A Czech company offers you work as a self-employed contractor. You will go to the office, follow your manager's instructions, report every hour and have your holiday approved. The only difference from an employee is that at the end of the month, instead of a paycheck, you have to issue an invoice.
You have no holiday, no sick pay, no protection against dismissal, not even a guarantee that anyone will pay you at all. The company saves on contributions and administration. That is not business! It is an employment relationship without employee rights.
I have been self-employed for fifteen years, I have programmed for Czech companies and for clients in Germany, so I have a first-hand comparison. Twice I was a supplier according to the contract and an employee according to reality. Then I found a client just across the border, where the same work looked completely different.
(Švarcsystém is the Czech term for disguised employment: dependent work that is dressed up as a contract with a self-employed supplier.)
Being self-employed is not a problem in itself
Working as a self-employed contractor is fine, everyone wants a taste of that feeling of freedom. A business owner (even a freelancer) has their own clients, bears responsibility for the result, agrees the scope of jobs, takes on the risk, but above all it is their decision where and when they work. That is normal business.
The trouble starts where a company wants neither an employee nor a real supplier - it wants both at once: control like over an employee, costs like for a freelancer. In Czechia this is called švarcsystém and the Labour Code has a clear answer: dependent work belongs in an employment relationship, not in a contract between a company and a sole trader. According to the Ministry of Labour and Social Affairs handbook, the employer faces a fine of up to 10 million crowns, a natural person up to 100 thousand. MPSV on basic employment relationships
I am not a lawyer and this is no legal analysis, but a company that dictates your place and routine of work, gives instructions and requires personal performance should ask itself whether it is by any chance buying an employee through an invoice.
My experience
In Czech engagements I was no external specialist who comes, delivers a result and disappears. I was part of the team exactly like colleagues in an employment relationship. I just sent an invoice instead of a payslip.
The office was mandatory, home office more an exception. Flexible working hours on paper, in practice you had to be there anyway, even on days when nothing was going on.
Time was tracked right in the computer, and not for invoicing, but just for control. They even tracked mouse movement and the number of keystrokes! The company cared how many hours you actually clicked through. In some places this regime extended to home office too - a computer switched on, activity measurement, reporting.
I had to have my holiday approved. The contract strictly forbade work for another client. Working from home was rather a rarity. A bonus only for the chosen ones, which I never was. When there was no work, I still had to sit there and click or simply pretend to be busy.
Formally self-employed, in fact subordination and control.
What amused me most was how the company talked about "cooperation with a supplier" at the same time. As soon as I started behaving like a supplier (wanting to choose where and when I work, declining a pointless meeting), it suddenly turned out that this freedom does not actually exist.
A salary instead of a rate
A Czech specialty is also the way we talk about money. The offer is 60 thousand gross a month, or three thousand a day. But the question of how many hours of work the company is actually buying for that amount almost never comes up.
60 thousand crowns can mean 160 hours, or 180, or even "until it is done" and an expectation that you will answer on Slack in the evening. An employee does have a full-time job too, but around it there is also the whole legal and social framework. Working hours, holiday, sick pay, notice period, employer's liability and so on. A freelancer in "employee" mode gets just one number, in which in most cases hides an effort to squeeze the maximum out of them for as little money as possible.
If you run a business, you do not sell your time for a lump sum - you sell a service or a result under conditions that make sense for both sides. The hourly rate is basic information about what you are buying and what you are delivering. The volume of hours determines your capacity and the volume of delivery. And even if it is to be that lump sum, then under precisely given and specified conditions.
What work in švarcsystém is not
As a freelancer you are not an employee. When you lie in bed with a fever for a week, nobody pays you for it. You do not manage your time off yourself but must have it approved by a superior, even though legally it is no holiday at all. When the cooperation ends, it ends overnight. No severance, no explanation, because you have no notice period as an employee does.
When they do not pay you, you are a creditor dealing with due dates and reminders, not an employee with a claim to wages. Once a payment of mine was a month late, right before Christmas - exactly when a person least needs to worry about whether the money the family budget stands on will arrive. That is business risk, which a freelancer has to count on.
But risk only makes sense when it comes with freedom and matching reward. A business owner's risk plus an employee's duties is simply NO!
How working in the West opened my eyes
After these experiences in Czechia I later started writing code for a client in Germany. A small company, nothing big, just across the border. The same field, similar technologies, comparable work.
The difference was visible immediately. We agreed an hourly rate and a monthly volume of work, no "60 thousand and we will see". When more work was needed, it was handled as more work, when less, as less.
Full remote was not an exception but the usual way of working together. Nobody tracked me, nobody cared whether I was at the computer at 9:03 - what mattered was whether I communicate, deliver the agreed things and am available to the agreed extent. Exactly how I had imagined business. I was finally starting to feel like the master of my own time.
The money was 120k+ for 160 hours. Not that the German client was automatically more generous, but he was buying an expert service under clear conditions and knew what the price for such work is.
On top of that I have experience with clients who look for software companies here in Czechia because they are cheaper than in the West. And guess what? One of them was our company too, and that is exactly the price such companies charge their customers. 60k for you and 120k for the customer. But that is perfectly fine, it is business. The difference is what position in that business (food) chain YOU stand in!
Why it is still done this way here
Plenty of Czech companies see a freelancer as a way to rent a person cheaper and with less responsibility - not as a business owner they are ordering a service from. They simply want to save, but in the wrong place.
Behind it is an old management reflex: when I pay someone, they must sit with me. I do not see them, so they are not working. I do not measure time, so they are surely robbing me. They have another client, so they are not loyal. They want to work from home, so something is going on. And then of course the urge to save at any cost, even at the cost of breaking the law.
But a programmer is not a production line! Eight hours in an office will not improve their work, it will rather take away the most productive part of the day - concentration without interruptions. And time tracking measures presence, not value. It shows you that the computer was running. It does not tell you whether that person solved a problem, designed a good architecture or saved the team three weeks of work.
I am not claiming every remote contractor works flawlessly and every office regime is wrong. But a company must choose what it is buying. Does it want to manage working hours, place and day-to-day activity as for an employee? Let it offer employment. Does it want a result from an external contractor? Let it leave them room to deliver it.
It is not just a legal problem
The legal side is clear - dependent work falls under employment law protection and is not supposed to hide behind an invoice. According to the MPSV and the interpretation of the State Labour Inspection Office it is the actual way of working that is assessed, not the heading of the contract.
But there is also a question of plain fairness. A young programmer often takes the first offer that looks like a job in the field - hears 50 or 60 thousand, sees a nice office and signs. They do not think about working hours, a superior, approved holiday or a ban on side clients. They have no idea that the pay has to cover unpaid time off, illness, accounting, equipment, insurance and the risk of an unpaid invoice. The company usually knows that very well.
I do not like it when responsibility is thrown back on the person - "but you signed it". Sure, they signed. But when the whole market explains to young people that this is the standard, it is not a free choice in some ideal world. It is pressure to accept conditions that mainly benefit the company.
They say you learn from mistakes and that is why I wrote this article. Because I made that mistake twice. The first time it was my own stupidity and the second time I had no choice. I have a family and I got into a situation where I had to take what there was.
What I would advise a young programmer today
Do not take the first offer just because it says Laravel, Java or React - a technology is no substitute for a bad contract. On the other hand, it is about compromise. When you know that you can grow in the company and cash in on it later, then it makes sense.
Before you sign anything, find out at least the following:
- is the pay hourly, daily or monthly? How many hours or days does the client actually buy with it
- is work from the office mandatory or do you also have the option of home office
- who sets the working hours and how (and why) is time reported
- whether you may work for other clients
- what happens when you fall ill or need to take a week off
- what the invoice due date is, what happens in case of delay
- whether the contract has a notice period
- but above all: are you delivering a result, or your everyday availability?
If it sounds like an employment contract but is supposed to be on a freelance basis, that is a warning sign! Not automatic proof of švarcsystém, the whole context decides that, but definitely a reason to stop and think the offer through properly.
But above all, keep looking. The Czech market is not the only option, Germany is close and the European remote market closer still. Decent English or German, a portfolio and the ability to come to an agreement often open the door to clients who treat you as an expert, not as a cheaper employee.
Not all Czech companies are the same
I do not want to paint it as if every Czech company is bad and every German client a professional. That is not how it is. I know domestic companies you can agree a fair cooperation with, where they understand the difference between an employee and a supplier and do not care exactly where the programmer writes code from.
Unfortunately it is still not the standard. The standard is an offer that takes the best from a freelancer and leaves them the worst - no holiday, no security, no protection.
After fifteen years I know I do not have to take such an offer. And that when I refuse it, the world does not fall apart. The world is big and for a software engineer the EU + UK market is sufficient.
Švarcsystém is not business. It is an illegal and stupid way to save money. The only one who benefits from švarcsystém is the employer! I understand it, but I do not approve of it.
And so, if you, dear reader, have read this far, I hope you will not make the same mistake I did, and then this article has served its purpose.