Direct hire: when to fill a role onto your own payroll

What direct hire means legally

In direct hire an employment relationship arises directly between your company and the employee under the Czech Labour Code. You are the employer with everything that entails, and the person becomes a core employee. The agency’s role ends with finding, approaching and pre-selecting the candidate; it does not enter the employment relationship.

Searching for employees on behalf of an employer is nevertheless employment mediation within the meaning of the Employment Act, and is subject to a permit. The same applies to employing people for the purpose of assigning them temporarily to a user. The difference is therefore not whether a permit is needed, but who remains the employer. Whether a particular agency holds that permit can be checked in the public register of employment agencies made available by the Czech state employment administration — the Ministry of Labour and Social Affairs and the Czech Labour Office.

When your own payroll makes sense

Onto your own payroll belongs what is meant to last and what you do not want to lose. Typically the permanent core of the operation, roles carrying know-how and the setup of the technology, holders of certificates tied to the person, and any position that manages people or decides on quality. For these, a longer search is worth it, because the cost of turnover is higher than for easily replaceable posts.

Seasonal peaks, cover for long absences, a new line ramping up or an order with a defined end are better covered by temporary assignment — the need ends and the assignment ends with it, without you having to terminate an employment relationship. Many companies combine both routes: a stable core on their own payroll, with a flexible layer above it.

What you take on with your own employee

Direct hire means all employer duties stay with you. That is not an argument against it, only an item to count when comparing the two routes — part of it is carried by the agency, as formal employer, under temporary assignment.

What the item contains:

• The employment contract, the pay agreement and internal regulations
• Payroll, statutory contributions and tax duties — check the applicable rates with the Czech Social Security Administration, the health insurer and the tax administration
• The entry occupational health assessment before the person starts, and further assessments to the extent set by the work category
• Initial and repeat occupational-safety training, and the issue and recording of personal protective equipment
• Working-time records, shift planning and wage compensation
• Ending the employment relationship within the limits of the Labour Code, including the notice period

Direct hire compared with agency employment

Both routes end with a person at the workplace doing the work. What differs is who employs them, who runs the payroll, how safety is allocated while they are on site, and what ending the arrangement actually consists of.

A practical guide: the more permanent the need and the more the role is bound to your know-how, the more it argues for your own payroll. The more variable the volume of work and the sooner capacity has to be available, the more assignment makes sense. Urgency on its own is not an argument for either route, because for qualified roles both run up against the availability of people and against notice periods.

The dimensions on which the two routes are compared:

• The employer — your company in direct hire, the staffing agency under assignment
• Instructions for the work — given in both cases by the user, that is, your own operation
• Payroll and statutory contributions — run by the agency under assignment
• Occupational safety at the workplace — ensured by the user for the duration of the assignment, while the agency retains its duties as employer
• Ending — termination of the employment relationship under the Labour Code, as against ending the assignment on the terms agreed
• Pay conditions — under assignment a statutory requirement of comparability with your own core employees in a similar position, not a negotiable item but a condition of the model

Fee models in outline

For direct hire an agency’s fee is usually tied to the chosen candidate starting and derived from their agreed earnings; the specific share is a matter for the contract. For temporary assignment you pay an hourly rate, which has to cover pay at the level required by comparable conditions, statutory contributions, leave and allowances — which is why it cannot be measured against a gross wage.

No amounts or percentages are stated here. The structure of the models, including exclusivity, staged payment and contractual arrangements for early departure, is set out on the fee-models page.

What to settle before signing

Before a search begins, have in writing the scope of the brief, the method and timing of payment, how long the arrangement is valid, the handling of candidates’ data, and the conditions for ending the cooperation. For temporary assignment, add the division of responsibility for occupational safety and protective equipment at the workplace, and who arranges the occupational health assessments.

What happens if the chosen person leaves early is a matter for the contract — agree it in writing before the search begins. Neither a replacement nor a candidate’s continued service can be promised in advance, because both depend on that person’s own decision.

Moving an assigned agency worker onto your own payroll belongs in the same category. It is a matter for agreement between the user, the agency and the employee: neither an automatic entitlement nor a prohibited step. Settle the conditions, including any fee for the transfer, in writing in advance, so that they are not being negotiated at the moment you have decided you want to keep the person.