms training, mentoring and professional experience are familiar to most of us – especially as we are likely to have encountered them ourselves when entering the workforce. The employer is legally obliged to provide the employee with the necessary knowledge and practical skills to perform the agreed work. For this purpose, it may send the employee to a training course, briefing, lecture or other form of training to prepare the employee for the performance of the agreed work within the framework of training, mentoring and professional experience. As this is a prerequisite for the employee to be able to perform the work, it is the employer’s responsibility to pay all the costs associated with this training. An employee shall be entitled to wages or salary for the time spent in training, course or other preparation, as if he or she were performing work. Therefore, if an employer hires a new employee, for example as a cashier, the employer is obliged to prepare the new employee for work with the cash register system, how to process orders, etc., and the time the employee spends on this training is considered performance of work.

Increasing and deepening qualifications

Although it may not be obvious at first glance, increase and deepening are two quite different concepts with different implications under labour law. The main difference between these concepts is whether, after completing the training in question, the employee merely improves his/her already acquired knowledge, skills and abilities (then it is a deepening of qualification), or whether the qualification of the employee changes and he/she becomes eligible to perform a different job (then it is an increase in qualification).^[1] Deepening a qualification means continuously adding to, maintaining and renewing it, while increasing a qualification is extending, gaining or changing the value of the qualification.

The employee is obliged to deepen his/her qualifications in order to perform his/her job and the employer may order him/her to participate in various forms of training for this purpose. Since the employee has no choice whether or not to take part in this training, the employer is obliged to reimburse the costs related to the training. In addition, these activities are considered to be the performance of work and the employee is therefore entitled to a wage or salary for them. Caution! Training for the purpose of deepening qualifications does not necessarily have to take place during the employee’s working hours (it will then be overtime from the perspective of the Labour Code).

Increasing qualification, on the other hand, is an optional activity that an employee undertakes on his or her own initiative and in order to improve his or her position in the labour market. This can include cases where the employee is merely upgrading an existing qualification, as well as cases where the employee is gaining a new qualification.^[2] The employer cannot unilaterally order the employee to increase his/her qualifications, unlike deepening them, and the employee, on the other hand, cannot demand that he/she be allowed to increase his/her qualifications. It is therefore up to the employer to assess on an individual basis whether or not it is in the employer’s interests to increase the employee’s qualifications and whether or not the employer is willing to support the employee’s activity. If the employer does not find the potential increase in qualification of his employee to be necessary, expedient and economically advantageous, he does not have to provide the employee with leave, a financial allowance or other concessions.

Although the demarcation line between these concepts is theoretically quite sharp, in practice it can be very difficult to distinguish between them. When three different employees in three different jobs come to their employer asking for reimbursement for a German course, the conclusion will not always be the same.

In the case of an employee working in a call centre specialising in German-speaking customers, such a course will fall under the concept of deepening qualification, as its completion will enable the employee to perform his/her current job better and more easily. In this case, the cost of the language course will be born by the employer and the employee’s participation in the course will be considered performance of work, for which he/she will be paid.

If the employee is an accountant in a company where the head of accounts must have a knowledge of German, this will be an increase in qualification (in this case, German is not required for the type of work agreed, but may be an advantage for the accountant in the selection process for the new head). Under these circumstances, it will be up to the employer to assess whether the increase in the employee’s qualifications will correspond to its interests (for example, whether it will consider filling the vacancy for the position of head of accounts with this employee). If the employer finds that the upgrading of qualifications really corresponds to its need, it may decide to accommodate the employee and support him/her in completing the language course (giving them time off, or paying for the course in full or in part, etc.)

And if an employee working as an assistant baker in a remote village is interested in taking a German course, the course will be neither an upgrade nor a deepening of his/her qualification, but only a private activity of the baker, which the employer may (co-)finance, but only as an accompanying benefit. The course in this case will not result in better or easier performance of the agreed type of work by the employee, even prospectively if the employee is promoted to another position. Yes, even a warehouseman can read Virgil in the original, but his employer is not obliged to reimburse him for his Latin studies, nor is he obliged to give him time off for this purpose.

It is therefore very important for both the employee and the employer to correctly assess which professional development institute the activity in question will fall under in the given circumstances, as this will determine the assessment of the employee’s entitlements (in particular the entitlement to wages or salary for the time spent participating in professional development, to time off work and to reimbursement of professional development costs).

In conclusion, there is good news: non-monetary benefits spent by the employer for the professional development of employees related to the employer’s business are exempt from taxation for employees even after the consolidation package comes into force, and are a tax expense for employers.

[1] KONEČNÁ, Petra. § 231 [Zvýšení kvalifikace (Increasing qualification)]. In: VALENTOVÁ, Klára, PROCHÁZKA, Jan, JANŠOVÁ, Marie, ODROBINOVÁ, Veronika, BRŮHA, Dominik a kol. The Labour Code. 2nd edition. Prague: C. H. Beck, 2022, p. 759–760

[2] KONEČNÁ, Petra. § 231 [Zvýšení kvalifikace]. In: VALENTOVÁ, Klára, PROCHÁZKA, Jan, JANŠOVÁ, Marie, ODROBINOVÁ, Veronika, BRŮHA, Dominik a kol. Zákoník práce (The Labour Code). 2nd edition. Prague: C. H. Beck, 2022, p. 758