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Czechia's 'Švarc system' could soon change: What freelancers need to know

A proposed change to Czech labor law could redraw the line between genuine freelancing and illegal disguised employment. Here's what workers need to know.

Dave Park

Written by Dave Park Published on 01.10.2026 09:09:00 (updated on 01.10.2026) Reading time: 4 minutes

Business & Money Work
Shutterstock by Barmaleeva
Shutterstock by Barmaleeva

If you work in Czechia on a trade license, or živnostenský list, you may already have encountered the term švarcsystém.

The practice occupies one of the murkier corners of the Czech labor market: a person formally works as a self-employed contractor, or OSVČ, but in practice performs a job much like a regular employee. When the relationship meets the legal definition of dependent work, using a freelance arrangement instead of employment is illegal.

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Now the rules determining where that line falls could change.

The Czech government approved a proposed new definition of dependent work at the end of August. PAQ Research warns that the wording could effectively legalize between 70 and 90 percent of arrangements currently considered part of the Švarc system, potentially affecting 50,000 to 80,000 workers.

The Ministry of Labor and Social Affairs rejects that interpretation, saying the proposal is intended to provide greater legal certainty and distinguish genuine entrepreneurs more clearly from disguised employees.

So what exactly is the Švarc system, how can you tell it apart from ordinary freelancing, and what could change?

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