ROWAN LEGAL

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

There are no special judicial bodies settling employment disputes – such disputes are simply settled by specialised judges in the civil courts.


The Main Sources Of Employment Law

The Czech Republic is a civil law country; the main source of employment law is thus legislation. Employment relationships and the obligations of the parties are governed and regulated mainly by the Labour Code, Civil Code, Employment Act, various governmental regulations and collective bargaining agreements where applicable.


National Law And Employees Working For Foreign Companies

The mandatory rules under national public law apply to all individuals physically working in the Czech Republic, regardless of their nationality and, where applicable, regardless of the law governing their employment contract. The law applicable to the employment relationship with a foreign aspect is determined according to the rules of international private law.


National Law And Employees Of National Companies Working In Another Jurisdiction

Should there be an employee employed in another jurisdiction by a company which is registered in the Czech Republic, the employment agreement shall generally be governed by the place where the agreement is concluded. The parties have contractual freedom and are entitled to have the agreement governed by the law agreed to under the rules of international private law. However, the rights of the employees shall never be lesser than those that they would enjoy in the country where the work is performed.

In the case of an employment relationship with a foreign aspect (i.e. in the event that the employer´s and the employee´s nationality is different), the law applied would be determined based on the rules of international private law. Under the Regulation of the European Parliament and Council EC no. 593/2008 on the law applicable to contractual obligations (Rome I), an individual employment contract is governed by the law chosen by the parties. Such a choice of jurisdiction may not, however, have the result of depriving an employee of the protection afforded to him by provisions that cannot be derogated from him/her by agreement under the law that would have been applicable in the absence of the choice. In the absence of any choice of law, a contract shall be governed:

  • by the law of the country in which or, failing that, from which the employee habitually carries out his/her work in performance of the contract;
  • by the law of the country where the place of business through which the employee was engaged is situated;

Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated above, the law of that other country shall apply.


Data privacy

The Labour Code stipulates that the employer may not require from an employee information that does not directly relate to performance of work and to basic labor relationship. The employer may not require in particular the information on: i) pregnancy, ii) family and property situation, iii) sexual orientation, iv) origin, v) trade union organization membership, vi) membership of political parties or movements, vii) religion or confession, viii) unimpeachability (clean criminal record).

Furthermore, Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) also applies directly to employment relationships as the employer is a controller for the purposes of this Regulation in the context of the protection of the employee's personal data.

The employer as the controller is responsible for compliance of personal data processing with the principles of personal data processing and the employer is thus obliged not only to comply with the principles of personal data protection but must also be able to demonstrate this compliance in reality.

An example of personal data that the employer processes about the employee which must comply with the rules of their processing are, in particular, identification data, contact data, operational data, location data or even sensitive data of the employee, which are e.g. health data of an employee.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

The law requires that the employer concludes the employment contract in writing.


Mandatory Requirements
  • Trial Period

    • There is no legal obligation to arrange for a trial period. In the event that one is agreed to by the parties, the trial period needs to be agreed in writing prior to the commencement of the employment relationship (the date on which the employee starts working) and cannot exceed three (3) consecutive months or in the case of a managerial (senior) employee six (6) consecutive months after the day the employment relationship is established. A trial period cannot be agreed after the date of commencement of employment.

  • Hours Of Work

    • Normal weekly working hours may not exceed forty (40) hours. The working hours of employees working on a (multi) shift rota or underground should be shorter. The working hours of employees under the age of eighteen (18) years (minor employees) may not exceed eight (8) hours per day.

  • Special Rules For Part-time Work

    • Part-time work (i.e., below the scope mentioned above) may only be agreed between the employer and the employee upon mutual agreement. In regard to certain categories of employees (e.g., female employees who are pregnant or taking care of a young child, or employees taking long-term care of a person dependent on their assistance), if such an employee requests to only work part-time, the employer is obliged to comply with such request unless this is prevented by serious operational reasons.

    The part-time employee is entitled to be paid a wage or salary according to the scope of the agreed part-time work.

  • Earnings

    • The legislation provides for a minimum salary (minimum remuneration for work). If the agreed pay is lower than the minimum salary, the employee is entitled to claim the difference between the minimum and the agreed salary from the employer.

    Generally, the minimum salary is set annually by statutory order. The current minimum salary for 2021 for a working week of forty (40) working hours is CZK 15,200 monthly or CZK 90,50 per hour. However, such a salary varies with different positions since the pay should be calculated with respect to the complexity of the work, responsibilities etc. (the so-called guaranteed salary also set by statutory order).

  • Holidays/Rest Periods

    • The standard length of paid holiday is at least four (4) weeks per year. Some categories of employees are entitled to a longer guaranteed period of paid holiday (e.g. academic employees of universities).

    After a maximum of six (6) hours of continuous work, employees are entitled to a rest period. Minor employees are entitled to a rest period after four and half (4.5) hours of continuous work. Work breaks are generally not included into the working hours.

  • Minimum/Maximum Age

    • Employment of individuals under the age of fifteen (15) and individuals with unfinished compulsory school attendance is (with several exceptions) prohibited. There is generally no legal limit providing for the maximum age of employees. Czech legislation also provides exceptions in relation to the minimum age of employers. With a court approval, an individual younger than 18 years old may run his own business inclusive of all relating actions, such as employing his own employees.

  • Illness/Disability

    • Disabled employees are entitled to special protection. Moreover, the employer is obliged to ensure certain special working conditions for these employees. Employers employing a certain percentage of disabled employees are entitled to a special state grant.

  • Location Of Work/Mobility

    • The place of work must be specified in the employment contract. The employer may send an employee on a business trip only with his/her consent. When employees perform their work outside their standard place of work, they are entitled to the reimbursement of their travel expenses.

  • Pension Plans

    • Employers are not obliged to contribute to the pension system; however, employers may decide to contribute to the individual pension schemes of their employees. The contributions can then be deducted from their tax base.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • A female employee is entitled to maternity leave of twenty-eight (28) weeks which can commence as soon as eight (8) weeks prior to the child’s birth. If the employee gives birth to two or more children, she is entitled to maternity leave of 37 weeks.

    Maternity leave may not be shorter than fourteen (14) weeks and cannot be finished or interrupted during the six (6) weeks following the birth. Both female and male employees taking care of a child under the age of three (3) years are entitled to paternity leave for a period that is required by the employee. An employer may not instantly terminate the employment relationship with a pregnant employee and/or employee on maternity or paternity leave.

  • Compulsory Terms

    • In the employment contract, the type of work, place(s) of work and commencement date must be specified. Further, the employment contract should contain information regarding the employee’s rights and obligations. The contract may be concluded without this information; however, in that case the employer is obliged to provide the information in writing to the employee within one (1) month after the employment relationship is established. In the event that the employee is to be sent to work abroad, the employer is obliged to inform him/her of the expected period of work abroad and the currency of remuneration.

  • Non-Compulsory Terms

    • Labour Law is governed by the principles of contractual freedom; therefore, in the employment agreement the parties may stipulate any additional terms and conditions. Nullity of legal acts and provisions of the contract cannot be detrimental to the employee provided that the said nullity was not caused exclusively by him/her.


Types Of Agreement

A labour relationship may be established either by a standard employment contract (establishing the employment relationship) or by agreements for work performed outside the employment relationship (such as Agreement on Work Performance or Agreement on Working Activity), the latter providing for fewer working hours and different formalities and conditions.


Secrecy/Confidentiality

Generally, the law does not impose an obligation of confidentiality on employees except for a specific group of employees working for public authorities. Members of trade union organisations, work councils or representatives concerned with occupational health and safety protection are entitled to require certain information from the employer. These employees are obliged to keep such information confidential. In addition, certain state employees are obliged not to reveal secret and/or confidential information.

Without the employer’s consent, no production equipment and/or other devices used at work, including computers and telecommunication devices, may be used by the employees. Unless there are good reasons connected to the special nature of the employer’s activities, the employees’ privacy in the workplace and common premises must not be encroached upon by open or hidden surveillance cameras (monitoring), interception and recording of telephone calls, checking emails or post addressed to the employees.

Regardless of the type of workers, a special statutory protection of trade secret applies; employees are under an obligation not to reveal certain confidential information if this is set out in their contract.


Ownership of Inventions/Other Intellectual Property (IP) Rights

Under the Copyright Act, the intellectual property rights to all inventions created by the employees in the course of their work performance for the employer are owned by the employer unless agreed otherwise. The employee has certain moral rights (e.g. a right to claim authorship) over the invention, but the property rights to such inventions or other subject matters protected by intellectual or industrial property rights are exercised by the employer unless agreed otherwise.


Pre-Employment Considerations

The selection of individuals with regard to their qualifications, skills, etc. is within the employer's competence (unless otherwise provided by law). Before the commencement of an employment relationship, the employer may require from the individuals seeking employment only information (data) related to the conclusion of the employment contract in question. Before an employment contract is concluded, the employer shall acquaint the individual with rights and obligations which would arise from the contract as well as with the working conditions and the remuneration conditions under which the work would be performed. The individual must also be informed of other obligations arising from statutory provisions and relating to the subject-matter of the contract.

The employer also needs to arrange for the individual to undergo an entry medical check-up before the conclusion of the employment contract.


Hiring Non-Nationals

EEA and Swiss nationals and their family members are automatically entitled to work in the Czech Republic under the same conditions as Czech nationals (subject to certain exceptions).

Non-EEA nationals are entitled to the same employment rights as nationals/EEA and Swiss nationals only if they hold a residence and working permit for the Czech Republic or an employee card. Non-EEA nationals may only be taken on for those vacancies registered with the Labour Office which have been offered to Czech nationals as open positions and cannot be filled. The employer needs to notify the Labour Office in advance and discuss with the Labour Office the intention to employ those foreigners.

Highly qualified non-EEA nationals may apply for a so-called “blue card”, which allows them to seek employment in the Czech Republic more easily. Also, non-EEA nationals who dispose of a “blue card” or working permission can be sent on a business trip under the same conditions as the Nationals and EEA nationals.

In some cases, no residence and working permit, blue card or employee card is needed (e.g., for non-EEA nationals who have permanent residency in the Czech Republic, those who are studying in the Czech Republic etc.)


Hiring Specified Categories Of Individuals

Employers with over twenty-five (25) employees are required either to employ disabled persons (constituting at least four (4) % of their workforce) or purchase special products produced by other employers who employ more than 50 % of the disabled or pay a special charge or combine the previously mentioned methods.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

The law imposes certain mandatory requirements for contracts concluded between an employment agency and a user company as well as for the temporary assignment of employees.

The employment agency and the user company must ensure that the working conditions and the remuneration of the temporarily assigned employees are not worse than the conditions of the user’s employees performing the same and/or similar work.

In addition to the case of an employment agency, an employer may also assign its employees to another employer. The agreement on temporary assignment may be concluded between an employer and an employee 6 months after the commencement of the employment at the earliest. Remuneration for temporary assignment is forbidden.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

The terms and conditions of the employment contract may only be changed in writing upon mutual agreement by the parties. In certain special cases, the employer is obliged/entitled to transfer the employee to another type of work without their consent (e.g., the employee has lost capability to perform his current work)


Change In Ownership Of The Business

Under Czech Law, when the enterprise or part of it is sold or rented, the rights and obligations arising from the employment relationships established between the employer and the employees are transferred from the seller (lessor) to the buyer (lessee). New employment contracts with the respective transferred employees need not be concluded.

A transfer of the employment relationships also occurs when the activities of an employer or part of them or the employer’s tasks are transferred to a new employer. Both the transferor and the transferee employer are obliged to inform the employees about the date, reason, impacts of the transfer and planned measures relating to the transfer no later than 30 days before the transfer.


Social Security Contributions

Both the employer and the employee have to contribute to the social security and health insurance systems.


Accidents At Work

The requirements for safety in the workplace are set out in the Labour Code and the Additional Occupational Health and Safety Requirements Act.

Where an accident at work occurs, the employer is obliged, without limitation, to investigate the causes and circumstances of the injury, maintain documentation of industrial injuries, notify the competent agencies and institutions and take measures to prevent the reoccurrence of such industrial injuries.


Discipline And Grievance

The employee is obliged to maintain discipline in the workplace, i.e. to meet all legal duties following from the employment contract, collective agreement, legal regulation and other regulation they have been familiarised with. In cases of breaches of work discipline, an employer might curtail an employee’s holiday (following an unexcused absence), terminate the employment with notice due to the breach of the employee’s duties, instantly dismiss the employee due to a material breach, or reduce the variable part of their salary.

In order to terminate employment with notice due to a breach of work discipline, the employer is obliged to first notify and warn the employee in writing as to the possibility of termination. The employer is then entitled to terminate the employment if the employee breaches his/her obligations again in the period of 6 months subsequent to the notification.


Harassment/Discrimination/Equal pay

The employer shall ensure all employees are treated equally in terms of their working conditions, remuneration, vocational training and opportunities for career development. Any discrimination is prohibited. According to the Anti-Discrimination Act which implements the EU rules against discrimination at work, harassment is also considered as discrimination and as such is prohibited.


Compulsory Training Obligations

Under Czech Labour Law, the employer is obliged to train new and unqualified employees. The employees have to endeavour to gain qualifications during their employment with the employer. The employer is entitled to instruct employees to take some training courses.

The employer is additionally obliged to provide handicapped employees with job training and an opportunity to further their qualifications.

The employer and the employee may also conclude a qualification agreement. The agreement shall include the employer’s willingness to enable the employee to further expand their qualifications and the employee’s willingness to remain employed with the employer for an agreed period (maximum of five (5) years) or to reimburse the qualification costs settled by the employer. This shall additionally apply to those cases where the employment contract is terminated before a qualification enhancing course has been completed.


Offsetting Earnings

In the Czech Republic there are very strict regulations relating to the offsetting of earnings. Any deduction to the employee’s salary must be based on law or agreed in writing, otherwise it is deemed to be invalid. Generally, the amount deduced may not be higher than the amount deduced from the pay following a judicial decision and may not exceed the amount of half of the employee’s remuneration.


Payments For Maternity And Disability Leave

Female employees on maternity leave receive maternity benefits from the social security system, rather than pay from their employer.

Employees temporarily incapable of performing their work or ordered to stay in quarantine are entitled to compensation payment from their employer (subject to certain exceptions) for the first fourteen (14) calendar days of their temporary incapacity for work or stay in quarantine in the amount determined by the applicable law.

Disability leave payment is paid by the social security system from the fifteenth (15th) day of temporary working disability suffered by the employee. Up to that time the compensation of salary for disability is paid by the employer – from the first working day of the time off work due to the working disability.


Compulsory Insurance

The employer is obliged to pay health and social insurance levies for every employee.


Absence For Military Or Public Service Duties

The employer is obliged to grant an employee time off for the performance of a public function, civic duties and other activities in the public interest, provided that these activities cannot be carried out outside the working hours of the employee. Subject to contractual or legal obligations, the employees are not entitled to a compensation payment from their employer.


Works Councils or Trade Unions

Trade unions may be established as an association of employees. There may also be two or more trade unions operating within one company (employer). The employer is obliged to treat the trade unions equally.

Within a company, the trade unions enjoy special rights. Trade unions represent all employees working for the employer regardless of their association with the trade union. Where more than one trade union operates within one business, the employer – in certain cases – has to negotiate and establish an agreement with all of them.

In order for a trade union to be able to exercise its rights vis-à-vis the employer, at least three (3) employees of the employer need to be members of the trade union in question.


Employees’ Right To Strike

The Czech Constitution guarantees employees the general right to strike under the conditions specified by law. In the event of a strike called to support collective agreement negotiations, the Collective Bargaining Act explicitly stipulates when such strikes should be considered as unlawful. The right to strike may be restricted for certain professions that are necessary for the protection of life and health; however, this can only be done based on the law.


Employees On Strike

The employees cannot be compelled to join or made to refrain from taking part in a strike. Since the participation in the strike is an exercise of their constitutional right, the non-performance of working duties during the strike may not be considered as a reason for terminating the employment contract.


Employers’ Responsibility For Actions Of Their Employees

Unless a third party knew or it was reasonable to presume that the third party was aware that the employee had acted beyond their competence, the employer is fully bound by actions of their employees, provided such actions are commonly performed in the course of the employee’s employment.

The employer is responsible for the damage caused to a third party by their employees during the performance of their working duties.

4

FIRING THE EMPLOYEE

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.


Instant Dismissal

The employment contract may be immediately terminated if:

    1. 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,
    2. the employee has been sentenced, under final verdict, for a wilful criminal offence to a term of unconditional imprisonment of over one year or,
    3. 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.

Employee's Resignation

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.


Collective Dismissals

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:

    1. at least 10 employees at the employer which employs from 20 to 100 employees;
    2. at least 10% of employees at the employer which employs from 101 to 300 employees; or
    3. 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.


Whistleblower Laws

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.


Severance Payments

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

None.


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.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

None.



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Contact a Contributing Author:
Mgr. Ondřej Křížek
ROWAN LEGAL
Czech Republic


JUDr. Adéla Uhrinová
ROWAN LEGAL
Czech Republic


Disclaimer:

© 2021, ROWAN LEGAL. All rights reserved by ROWAN LEGAL as author and the owner of the copyright in this chapter. ROWAN LEGAL has granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: June 2021