Procedures For Terminating the Agreement
The employment relationship may be terminated by agreement of the parties, upon notice of termination, by instant dismissal and upon cancellation during the trial period. Employment might also be terminated by the lapse of time or due to other reasons (such as the employee’s death). The reasons for terminating the employment relationship on notice are expressly listed in the Labour Code; the employer is not entitled to terminate an employment contract on notice for other reasons.
Where the employment relationship is not terminated by an agreement or by instant termination, it ends upon the expiry of the notice period.
The employment contract may be immediately terminated if:
- the employee has breached some of his/her duties, which stems from the statutory provisions and relates to its work performance, in a particularly grave manner or,
- the employee has been sentenced, under final verdict, for a wilful criminal offence to a term of unconditional imprisonment of over one year or,
- if the employee has been sentenced, under a final verdict, of a wilful criminal offence committed during the performance of his/her working tasks or in direct connection therewith, and to unconditional imprisonment of no less than six (6) months.
The employee may terminate the employment relationship by giving notice with or without stating a reason. In such cases, the employment relationship ends upon the expiry of the notice period. Instant termination of the employment contract by the employee is allowed only in cases where the employee is not able to perform the work for health reasons (approval of a physician is required), and is not offered suitable work of a different kind and/or the employees have not received their salary (wage) or part of the salary within fifteen (15) days of the due date.
Termination On Notice
The notice of termination must be given in writing and delivered to the other party. In the notice of termination given by the employer to the employee, the statutory reason for which the employment relationship is ending must be specified. The employer is required to specify the reason clearly to prevent the reason from being confused with any other. Failure to comply with these requirements will result in an invalid notice of termination. The notice period shall start on the first day of the calendar month following the delivery of the notice, and end upon the expiry of the last day of the relevant calendar month with some exceptions. The notice period shall be at least two (2) months, except for special cases such as the transfer of the employment to another employer.
Termination By Reason Of The Employee's Age
Under the Czech law, there is no statutory reason for termination related to employee's age. Moreover, the employee cannot be treated differently because of his/her the age.
Automatic Termination In Cases Of Force Majeure
Under Czech law, an employment relationship can additionally be terminated in cases of force majeure represented by the death of the employee and in some cases of the employer, too. Automatic termination in cases of force majeure additionally comes into question where the company (i.e. the employer) is dissolved and no legal successor is defined.
Under the Czech Labour Code, a collective dismissal means the termination of employment relationships by one employer to no less than 10 employees (the number increases in respect to the total number of employees of one employer) within a period of 30 calendar days on the basis of notice given inconsequence of e.g., a business shut-down, relocation of the business or redundancy.
The following number of terminated employees must be met for the application of collective dismissal procedure:
- at least 10 employees at the employer which employs from 20 to 100 employees;
- at least 10% of employees at the employer which employs from 101 to 300 employees; or
- at least 30 employees at the employer which employs more than 300 employees.
The employer shall report in writing the intention of a collective dismissal to the trade unions and the work council at least 30 days in advance, together with additional information such as the reasons for the collective dismissals, number of employees to be made redundant and the applied selection criteria.
Termination By Parties’ Agreement
The parties are free to terminate the employment relationship by agreement. However, in some specific situations, the employee is entitled to a severance payment.
Directors Or Other Senior Officers
The employer and the senior officer (employee who, at individual management level, is authorized to determine and give tasks to subordinate employees, to organize, manage and supervise their work and to give them binding instructions (orders) for this purpose) may agree on the possibility to be discharged from their managerial position, provided it is also agreed with them that they may resign from their position. Where the employer is a legal entity, these persons may be discharged from their position only by the statutory body. Where the employer is an individual, they may only be discharged from their position by the individual in question (i.e. the employer). The discharge or resignation from a managerial position must be made in writing.
The employment relationship of these persons shall not come to an end upon their discharge or resignation from their managerial position. A new position within the employer’s business shall be proposed and suitable alternative work corresponding to the employee’s health and qualifications offered. Otherwise, the employment relationship may be terminated in the same way as already mentioned above.
Special Rules For Categories Of Employee
The law provides for special protection of pregnant women, mothers of young children and employees under the age of eighteen (18) years. Special rules additionally apply to certain categories of employees working in an unhealthy or potentially dangerous workplace (e.g. miners). Some exceptions are mentioned above.
Specific Rules For Companies in Financial Difficulties
Under the Bankruptcy Act, the financial claims of employees against a bankrupt company are considered as a preference claim.
Restricting Future Activities
The parties can agree to enter into a non-competition agreement for an agreed period of time. This period cannot exceed one (1) year following termination of the employment contract. The employer is obliged to provide the employee with adequate monetary compensation for the above period in the amount of at least a half of the average monthly salary for each month of the duration of the non-competition agreement.
The non-competition agreement can only be concluded in the case that it is justifiable regarding the information and know-how that the employee obtains in the course of the employment with the employer, and where use of such information and know-how may have a substantial and detrimental effect on the employer’s business.
A non-competition agreement must be concluded in writing.
Although there have been initiatives in the government to introduce legal protection of whistleblowers, there currently aren’t any whistleblower-focused laws in effect in the Czech Republic. Given the entering into force of the EU Whistleblower Protection Directive, the Czech Republic as an EU Member State will need to transpose its contents into national law (however, the Directive necessarily only covers those matters where EU law has been breached).
Special Rules For Garden Leave
The concept of garden leave is not expressly recognized in Czech law, but is used in practice quite commonly (i.e., the employer decides that the employee shall stay at home). In such cases, the employee is entitled to a so-called compensatory wage throughout this period.
Where the employment relationship is ended due to reasons of closure or relocation of the employer’s business or its part or due to redundancy, the employee is entitled to a severance payment (regardless of whether the relationship is ended by termination or agreement) equivalent to once (1), twice (2) or triple (3) his/her average monthly earnings depending on the length of the employment.
Where the employment relationship is terminated on notice or by agreement because of an industrial injury, illness or related events incurred by the employee; he/she is entitled to a severance payment (regardless of whether the relationship is ended by termination or agreement) in the amount of at least twelve times (12) his/her average monthly earnings.
Special Tax Provisions And Severance Payments
There are no special tax provisions concerning severance payments. However, severance payments – as an income of the employee – are subject to income tax. Severance payments obligatorily paid out by an employer pursuant to the Czech Labour Code are free from health and social insurance levies.
In general, the employer is not obliged to give any payments to the employees after their contract is terminated. However, should there be a non-competition clause stipulated, the employer shall pay remuneration of the pay for up to one (1) year.
Nullity of the termination of an employment relationship may be claimed both by the employer and the employee before the competent court within two (2) months of the day when the employment relationship in question should have come to an end as a result of such termination.
Allowances Payable To Employees After Termination
Time Limits For Claims Following Termination
The time limits for claims arising from the employment relationships are governed by the Civil Code. The general time limit is three (3) years from the moment the claim could have been first raised.