End of Tolerance: New Law from October 1, 2025, Tightens Rules for Employing Foreigners

Many companies rely on workers from abroad. However, the previously lenient rules for reporting them are coming to an end. A key amendment to the Employment Act comes into force on October 1, 2025, which abolishes the possibility of retroactive reporting and introduces the concept of "undeclared work." For companies that are not careful, this means the risk of high fines and other sanctions.

This change is not just minor bureaucracy. It is a fundamental step by the state to combat the massive abuse of the system, which has distorted the labor market and cost public budgets tens of billions of crowns.

Key Change: The End of Retroactive Reporting

Until now, it was sufficient to report the start of an employee's employment to the Labor Office on the day they began working at the latest. However, this system was massively abused by some employers – they let workers work without reporting them and only hastily filed reports when an inspection was announced.

From October 1, 2025, the arrival of a foreign national must be reported to the Labor Office BEFORE the worker physically starts. As soon as they perform even one hour of work before being reported, it is considered undeclared work!

This obligation applies without exception to all foreigners, i.e., EU citizens, third-country nationals with work permits, and foreigners with free access to the labor market (holders of temporary protection).

Why is the change happening? The fight against massive fraud

The reason is to prevent fraud and level the business playing field. Companies that employed workers illegally saved approximately 45.4% on wage costs in social security contributions (33.8% for the employer and 11.6% for the employee), giving them an unfair competitive advantage. The scale of the problem is evidenced by the findings of the Supreme Audit Office, according to which the state may have lost 92 billion crowns just between 2019 and 2022 due to this practice.

Impact on Companies and How to Prepare

For every employer of foreigners, this change brings clear tasks. It is not enough to just have a contract ready; the key is to adjust internal HR processes. Ignoring this obligation can be fatally expensive:

• A fine of up to CZK 3,000,000 for allowing the performance of undeclared work.
• Other sanctions such as loss of eligibility for state subsidies, repayment of grants, or a temporary ban on employing other foreigners.

Conclusion and Recommendation: Be Proactive

The era when it was possible to "iron out" reporting problems at the last minute is definitively over. The state is sending a clear signal that its patience with dishonest practices has run out. What to do now?

• Immediately review your HR processes: Make sure you have a system in place that guarantees every foreigner is reported BEFORE they start work.
• Train responsible staff: Everyone in HR and management positions must know about the new obligation and its consequences.
• Bet on prevention: The costs of proper administration are negligible compared to the risk of crippling fines and damage to the company's reputation.

Taking a risk in this case is really not worth it. An honest approach is the best protection for your business.