Employer

What it means

An employer is a legal entity or individual employing at least one person under an employment relationship. It may be a commercial company, a sole trader, a non-profit organisation or a public institution. Being an employer brings rights and extensive duties towards employees and the state.

The employer directs employees' work, assigns tasks and gives instructions. At the same time it must comply with the Labour Code, ensure safe working conditions, pay wages on time and in the correct amount and respect employees' rights, for example to leave and data protection.

The employer also acts as a payer towards the state. It withholds and pays payroll tax advances and social and health insurance contributions for employees and itself, and files the related reports with the Social Insurance Agency, health insurers and the tax office.

How it works in practice

Before an employee starts, the employer must conclude a written contract and complete employee registration with the Social Insurance Agency at the latest before work begins, and with the health insurer within the statutory deadline. A forgotten registration may be treated as illegal employment.

The employer must keep working time records, payroll records and personnel files and comply with health and safety rules, such as training, occupational health services and providing protective equipment.

Each month the employer calculates wages, contributions and tax advances, pays net wages and remits the mandatory payments. After the year ends, it carries out the annual tax reconciliation for employees who requested it and files a report with the tax office.

What to watch out for

Breaching employer duties, such as illegal employment, failing to pay contributions or violating health and safety rules, can lead to heavy fines and, in serious cases, criminal liability. Inspections are carried out by the labour inspectorate, the Social Insurance Agency, health insurers and the tax office.

Obligations grow with headcount, for example the disability employment quota, an internal whistleblowing system or consultation with employee representatives. As a company grows, it should track when a new obligation arises.