Expert Guide on Use of outsourced IT personnel in Czech Republic

Yes.

Yes.

Yes. 

Yes, common.

In practice, this depends on the size of the team to be hired. Generally, it is possible, but several legal requirements must be met. The Czech Employment Act stipulates the liability of a customer that allows hidden agency employment. Therefore, both parties (not only the one which provides the workforce, but also the user) might be held liable for conduct whereby someone (an intermediary) provides the workforce without having an employment agency licence. In the case of outsourcing, it is crucial to pay close attention to the contractual arrangements to prevent potential risk of liability for hidden agency employment.

The risk is low if the contractor’s work does not show signs of work dependent on the customer under the Czech Labour Code. Dependent work is work performed: (i) in a relationship where the employer is superior and the employee is subordinate; (ii) in the employer's name; (iii) according to the employer's instructions; and (iv) personally by the employee for the employer. Dependent work must be performed for remuneration, at the expense and responsibility of the employer, and during working hours at the workplace of the employer, or other agreed place. Whether or not the contractor’s work shows signs of dependent work should be assessed on a case-by-case basis in light of the wording of the agreement and factual operation of the respective contractual relationship. If the performance of work qualifies as dependent work under the Czech Labour Code, there is a high risk of re-qualification.

No. 

N/A

No. 

Yes, but not recommended.

Leasing the office directly without having a local presence may create a risk of a permanent establishment and unnecessary tax risks. It can also increase the risk of re-qualification into an employment relationship. This should be analysed on a case-by-case basis.

Yes, but not recommended.

Compensating a contractor (intermediary) based on a separate agreement for compensation (not directly in the contractual price for services / work) may increase the risk of re-qualification into an employment relationship. This should be analysed on a case-by-case basis.

Contractor agreement (contract for work and IT services agreement).

Contract for work, IT services agreement.

Yes.

Yes. 

However, computer programmes, databases, and cartographic works created by a contractor on hire, which are not collective works, are considered employee works where the client has right to exercise the economic rights to them.

IP assignment agreement. Proprietary rights are transferrable to industrial property, databases and other intangible assets which are not specifically regulated, e.g. know-how and trade secrets. From the perspective of copyrightable works, we note that economic rights as well as moral rights are non-transferrable; however, the right to exercise the economic rights to employee works is transferrable.

Generally yes, however it depends on the wording. This depends on the wording of the noncompete/non-solicitation arrangement. In general, noncompete clauses are in practice easier to enforce than non-solicitation arrangements (regarding the burden of proof). However, this depends on the governing law of the contract and the place of enforcement. If the contractual relationship is reclassified to employment, special rules regarding noncompete would apply.

Yes. However, it is still necessary to comply with imperative and mandatory rules.

There is no specific legal regulation on warranties. Indemnity is recognized by law. Both concepts are a common part of agreements. They should always be adjusted to local rules.