The Czech government approved a legislative amendment in late August to narrow the definition of dependent work and address illegal freelance work, known locally as švarcsystém
. The reform, which now heads to parliament for debate, aims to ease regulatory pressure on tens of thousands of independent contractors.
Narrowing the Definition of Dependent Work
The Czech government approved a plan at the end of August to narrow the legal definition of dependent work through a new law on platform work. For years, tens of thousands of individuals have operated as independent contractors—known locally as švarcsystém
—working for single dominant companies on trade licenses rather than as traditional employees.
According to the outlet Česká justice, these workers typically lack standard employment benefits such as paid leave, sick pay, and employer-funded social or health contributions, which can result in lower future pensions.
The Push for Legal Certainty
Under current rules, courts evaluate four simultaneous signs of illegal employment: performance in the name of the employer, work done according to instructions, personal performance, and a relationship of subordination. Jeroným Dekan, director of the employment and labor inspection department at the Ministry of Labour and Social Affairs, explained that the subordination requirement created the greatest hurdle for authorities. Ekonomický deník reported that Dekan noted the requirement contained so many hidden sub-signs that proving economic dependence required assessing whether a worker could operate independently.
The new legislative proposal introduces a change to the signs of dependent work. Peter Perniš, lead attorney at Aegis Law, expects the change to facilitate broader legalization, noting that the number of dependent work signs will increase and must be fulfilled cumulatively, making it easier to exit the current legal classification.
Conflicting Projections on Legalization and Litigation
Projections regarding the reform’s impact vary sharply among legal and research organizations. The research organization PAQ Research estimates that the amendment could legalize 70 to 90 percent of current contractors, affecting between 50,000 and 80,000 people.
However, Markéta Tkadlecová, an attorney at AK Bříza & Trubač, offers a less optimistic outlook. She points to existing Supreme Administrative Court jurisprudence, which mandates a material assessment of workplace conditions in each specific case. The court noted that even if all formal conditions are not met, a situation may still constitute švarcsystém, suggesting the amendment will not eliminate legal uncertainty.
The change will create a vast space for lawsuits. Employers will try to break the jurisprudence, relying on the new wording of the law and the legislator’s intent. Markéta Tkadlecová, attorney at AK Bříza & Trubač
Missed Opportunities for a Third Status in Modern Labor
Experts at a recent conference hosted by Česká justice and Ekonomický deník also debated whether labor law should prioritize flexibility or worker protection. Peter Perniš advocated for establishing a distinct third category between employees and independent contractors, similar to models in Germany. Such a status would benefit high-income IT professionals by offering partial employment rights and termination protections alongside schedule flexibility.
Although the Ministry of Labour and Social Affairs considered a third category during the preparation phase of the current amendment, it ultimately abandoned the plan.
Parliamentary Review and Unresolved Market Pressures
With the government’s approval secured in late August, the legislative package now moves to the Czech parliament for formal debate. While proponents emphasize the drive toward legal clarity, critics argue that the reform fails to capture the realities of modern work.
As employers prepare to test the statutory limits of the new rules once enacted, analysts note that high-income sectors like information technology no longer represent the weaker negotiating party, leaving companies with limited leverage to force traditional employment contracts on skilled specialists.