Can a Managing Director of Czech sro Receive Unemployment Benefits?
Question: I am a shareholder and managing director of a Czech limited liability company (s.r.o.). The business has not been successful. Can I leave the company dormant, register with the Labour Office and receive unemployment benefits?
[updated 13 October 2026]
Before answering, we need to clarify the difference between registration with the Labour Office and entitlement to unemployment benefits.
- Registration as a jobseeker: A managing director of an s.r.o. may register as a jobseeker only if they receive no remuneration or their monthly remuneration (together with any earnings from employment permitted during registration) does not exceed half the minimum wage.
- Unemployment benefits: Under Section 39(2) of the Employment Act, a remunerated managing director or shareholder of an s.r.o. is not entitled to unemployment benefits, regardless of the amount of remuneration. The Act expressly states that “the amount of income or remuneration shall not be taken into account”. An exception applies only to members of housing cooperatives.
What does the law say?
Statutory Provisions
| Relevant provision | Content of the provision |
|---|---|
| Employment Act, Section 25(1), point (c) and point (s) | Unless otherwise provided by this Act, only an individual residing in the Czech Republic may qualify as a jobseeker, provided that they are not (c) a shareholder or managing director of a limited liability company, a limited partner in a limited partnership, a director of a public benefit company, or the head of a branch of a foreign legal entity who performs work for that company outside an employment-law relationship, receives remuneration from the company for that work, and whose monthly or average monthly remuneration, together with any earnings (remuneration) under subsection (3), exceeds half the minimum wage, (s) an individual entrusted with business management who performs that activity for remuneration outside an employment-law relationship and whose monthly or average monthly remuneration, together with any earnings (remuneration) under subsection (3), exceeds half the minimum wage, |
| Employment Act, Section 25(3) | Registration and continued inclusion in the register of jobseekers shall not be precluded by (a) work performed under an employment or service relationship, provided that monthly earnings do not exceed half the minimum wage, or (b) work performed under an agreement to perform work (DPČ), provided that the monthly remuneration, or the remuneration attributable to one month of the period for which it is payable, does not exceed half the minimum wage. Regardless of the amount of monthly earnings or remuneration, the jobseeker must notify the regional branch of the Labour Office of this activity when applying for employment placement services or no later than the day on which the activity begins, and must provide evidence of monthly earnings or remuneration within the deadline set by the regional branch of the Labour Office. Where several activities are performed, the monthly earnings (remuneration) shall be added together for the purpose of assessing compliance with the monthly earnings limit. |
| Employment Act, Section 39(2) | A jobseeker shall not be entitled to unemployment benefits if, on the date from which unemployment benefits are to be awarded, they have the status of any of the persons referred to in Section 25(1)(c) to (f) and (s) (including a shareholder or managing director); the amount of income or remuneration shall not be taken into account. This shall not apply to a member of a housing cooperative who performs work or activities for the housing cooperative outside an employment-law relationship or is entrusted with its business management. |
To summarise, the current legislation does not prevent a managing director whose income does not exceed 50% of the minimum wage from registering with the Labour Office, but they are not necessarily entitled to unemployment benefits.
Registration still offers some protection, as the state at least pays health insurance contributions for registered jobseekers. It does not pay social insurance contributions, but the period of registration may count towards pension entitlement as a credited non-contributory insurance period.
What About Entitlement to Unemployment Benefits?
- The broader interpretation extends “disregarding the amount” to zero remuneration and excludes all managing directors and shareholders.
- The narrower interpretation removes only the income threshold and retains the requirement that no remunerated work is performed for entitlement to benefits.
The Labour Office’s interpretation tends to allow entitlement to unemployment benefits for a managing director or shareholder who receives no remuneration from the company.
Labour Office FAQ – Managing Directors
The Labour Office’s current FAQ specifically asks: “What documents do I need to provide if I am a shareholder or managing director of a company?” It requires:
- an agreement governing the performance of the office, if one has been concluded;
- a declaration stating whether the individual performs activities for the company outside an employment-law relationship for which they receive remuneration.
Source: Labour Office – Employment, Documents and Certificates section.
Practice is therefore more nuanced than theory, and there are cases in which an individual who is a managing director or shareholder has been awarded unemployment benefits.
Court Decision
A court decision from 2025 is of particular interest. In its judgment 32 Ad 11/2024-30 of 30 January 2025, the Regional Court in Hradec Králové describes an applicant who was the sole managing director of an s.r.o. He provided the Labour Office with an agreement stipulating that he performed the role without remuneration and confirmation that he had received no funds from the company. He was awarded unemployment benefits; the dispute concerned their amount and evidence of his previous earnings.
The judgment documents a specific case in which an unpaid managing director was awarded unemployment benefits. However, the court addressed the amount of the benefits, rather than the general entitlement of all managing directors performing their role without remuneration.
Source: judgment in the official court database, particularly paragraphs 1, 12 and 25.
Potential Risks
Could the managing director be required to repay the benefits following a review or a change in interpretation?
Under Section 55(2), the jobseeker’s fault is a key factor in determining the obligation to repay benefits, for example where they concealed a material fact, provided incorrect information or failed to fulfil a notification duty. A subsequent change in the authority’s view does not therefore automatically amount to an overpayment attributable to the jobseeker’s fault. Section 56 provides for additional specific cases in which repayment is required.
Full and truthful disclosure of the role, activities and remuneration is essential when assessing whether the jobseeker was at fault.
Sources:
Employment Act
32 Ad 11/2024-30 of 30 January 2025
Labour Office website – FAQ