Substitute performance is a mandatory form of support for persons with disabilities (PWD). The obligation is given by the Employment Act No. 435/2004 Coll. and applies to all companies with more than 25 employees. The share of PWD must be 4% of the total number of employees, i.e. at least 1 PWD per 25 employees.
If there are obstacles on your part as an employer that do not allow you to employ PWD, you must:
- to pay the state a levy to the state budget,
- or use another of the options for forms of facultative compensation.
If you do not meet your mandatory share, your company faces financial penalties of up to CZK 1,000,000.
Four forms of facultative compensation
1. Employment of persons with disabilities
You can employ PWD directly, which is the easiest way. However, the workplace or the nature of the profession does not always allow people with disabilities to be employed. But that is not what the law asks. In this case, you must use another form of facultative compensation.
2. Purchase of goods or services
The second form of facultative compensation is advantageous for both parties and is the purchase of goods and services and other companies providing facultative compensation. These are companies where more than 50% of employees are PWD and operate on the so-called protected labour market.
Such a form of performance is advantageous for you mainly because you do not pay mandatory contributions to the state budget. Another advantage is the fact that you do not give money to the state, but for example to sheltered workshops, and believe that they will appreciate your money more than the state.
3. Financial levy to the state budget
If you do not use any of these options, you are obliged to pay a financial levy to the state budget. But you won't get any advantage here. It is actually a penalty for not employing PWD or using the form of substitute performance that is intended by the state to support the employment of PWD.
The levy is 2.5 times the average wage in the national economy for the 1st to 3rd quarter of the year in which the obligation to fulfil the compulsory share of PWD arose, for each person. The current level of the average wage in this period is announced by the Ministry of Labour and Social Affairs in an annual announcement.
4. Combination of forms of facultative compensation
The fourth option is a combination of the three above-mentioned variants of facultative compensation. For example, you employ only 5 people with disabilities instead of the mandatory 10 and you also buy goods from companies falling under the protected labor market.
Amount of facultative compensation in 2022
The calculations are based on the average monthly wage for the 1st to 3rd quarter of 2021, which amounted to CZK 37,047.
Amount of facultative compensation for the purchase of goods or services
To fulfill the obligation, it is necessary to take products worth 7 times the average monthly wage. This means that in this hand you have to buy at least CZK 259,329 for one PWD that you did not employ.
Amount of levy to the state budget
The levy for 2022 is CZK 92,617.50, or 2.5 times the average monthly wage for 2021 and for each disabled person you have not employed. So, for example, if you employ 75 people, but no person with disabilities, you will pay CZK 277,852.50 to the state.
Records of facultative compensation
If you provide facultative compensation, then you are subject to the electronic records of the Ministry of Labour and Social Affairs. In one year, you can deliver orders in the form of facultative compensation in the maximum amount of 28 times the average monthly wage (I to III quarters of the previous calendar year) and for each PWD you employ.
Data that must not be missing in the register of facultative compensation can be found on the website of the Labour Office. The records of facultative compensation for 2022 and any payment to the state budget are closed as of 15 February 2023.