The Employment Law Review: Czech Republic
National laws in the Czech Republic regulate employment relationships extensively. As a result, employees receive a high level of statutory protection. Modifications of rights and duties in employment relationships are limited. The rights and duties of an employee may be modified only by a bilateral agreement and modifications that disadvantage the employee are not permitted. The main employment regulation is the Czech Labour Code. In addition to national legal acts, government regulations and EU law are the key sources of Czech employment law rules. Case law is used as an interpretation source but is not binding.
Some aspects of employment relationships can be regulated by collective bargaining agreements, specifically those at a higher level, concluded between employers' associations and sector trade unions, which are binding for all employers active in the relevant economic sector. Collective bargaining agreements of a higher level are published on the website of the Czech Ministry of Labour and Social Affairs.
Employment law-related disputes are subject to the jurisdiction of special employment law senates. The court system comprises three levels: regional courts, district courts and the Supreme Court.
The main government agency with authority to enforce employment law is the State Labour Inspectorate, which monitors compliance with statutory laws relating to a wide range of matters, including working conditions, health and safety, remuneration and employment-related documents. Other authorities involved in employment relationships are the Office for Personal Data Protection, the Foreign Police Department and the Customs Administration; the latter has the authority to monitor employment of foreigners.
Year in review
i Electronic sick notes
As of 1 January 2020, an amendment of the Czech Act on Sickness Insurance has come into force. Since then, when deciding about an employee's sick leave, doctors are obliged to issue electronic sick notes instead of paper ones. The main aim of electronic sick notes is to speed up the transfer of information between policyholders, employers, doctors and health insurance authorities, while also making the process simpler.
ii Significant Labour Code amendment
Part of a major amendment to the Labour Code came into force as of July 2020, with another part coming into force as of 1 January 2021 (see Section XV for more details).
The amendment effective from July 2020, in particular, (1) changed the rules for delivery of significant employment-related documents to employees, (2) implemented Directive (EU) 2018/957 of the European Parliament and of the Council, amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (see Section II.iii), and (3) amended and improved regulation of the transfer of rights and duties of employees after a transfer of business.
iii New Posted Workers Directive
The freedom of movement of persons and the freedom to provide services are two of the fundamental principles of the European Union and have become significant tools within the EU employment market.
More than 20 years after the implementation of Directive 96/71/EC, the regulation of posted workers was amended by the adoption of Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 (the New PWD). The deadline for implementation of the New PWD by EU Member States was 30 July 2020, which was met by the Czech Republic.
The PWD regime applies to situations in which employees from one EU Member State are posted by their employer to work temporarily for a company in another EU Member State; either to perform work for another company on the posting employer's behalf, and under its direction, or within the same group of companies.
The New PWD implements two categories of posting: (1) short-term (less than 12 months), which may be extended up to 18 months; and (2) long-term. It also sets down a rule that if an employee replaces another employee and performs the same duties in the same location, the durations of those postings must be combined. The employer is therefore obliged to monitor instances and durations of postings in which employees replace others in the same position.2
Under the New PWD, all minimum components of the salary must be granted to each posted employee. In the Czech Republic, this means a premium for overtime work and a premium for work during the night or at weekends. Employers will also have to monitor applicable collective agreements. In addition, posted employees will be entitled to compensation for travel and lodging expenses.
iv Labour authority inspections
The State Labour Inspectorate has been focusing on illegal employment and illegal provision of agency workers. Both these administrative offences may be subject to significant fines. Typically, we see cases in which a company believes it is using agency workers but the provider of those workers does not have the relevant authorisation. Another common typical inspection matter is a situation in which a company uses independent contractors who nevertheless do not work independently but actually work according to the same regime as employees who are under the instructions of the employer, using the employer's tools, and whose working time is determined by the employer.
v Effects of covid-19 on employment relationships
The covid-19 pandemic has affected the employment environment in the Czech Republic significantly but no specific amendments to labour law have been implemented. One of the main challenges that employers had to face was implementation of preventive measures, mostly consisting of employees working from home. Employers therefore had to create a legal framework to cover terms and conditions for home working.
The pandemic also raised practical issues connected with complicated Czech rules for delivery of important employment-related documents, which prevent these documents from being delivered electronically. The necessity of an amendment to the law that would allow digitalisation and electronic delivery of employment documents has been a hot topic.
A ruling by the Czech Supreme Administrative Court on 25 May 2020 concerned agency workers, among other things.
The Czech Labour Code states that an employment agency and a user of a temporary employee are obliged to ensure that the working and wage conditions of the temporarily assigned employee are not worse than the conditions of a comparable employee (a non-agency employee). However, the Czech Supreme Court ruled that this does not necessarily mean that the working and wage conditions must be always the same. It only means that when agency employees are not remunerated (or otherwise treated) in the same way as comparable non-agency employees, there must exist a rational explanation for this treatment. This explanation can be, for example, proficiency in machine operation, level of incorporation, performance, reliability, degree of connection with and loyalty to the user, but also experience and ability to adequately face non-standard situations. A legitimate difference can also be the seniority or juniority of employees.
On 20 July 2020, the Czech Supreme Court delivered a ruling on a highly sensitive question of whether socio-economic background in different regions of the Czech Republic can justify a difference in wages of employees of the same employer who work in different regions.
Although the ruling was not entirely unexpected, it still made a serious impact. In this case, an employee working as a driver outside the Czech capital sued his employer because his wage was lower than that of drivers working in the Czech capital, even though they have the same responsibilities and duties. He considered this approach on the part of the employer to be in breach of the principles of equal treatment and fair remuneration. The Supreme Court agreed and stated that the Labour Code provides a complete list of circumstances based on which a wage can be differentiated; the socio-economic background of a region is not one of the listed circumstances.
Basics of entering into an employment relationship
i Employment relationship
A written employment contract is required by law and it should be executed before the employment relationship commences. If no employment contract is in place and the employee starts to perform work for the employer, an employment relationship will be created and the employee will be granted all statutory rights, duties and protection, including from termination of employment. An employment contract must include at least (1) the type of work, (2) the place or places where the work is performed, and (3) the date of the commencement of work. The employer must provide the employee, in writing, with further details of the employment relationship, such as a description of the tasks involved in the job, weekly working hours and duration of annual vacation, no later than within one month of the commencement of the employment relationship, if the information was not already provided in the employment contract. Terms and conditions of an employment contract may only be amended in writing by mutual agreement between the employer and the employee.
Fixed-term employment contracts are allowed. However, the duration of a fixed-term employment relationship cannot exceed three years and cannot be repeated more than twice; in other words, the maximum term for which an employee can be employed on a fixed-term contract is nine years. There are limited cases in which exceptions apply, such as seasonal employment in the agriculture sector. Should an employee work for an employer in breach of these fixed-term contract limitations, an employment relationship for an indefinite term will be created automatically.
ii Probationary periods
The employer and the employee can agree on a probationary period. That agreement must be in writing and the probationary period may not exceed three consecutive months from the commencement of the employment relationship in respect of non-managerial employees or six consecutive months in respect of managerial employees. In the case of a fixed-term contract, the agreed probationary period must not be longer than half of the agreed term of the employment relationship.
A probationary period may be agreed not later than on the date that was agreed as the date of commencement of work or the date specified as the date of appointment to a managerial position. An agreed probationary period cannot be subsequently extended.
iii Establishing a presence
Foreign companies do not have to register in the Czech Republic to hire employees but non-EU companies must register a subsidiary or a branch in the Czech commercial register to conduct business here. Business presence will also often create a permanent establishment for tax purposes. The company will have to obtain the relevant authorisation to conduct its business (i.e., a trade licence or other relevant licence) and register as an employer with the Czech social security and health insurance system to pay the relevant contributions for its employees.
Statutory deductions from each employee's monthly salary include advance payments for personal income tax, social security insurance, unemployment contribution, health insurance and sickness insurance. In general, all statutory contributions are calculated, deducted and paid by the employer on behalf of its employees.
Foreign companies can engage independent contractors in the Czech Republic.
An employee is prohibited by Czech employment law to perform any gainful activity (with the exception of scientific, pedagogical, journalistic, literary and artistic activities) that is identical to the activities of his or her employer, unless the employer provides the employee with a prior written consent to the performance of that gainful activity.
An employee and an employer may agree on a non-compete clause that becomes applicable after the termination of an employment relationship. It must be in writing, either as part of the employment contract or in a separate agreement. The non-compete agreement can only prohibit the employee from conducting a gainful activity that is of the same nature or competes with the activity of the employer. The duration of a non-compete clause is limited to a maximum of one year after the termination of an employment relationship and it must be justifiable with respect to the nature of the employee's work. The employer must provide the employee with a statutory compensation corresponding to a minimum of 50 per cent of the employee's monthly average earnings for each month of the duration of the non-compete obligation. The employee and the employer may agree on an adequate contractual penalty that the employee will be obliged to pay if he or she breaches the non-compete agreement. Upon payment of the contractual penalty, the non-compete obligation ceases to exist.
The employer may only withdraw from a non-compete agreement during the existence of the employment relationship. The employee may terminate the non-compete agreement if the employer failed to provide him or her with compensation within 15 days of its due date. In that case, the agreement ceases to be valid on the first day of the calendar month following the delivery of the notice.
i Working time
The standard working time is 40 hours per week, which also is the statutory maximum for employees working in a single-shift regime. The working week for employees in a regime involving two or more shifts (whereby they regularly mutually switch between two or more shifts within 24 consecutive hours) is 38.75 or 37.5 hours, respectively.
An employer may distribute working hours evenly (over five working days during the week) or unevenly, in a more complex pattern over a balancing period exceeding one week. A single shift (without overtime work) may not exceed 12 working hours and the employer must distribute working hours so that the employee has a rest between shifts of at least 11 consecutive hours and uninterrupted weekly rest of at least 35 consecutive hours (including Sunday, if possible).
Night work means work performed between 10pm and 6am the following day, and the duration of a night shift may, as a rule, not exceed eight hours within 24 consecutive hours. For night work, employees are entitled to additional pay of at least 10 per cent of their average earnings (unless otherwise agreed).
Overtime work is defined as work in excess of the full-time weekly working hours determined in the work shifts schedule. Employers should only require overtime work from employees as an exceptional measure.
Unless agreed otherwise, overtime work performed by an employee may not exceed eight hours in a single week and 150 hours in a calendar year. If the employee agrees to perform overtime work exceeding the annual limit of 150 hours, that work may not exceed, on average, eight hours per week over a balancing period of 26 or 52 consecutive weeks. As a result, employees may actually perform a total of 416 hours of overtime work in a year, subject to his or her individual consent.
For performance of overtime work, employees are entitled to their salary and additional pay of at least 25 per cent of their average earnings, unless an employer and an employee agree that the employee will be provided with compensatory time off corresponding to the amount of overtime work. An employer and an employee may agree that the salary of the employee includes performance of overtime work. The statutory limit for including overtime work in a regular salary is 150 hours per calendar year for standard employees and 416 hours per calendar year for managing employees.
Citizens of Member States of the European Union and European Economic Area (EEA) and of Switzerland may seek employment in the Czech Republic freely without a working permit or visa. These citizens may be also posted to the Czech Republic by their employers for a limited period when meeting the conditions of the New PWD and related regulations. Third-country citizens need to obtain a residence permit and a work permit, Intra-company Transferred Employee Card, Employee Card or Blue Card; the latter three combine the residence and work permit.
The Intra-company Transferred Employee Card is a dual long-term permit allowing its holder to stay in the Czech Republic for more than three months and to work as a manager, specialist or employed trainee to which a foreigner has been temporarily transferred within a multinational company. The Employee Card is a long-term residence permit for third-country citizens whose purpose for staying in the Czech Republic is employment. Holders are entitled to reside and work in the territory of the Czech Republic in the job for which the Employee Card was issued or for which the consent was granted. The Employee Card is usually issued for the duration of the employment, to a maximum of two years, with an option to extend its validity repeatedly. The Blue Card is similar to the Employee Card and is intended for third-country citizens to perform a highly skilled job.
An employer is obliged to keep records of its foreign workers, containing basic information such as identification data, the type of work and the date of commencement of the work. The number of foreign workers an employer may have is not limited.
Employers are obliged to notify in writing the competent regional labour office of the employment of a foreigner on the day the worker commences performance of work, at the latest. In respect of workers posted in the European Union, the posting employer must send this notification. Employers are further obliged to inform in writing the competent regional labour office within 10 calendar days, at the latest, that a foreigner ended performance of his or her work or that the posting has concluded.
A foreign worker may be subject to Czech taxation, especially to income tax, if he or she is a permanent resident in the Czech Republic or is present in the Czech Republic for more than 183 days in a calendar year. When an employee is considered a resident in more than one country, tax residency is usually determined according to the applicable double taxation treaty.
Whether a foreign employee is protected under local employment law depends on the law applicable to the employment contract and to the time spent in the territory of the Czech Republic in respect of a posting in the European Union. Pursuant to the PWD and its implementation in the Czech Labour Code, the local legal provisions apply particularly in the following areas:
- the maximum length of working hours;
- the minimum length of rest periods;
- the minimum length of annual leave or its proportional part;
- the minimum wage or the relevant level of guaranteed wage, if applicable;
- occupational health and safety;
- working conditions for pregnant workers, workers who are breastfeeding and up to the end of the ninth month after childbirth, and adolescent workers;
- equal treatment and non-discrimination of employees;
- working conditions in agency employment;
- conditions of accommodation, if provided for employees by the employer; and
- reimbursement of travel expenses in connection with the performance of work, provided that the usual place of work in the territory of the Czech Republic is considered a regular workplace.
These provisions shall not apply if the rights arising from the legislation of the EU Member State from which the employee was posted to perform work in the framework of the transnational provision of services are more favourable to the employee. Advantage is assessed for each right arising from the employment relationship separately. The requirements for remuneration do not apply if the period of posting of the employee to perform work within the transnational provision of services in the Czech Republic does not exceed a total of 30 days in a calendar year. This does not apply if the employee is posted to perform work in the framework of the transnational provision of services by an employment agency.
If the posting of an employee pursuant to the previous paragraph exceeds 12 months (or 18 months in special cases), further regulation of employment shall apply in addition to the already specified conditions, with the exception of the regulation of commencement, changes and termination of employment.
There is no statutory requirement for companies to have any disciplinary rules. Most employers issue internal regulations to regulate employment relationships in respect of rights and duties that do not have to be set down in the employment contract. Disciplinary rules would typically be established by internal regulations, not in an employment contract. Internal regulations, like a code of business conduct, have been more typically used by international groups of companies that implement global policies but similar internal regulations are increasingly being implemented by other employers.
An employer issues internal regulations unilaterally. They take effect as of the date of announcement to employees or any other later date specified in the regulation. Upon the issuance of an internal regulation, all its changes and its abolishment must be announced to employees within 15 days. The text of an internal regulation must be available to all employees and the employer must archive each internal regulation for 10 years after its expiry. The law prescribes no form of announcement or publishing; email and the company intranet are increasingly used. If trade unions are established within the organisation, they must be consulted in most cases regarding regulations, but no consent is required and non-compliance with this obligation does not make a regulation invalid.
There is no legal obligation to have internal employment regulations drawn up in Czech but since, in the event of any dispute, the employer must prove that employees have understood the regulations, it is recommended in most cases that Czech is used for internal employment regulations.
Czech law distinguishes between three types of leave in connection with the care of a child. All types of childcare-related leave are also available for parents who are taking a child into their care in place of the biological parents.
Maternity and parental leave are considered protected periods, during which the relevant employee is protected from dismissal. Employers have a statutory obligation to provide an employee returning from maternity leave with the same position as was held before the maternity leave (or parental leave to the extent of the maternity leave). Employers also have a statutory obligation to provide an employee returning from parental leave with a position corresponding to their employment contract.
i Maternity leave
In connection with childbirth and care for a newborn child, a female employee is entitled to maternity leave for 28 weeks. Should an employee give birth to two or more children at the same time, she is entitled to maternity leave for 37 weeks. Maternity leave usually commences at the beginning of the sixth week prior to the expected date of birth, but not before the beginning of the eighth week prior to the expected date of birth.
During maternity leave, female employees are entitled to financial support in maternity (PPM),3 which is fully funded by the state. The amount of PPM corresponds to 70 per cent of the gross average salary of the employee; the law also stipulates the minimum and maximum amounts of financial help due.
ii Paternity leave
The father of a newborn child is entitled to seven days' leave, which must be used within six weeks of the date of birth of the child. Similar rules to those in respect of maternity leave apply.
iii Parental leave
The mother is entitled to parental leave after the expiry of maternity leave and the father from the birth of the child. The maximum duration is until the third birthday of the child. An employee on parental leave is entitled to a parental allowance funded by the state.
Czech law does not require employment documents to be translated into Czech or into an employee's native language. However, in the event of a dispute, the employer must be able to prove that its employees have understood all documents relating to the employment relationship, such as the employment contract, employee handbooks, internal policies or confidentiality agreements.
It is recommended that documents are prepared in bilingual versions, with one of the languages being Czech. This approach is also practical since the State Labour Inspectorate may request these documents during an inspection and the employer must be prepared to provide a translation if one does not already exist.
Employees in the Czech Republic are permitted, but not obliged, to form representative bodies (trade unions or works councils) or elect a representative for occupational safety and health protection. Pursuant to the applicable EU legislation implemented in the Czech Labour Code, employees are also permitted to create a works council. The employer is obliged to inform or consult employee representatives about certain organisational or personnel changes, or must fulfil these obligations towards employees individually if there are no active employee representatives. There are no strict requirements for the frequency with which employee representatives should meet.
i Trade unions
The right to form trade unions results from the Czech Charter of Fundamental Rights and Freedoms. A trade union may operate with an employer only if (1) such an operation is authorised in its statutes and (2) at least three members of the trade union are employed by the respective employer. On meeting these conditions, an unlimited number of trade unions may be active with the employer. The employer may neither prohibit its employees from becoming members of a trade union nor discriminate against them in connection with their activities within the trade union. Trade unions that are active with an employer always represent all employees, including those who are not members of the trade unions.
Employers must keep trade unions informed on several matters, such as the economic situation, working conditions, occupational health and safety protection or equal treatment, and in particular must consult trade unions regarding the employer's economic situation, workload and work pace, changes in the organisation of work, the system of employee remuneration, dismissals and other important matters pursuant to the Labour Code. The trade unions also approve holiday schedules and may enter into collective agreements with the employer and influence or participate on some employer decisions. The employer must consult the trade unions in respect of each termination of employment with a notice period or immediate termination; however, the trade union may not veto a termination.
Trade unions may decide on the election procedures for their body members and the length of their term of office. Trade union members who hold an office in the union enjoy special protection during their term of office (and for a period of one year afterwards), whereby the employer may not dismiss these employees without the prior consent of the trade union.
ii Works councils and representatives for occupational health and safety protection
Works councils and representatives for occupational health and safety protection may be constituted for each employer individually. A works council may have between three and 15 members (the number must be always odd).
The number of representatives for occupational health and safety protection depends on the total number of employees of the employer. A maximum of one representative per 10 employees may be appointed. Representatives are elected for three years.
For elections to these bodies, one-third of an employer's employees must sign and deliver a written proposal, following which the employer is obliged to organise an election within three months of delivery of the proposal.
In May 2018, a new complex personal data protection regime was implemented by Regulation 2016/679 of the European Parliament and of the Council 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, also known as the General Data Protection Regulation (GDPR).
i Requirements for registration and other general obligations
Employers have no obligation to register with the Czech Office for Personal Data Protection (the Office). All employers in their role as data controllers are obliged to maintain a register of their data processing activities, particularly with respect to personal data processed systematically and with respect to all employee personal data. The Office monitors compliance with this obligation and a register of data processing activities must be provided to the Office in the event of an inspection.
Employers have an obligation to inform employees about the processing taking place, and secure the processed data by implementing appropriate technical and organisational measures depending on the type of data processed and its extent. Recommended best practices are maintaining a strong password policy, clean desk policy or regular employee training.
Employers should only process data that they need to fulfil their statutory rights and duties and no employee consent is required for this type of processing.
ii Cross-border data transfers
Transfers of personal data to countries within the European Union and EEA are allowed under the same conditions as domestic data processing. These transfers do not have to be notified to the Office but they have to be described in the register of processing activities.
Transfers of personal data to countries outside the European Union and EEA are only permitted if the recipient of the data can ensure an adequate level of protection.
iii Sensitive data
The processing of personal data that reveals racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, and of genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health, a natural person's sex life or sexual orientation shall be prohibited. Sensitive data can be processed only by the employer in exceptional situations when this is explicitly permitted or required by statutory provisions (typically, notification duties with respect to social and health security insurance).
iv Background checks
Background checks by the employer are allowed but must be limited to matters that are relevant for the specific job. An employer cannot require from a potential employee any information concerning pregnancy, family and property matters, sexual orientation, racial or ethnic origin, trade union membership, affiliation with political parties, or religion. Criminal record checks can be requested based on the general principle that it must be important and adequate for the specific position.
There are three possible types of dismissal: during a trial period, with a notice period and immediate dismissal for serious cause. The employer or the employee may terminate the employment during a trial period without stating any cause. Once the trial period has expired, the employer may terminate an employment agreement only for one of the reasons set out in the Czech Labour Code. However, the parties may terminate the agreement at any time by mutual agreement.
Dismissal with a notice period or immediate dismissal are subject to consultation with trade unions, and trade unions members are subject to special protection (see Section XI). In the case of individual dismissals that do not fall under collective dismissal (see Section XIII.ii), the employer is not obliged to inform any state authorities. The employer has no obligation to provide a social plan or to offer any alternative employment to affected employees.
Form of dismissal
The termination notice must be in writing and delivered to the employee. It must also state the reason or reasons for dismissal, except during a trial period, when no reasons are required.
In respect of a standard termination notice, the employment terminates on expiry of the notice period. The standard notice period is two months; the employer and the employee can agree to a longer period, provided this is included within the employment contract. The notice period starts on the first day of the calendar month following the month in which the termination notice was delivered to the employee. Pay in lieu of the notice period is not permissible. Employment continues during the notice period but garden leave is often used, whereby employers release employees from their duty to work during the notice period.
When an employee is dismissed for serious cause by an immediate termination of their contract, the employment is terminated with immediate effect. During a trial period, employment can be terminated without a notice period, usually as of the day of delivery of the termination notice, unless the notice stipulates a later date within the trial period.
Special dismissal protection
Some groups of employees enjoy protection with respect to dismissal. The Labour Code introduced a special protection period during which the employment contracts of certain employees may not be terminated. This applies to employees who are pregnant or on maternity leave, or while employees are absent because of illness, serving a term in public office or on military exercises, among other reasons.
An employee is entitled to severance pay if dismissed with notice or by agreement in the event that the employer's undertaking, or a part of it, is closed down or relocated, or if the employee's post becomes redundant. The amount of the severance pay depends on the length of employment. An employee is entitled to at least (1) the equivalent of his or her average monthly earnings if the length of service is less than one year, (2) twice his or her average monthly earnings if the length of service is at least one year but less than two years, or (3) three times his or her average monthly earnings if the length of service is two years or more.
If the reason why an employee is dismissed with notice or by agreement is because of his or her incapacity to work resulting from a work injury, occupational disease or a threat of occupational disease, the employee is entitled to severance pay amounting to at least 12 times his or her average monthly earnings (unless the employer is entirely relieved from liability for the work injury or occupational disease).
Special rules for collective dismissal apply if the same employer dismisses a certain number of employees for organisational reasons (depending on the total number of its employees) within 30 calendar days. The employer is obliged to inform the trade unions and the works council in writing at least 30 days in advance of the collective dismissal, stating the reasons. If there is no trade union or works council, the employer must inform each affected employee individually. At the same time, the employer is obliged to inform the competent regional labour office of the planned collective dismissal and provide a written report on the decision leading to that collective dismissal and the conclusions of consultations with the employee representatives. If an employer fails to inform the labour authority, the employment relationships of the affected employees will not be terminated.
As stated in Section XIII.i, an employer may terminate an employment agreement only for one of the limited reasons set out in the Labour Code, of which one is redundancy. Posts become redundant following a decision by an employer to make organisational changes.
Transfer of business
Employees affected by a transfer of business are protected by rules set down by Council Directive 2001/23/EC of 12 March 2001 (the Acquired Rights Directive). The Directive has been implemented in the Czech Labour Code.
The legal definition of a transferring business is rather extensive. A transfer of rights and duties of employees occurs if the activity or a part of the activity of an employer, or tasks or a some of the tasks of an employer (the transferring business), are transferred and the transferee continues to operate the business. As a consequence, all employment relationships that are allocated to the transferring employer are transferred with all rights and obligations to the transferee by operation of law. The employment conditions remain unchanged and working conditions should not be worse as a result of the transfer.
Provided the transfer is not in respect of an activity specified by a special law (e.g., a merger of companies or a sale of business enterprise), the rights and obligations shall pass from the transferring employer to the acquiring employer upon the transfer of the employer's activity only if specific conditions are met.
The transferor and the transferee are obliged to notify the employees who are subject to a transfer of their employment relationship 30 days before the planned date of transfer. There is an administrative fine of 200,000 koruna for non-compliance with the information obligation but non-compliance does not affect the outcome of the transfer.
An employee affected by a transfer of business may terminate his or her employment with effect from the actual date of the transfer. An employer cannot terminate the employment of an employee because of the transfer of business.
Employers should be prepared for the significant legislative changes in labour law that are effective as of 1 January 2021, following the adoption of an amendment to the Labour Code. The aim of the amendment is to adapt the Labour Code to meet current trends and needs in employment practice, noting the following changes in particular:
The most important change is in the calculation of annual leave, which in 2021 will be based on working hours instead of working days. Employers should increase their vigilance in ensuring compliance with applicable labour law regulations. It is expected that the activity of the State Labour Inspectorate, which verifies compliance with legal obligations relating to general working conditions and safety at work, will be intensified in 2021. As in previous years, the Inspectorate shall focus mainly on illegal employment, in particular the employment of foreign workers without a permit, and concealed agency employment.
A state aid programme has been introduced to support employers by partly covering wage compensation paid to their employees during the restrictions to work arising because of the covid-19 pandemic. If employers participate in this programme, it is expected that the State Labour Inspectorate could carry out checks that all the conditions of the programme have been met.
1 Jan Procházka is a partner and Iva Bilinská is a senior managing associate at Deloitte Legal sro, advokátní kancelář.
2 The purpose of adding up successive postings is to prevent situations in which employers might 'rotate' the posted workers by replacing them with each other so as not to fall under the stricter posting regime. Although no maximum period of posting is explicitly stipulated, a posting should be temporary in its nature, even while being 'long-term'.
3 Peněžitá pomoc v mateřství.