JMHZ in practice: first experience points to technical and procedural problems

 

The initial operation of JMHZ has been accompanied by technical errors and an unclear methodology. 

Communication regarding errors is often sent directly to clients rather than to their representatives. 

Problems also arise for foreign employers without a data mailbox in the Czech Republic. 

The first weeks of the live operation of the Unified Monthly Employer Report (JMHZ) show that although it is a step towards digitization and simplification of the agenda, the reality is still significantly more complicated. Internal experience from practice confirms that employers and their external payroll providers are currently dealing with a combination of technical limitations, unclear methodology and unfinished functionality of the system. 

Error messages do not go to the representative, but to the client 

We represent most clients on the basis of a power of attorney and we are registered with the CSSA as a contact person. Logically, we would expect that all feedback from the JMHZ system, i.e. confirmations, defect reports and calls for correction reports, is sent to us, but in practice it does not work that clearly. 

After filing the report, we usually receive a confirmation from the CSSA that everything is in order. However, it happens immediately that a protocol on the completeness of the submission arrives in the client's data box with a warning of errors or deficiencies and nothing arrives in our data box. The client must then forward the document to us, we will find out what needs to be corrected, and only then can we react. 

Added to this is the technical immaturity of the system. The payroll software is continuously updated, often in weekend versions, the Ministry of Labour and Social Affairs refines the instructions for filling in during the year, and it repeatedly happens to us that the report fails for a reason that was not yet described before the update. In practice, this means a cycle of several weeks: we send the first few reports, the errors are returned to the client's data box, we report them to the developers and wait for the next update. 

What to do about it in practice  

We expect that communication takes place in multiple channels. We regularly ask clients if they have received anything from the JMHZ system in their data box. We monitor the CSSZ ePortal and our own data box in parallel. It would help if all communication from the CSSA and the Ministry of Labour and Social Affairs was also available on ePortal. It now only includes the ability to view prompts, not logs for individual submissions, which are delivered only to data pages. 

 

Combination of submissions from software and work on ePortal 

Another complication is the limited interconnection between payroll systems and the CSSA ePortal. A report sent directly from the software is not visible on ePortal, which significantly limits data control and makes it impossible to make corrections directly in ePortal. In this case, it is always necessary to prepare and send the correction report again from the payroll system. 

Practical problems are also brought by working with cancellations. Although the original submission should be deleted, the system does not process it immediately. If a new regular report is filed immediately after the cancellation, it is often rejected for duplication. Experience has shown that it is advisable to wait at least one day before a new regular report can be submitted. 

In practice, we also encounter limited control options for already sent data, both for the reported employee data and for the monthly report itself. The data cannot be easily displayed, which complicates its review and subsequent corrections. The Ministry of Labour and Social Affairs has confirmed that it is aware of this limitation and is working on adding functionalities that would allow data on the portal to be better displayed, checked and edited. 

 

A foreign employer without a data box 

A specific group of clients that we process are foreign employers without a registered office, permanent establishment or branch office in the Czech Republic. Typically, these are situations where a Czech tax resident has several employers from EU countries, while a substantial part of his or her activities are carried out in the Czech Republic for a Czech employer and a smaller part abroad for a foreign employer. According to Article 13 of Regulation (EC) No. 883/2004 of the European Parliament and of the Council, all work activities of such an employee fall under one social security system, which in this case is the Czech Republic (A1 form). Therefore, a foreign employer must register with the Czech Social Security Administration in the Czech Republic and pay insurance premiums for its employee there. However, the tax on dependent activities continues to be paid abroad, this employer is not a tax payer in the Czech Republic. The tax resident then settles worldwide income in his tax return. 

These clients (employers) do not have a Czech data box. Communication therefore takes place through us as a proxy with a general power of attorney. In most cases, messages from the system go to our data box correctly. In the past, however, we have rarely encountered that the Czech Social Security Administration sent a document by post to a client's foreign address, while it also arrived in our data box. This creates uncertainty as to whether the document will now be delivered to the representative's data box or only by post to a foreign entity. This is also associated with the moment of service, which is decisive for the running of time limits. 

It would help if there was an explicit procedural framework for foreign employers without a data box in the Czech Republic, for example, a clear rule that in the case of an employer represented by a power of attorney, the representative is delivered primarily to the data box and this moment is decisive for the running of time limits. 

Form and foreign regime: fields that do not match 

With foreign employers, we encounter another set of problems, and that is the filling in of reports and registrations. The form is designed for a typical Czech entity and requires a foreign employer without an establishment in the Czech Republic to fill in values that do not correspond to reality. Specifically: 

Employer's address in employee registration  

When registering or registering an employee, it is possible to state the foreign address from the contract, but the municipality is bound to the code list of Czech municipalities. To our inquiry, the Ministry of Labour and Social Affairs replied that in this specific case (the employer does not have a registered office or establishment in the Czech Republic),  the employee's address of residence in the Czech Republic is stated. 

Place of work in JMHZ 

For the individualized part of the report, it is possible to select the foreign country of work (e.g. Germany), but the municipality is again only from the Czech code list. The Ministry of Labour and Social Affairs recommends the same procedure, i.e. to specify the municipality according to the employee's place of residence in the Czech Republic. 

Employer's Tax Office  

A mandatory field for which it is not possible to select the option "I am not a tax payer in the Czech Republic". When asked, the CSSA confirmed to us that in this case the Tax Office for the Capital City of Prague is mentioned. 

The common denominator is that the necessary procedures are based on individual answers of the Ministry of Labour and Social Affairs and the Czech Social Security Administration to specific questions, not on the published methodology. Both institutions respond in a helpful and matter-of-fact manner, often within a few days. However, it would help if the answers obtained were gradually reflected in publicly available explanatory materials. Every employer in the same situation would not have to ask again and would have formally comparable support. 

Practical recommendations 

If you are dealing with a non-standard situation, submit your own question to the Ministry of Labour and Social Affairs or the Czech Social Security Administration and archive the answer. If you follow the instructions of the authority, you at least have evidence that you acted in good faith.