Salary in Foreign Currency (EUR, USD) in the Czech Republic

Wage Payment in Foreign Currency: Czech Labour Code Amendment 2025 and Salary in EUR, USD etc.

Wage Payment in Foreign Currency Amendment 2025: Expansion of Eligible Employees

The recent amendment to the Labour Code, often called the "flexi-amendment," introduces several significant changes in labour law. One key adjustment, responding to practical demands, revises the conditions for wage payment in foreign currency. The 2025 amendment significantly alters these options. The amended Section 143 of the Labour Code primarily sets forth these changes.

Let's take a closer look at what changes and whom this new regulation affects.

Expansion of the Scope of Employees Eligible for Payment in Foreign Currency

The most fundamental change significantly expands the scope of employees to whom employers can pay salary or wages in foreign currency. Previously, this option was essentially limited to employees with a place of work abroad. However, the new regulation in Section 143(1) explicitly permits payment in foreign currency for other employee groups as well. This provision states: "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..." A list of specific employee categories follows. Thus, two basic conditions remain:

There must be employee consent and an agreement with the employer. Neither party can compel the other to accept payment in foreign currency.
The currency must be one for which the Czech National Bank (ČNB) announces a foreign exchange market rate.

Eligible Employee Categories

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 employment requiring high qualification).
c) Foreigners or stateless persons for whom the Act on Employment does not require the aforementioned permits.
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 they permanently reside abroad or cover living expenses for themselves or their family members there.

The explanatory memorandum to the amendment states that this expansion aims 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 offer an advantage. 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 wages, or parts thereof, into foreign currency. The old regulation (formerly Section 143(3)) used the rate valid on the day the employer purchased the foreign currency for payment purposes.

The new wording of Section 143(2) establishes the default rule: "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 the cited provision directly indicates, the employee and employer can agree to use 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 employer pays the salary or wage in foreign currency only after making mandatory deductions. These include income tax, social security and health insurance contributions, and potential enforcement deductions. 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), which states, "The salary or wage shall be rounded up to the nearest whole crown," also applies appropriately to foreign currency. The last sentence of Section 143(1) stipulates this: "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 notice that the legislator has deleted the original Section 143(1) from Section 143. This original section generally regulated the conditions for non-cash wage payment to an employee's account (based on agreement). The reason is that the amended Section 142, particularly its paragraphs 3 and 4, now comprehensively addresses the issue of the payment method (primarily non-cash to an account, optionally in cash).

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. It also 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. This agreement should cover the foreign currency payment itself, the specific currency, and potentially the day whose exchange rate will be used for the conversion.

For more information, please do not hesitate to contact us at:

JUDr. Mojmír Ježek, Ph.D.

ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Praha 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz

O ECOVIS ježek, advokátní kancelář s.r.o.

The Czech law firm ECOVIS ježek focuses its practice primarily on commercial law, real estate law, litigation, but also finance and banking law and provides full-service advice in all areas, creating an alternative for clients of international law firms. The international dimension of the services provided is ensured by the experience gained to date and through cooperation with leading law firms in most European countries, the USA and other jurisdictions within the network ECOVIS operating in 75 countries around the world. ECOVIS ježek team members have many years of experience from leading international law and tax firms in providing legal advice to multinational corporations, large Czech companies, as well as medium-sized companies and individual clients. For more information please visit www.ecovislegal.cz.