Wage Payment in Foreign Currency: Labour Code Flexi-Amendment 2025 and New Conditions (§ 143)
Wage Payment in Foreign Currency Amendment 2025: Expansion of Eligible Employees
The recent amendment to the Labour Code, often referred to as the "flexi-amendment", introduces several significant changes in the field of labour law. One of the key adjustments, responding to demands from practice, is the revision of conditions for wage payment in foreign currency – the 2025 amendment significantly changes these options. The changes are primarily set forth in the amended Section 143 of the Labour Code.
Let's take a closer look at what is changing and whom this new regulation affects.
Expansion of the Scope of Employees Eligible for Payment in Foreign Currency
The most fundamental change is the significant expansion of the scope of employees to whom salary or wages can be paid in foreign currency. Whereas before the amendment, this option was essentially limited to employees with a place of work abroad, the new regulation in Section 143(1) explicitly permits payment in foreign currency for other groups of employees as well. According to this provision, "An employer may, with the employee's consent, pay the employee's salary, wage, or part thereof in an agreed foreign currency, provided that the Czech National Bank announces a foreign exchange market rate for this currency, and only if it concerns..." followed by a list of specific employee categories. Thus, two basic conditions remain:
- There must be employee consent and an agreement with the employer. Neither party can be forced into payment in foreign currency.
- It must be a currency for which the Czech National Bank (ČNB) announces a foreign exchange market rate.
Newly, the option of payment in foreign currency applies to the following categories of employees listed in Section 143(1):
- a) Employees with a place of work abroad (this option remains).
- b) Foreigners or stateless persons who perform work based on an employment permit, employee card, or blue card (permission for long-term residence for the purpose of employment requiring high qualification).
- c) Foreigners or stateless persons for whom the aforementioned permits under the Act on Employment are not required.
- d) Citizens of another EU Member State who are not also Czech citizens and do not have permanent residence in the Czech Republic.
- e) Other employees who demonstrate that they permanently reside abroad or cover the living expenses for themselves or their family members there.
As stated in the explanatory report to the amendment, the aim of this expansion is to link the possibility of payment in foreign currency to the employee's objective personal connection to a foreign country. This therefore also applies to employees working in the Czech Republic but who are closely connected to a foreign country through their life (e.g., residence, family, covering costs). For these employees, receiving their wage directly in the required foreign currency can be advantageous as it reduces transaction costs associated with potential currency exchange from Czech crowns.
Change in the Currency Conversion Rule
The amendment also changes the method for determining the exchange rate for converting wage or a part thereof into foreign currency. Under the old regulation (formerly Section 143(3)), the rate valid on the day the employer purchased the foreign currency for payment purposes was used.
The new wording of Section 143(2) establishes the default rule as follows: "For the conversion of the salary or wage or part thereof into a foreign currency, the exchange rate announced by the Czech National Bank for the first working day of the calendar month following the month in which the employee's right to the salary or wage or part thereof arose shall be used, unless the employee and the employer have agreed on a different working day."
Important note: As directly follows from the cited provision, the employee and employer can agree on using the exchange rate for a different working day. The statutory rule (rate of the first working day of the following month) thus applies only if the parties do not agree otherwise.
What is Paid in Foreign Currency?
The explanatory report emphasizes that the salary or wage is paid in foreign currency only after mandatory deductions have been made (income tax, social security and health insurance contributions, potential enforcement deductions, etc.). This therefore concerns the payment of the so-called "net wage" made available to the employee.
Rounding
The rounding rule for salaries and wages set out in Section 142(2), according to which "The salary or wage shall be rounded up to the nearest whole crown," shall apply appropriately to foreign currency as well. This is stipulated in the last sentence of Section 143(1): "The provision of Section 142(2) on rounding shall apply appropriately to the rounding of salaries or wages in foreign currency." This means rounding up to the nearest whole unit of the given currency (e.g., whole euros, dollars) or its commonly used subdivisions (e.g., euro cents).
Change in Systematics – Relocation of the Non-Cash Payment Regulation
The attentive reader may have noticed that the original Section 143(1), which generally regulated the conditions for non-cash wage payment to an employee's account (based on agreement), has been deleted from Section 143. The reason is that the issue of the payment method (primarily non-cash to an account, optionally in cash) is now comprehensively addressed in the amended Section 142, particularly in its paragraphs 3 and 4.
Conclusion
The amendment to the Labour Code in Section 143 brings welcome flexibility for employers and employees with ties abroad. It expands the scope of persons who can receive their wage in foreign currency and clarifies the rules for exchange rate conversion. However, the key element remains the necessity of employee consent and mutual agreement between the employee and employer regarding the foreign currency payment itself, the specific currency, and potentially also the day whose exchange rate will be used for the conversion.
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