The mediation of employment of foreign workers

In January 2013, the Supreme Administrative Court and the Regional Court in Ostrava asked the European Court whether Czech legislation concerning employment agencies was in line with European law. This specifically concerned the obligation to withhold income tax from wages. Czech employment agencies that staff their Czech clients in this country with foreign workers have this obligation. In the case that a Czech company hires a foreign agency to provide workers, this obligation to withhold income tax from wages is transferred to the Czech client.

This obligation is a burden to Czech companies, as it increases their administrative costs related to the tax agenda. For this reason, Czech companies prefer domestic employment agencies, which naturally leads to discrimination against foreign employment agencies and the workers they offer.

The European Court recently expressed the opinion that this is in fact discrimination based on the country of origin. Discrimination is in conflict with one of the main principles of the European Union - the free movement of individuals. We can therefore anticipate future changes in the relevant law.