TEN Q&A on labour law in Europe: Czech Republic

What types of employment contract are recognised in Czech Republic?

There are two types of employment contracts in Czech Republic:

• Employment Contract for a definite period
• Employment Contract for an indefinite period

In addition, an employee may perform work on the basis of other agreements:

• Agreement to complete a job – the scope of work shall not exceed 300 hours yearly
• Agreement to perform work – the scope of work may not exceed a maximum of one half of determined weekly working hours (20 hours).

What are the minimum and maximum terms for which a fixed-term employment contract can be concluded in Czech Republic?

There are no legal requirements relating to a minimum term, but maximum term is 3 years and it is allowed to conclude only 3 fixed-term employment contracts in a row (3×3 years).

How can a contract of employment be terminated in Czech Republic?

Employment contract may be terminated in following ways:

• by agreement between the parties in writing
• by notice of termination
  • the notice of termination shall be made in writing and delivered to other party
  • the employee may give his employer notice of termination for any reason or without stating a reason
  • the employer must specify the reason based on a list of reasons provided by the law

• by immediate termination only for reasons specified in Labour Code
• by termination within a probationary period
• due to expiration of an employment term in case of employment contract for a definite period
• upon death of the employee.

The employer may terminate the employment only for the following reasons:

1. if the employer or its part is liquidated,
2. if the employer or its part of the employer relocates,
3. if the employee becomes redundant due to a decision of the employer or the competent authority to change his or her tasks, technical equipment, to reduce the number of employees in order to increase work efficiency or due to other organizational changes,
4. if, on the basis of a medical report issued by an occupational health service provider or a decision of the competent administrative authority examining the medical report, the employee may not continue to perform work due to occupational injury, occupational disease or threat of such disease, or an employee has been subjected to a maximum permissible level of harmful exposure,
5. if employee has lost his or her capability to perform the current work due to long-term state of his/her health, according to a medical report issued by the occupational health service provider or a decision of the competent administrative body reviewing the medical report
6. if the employee does not meet the preconditions stipulated by legal regulations for the performance of the agreed work or if he or she does not meet the requirements for the proper performance of this work without the fault of the employer,
7. if there are grounds for terminating employment immediately or there is a serious breach of an obligation arising from the legislation applicable to the work performed by the employee; for a systematic less serious breach of the obligation arising from the legislation relating to the work performed, the employee may be dismissed if he has been notified in writing of the possibility of termination in the last 6 months in connection with the breach of the obligation arising from the legislation relating to the work performed,
8. if there is serious breach of some duties concerning sickness regime of an employee during the first 14 days of sick leave.

The employer may terminate the employment immediately only if

1. the employee has been convicted of an intentional criminal offense to an unconditional sentence of imprisonment for a period of more than 1 year, or if he or she has been convicted of an intentional criminal offense committed during the performance of his duties or in direct connection with it to an unconditional sentence of imprisonment for a period of at least 6 months,
2. if the employee has failed to fulfill an obligation under the legislation applicable to the work which he or she performs in a particularly gross manner.

What are the applicable notice periods, and what determines their length?

The notice period must be the same for both the employer and the employee and is at least 2 months.  The notice period may be extended only by a contract between the employer and the employee; this contract must be in writing. The notice period begins on the first day of the calendar month following the delivery of the notice and ends on the last day of the next calendar month.

Is it possible to employ employees as teleworkers in Czech Republic, and are there any particular regulations that apply (differentiating from other regulations)?

Yes, it is possible.

The regulation of homeworking is very briefly contained in Section 317 of Labour Code which lays down rules for employees who do not work at the employer’s workplace but according to agreed conditions perform work during working hours which they schedule themselves.

The employer and the employee must agree on work outside the workplace in the employment contract or agreements on work performed outside employment relationship.

The employee who performs work outside the employer’s workplace during working hours, which he / she schedules himself / herself, is usually covered by the Labor Code with the following exceptions:

• he/she is not subject to regulation of the layout of working time, downtime or interruption of work caused by adverse weather conditions,
• this employee is not entitled to time off with wage or salary compensation for other important personal obstacles to work (pursuant to Government Regulation No. 590/2006 Coll.), except for marriage, death of a relative and relocation – for this purpose it is necessary for the employer to make a fictitious allocation of working time for employees (to see when a particular obstacle to work interferes with working time and thus the employee is compensated for it),
• also in the case of temporary incapacity for work or quarantine, the employer is obliged to make a fictitious allocation of working time for employees in order to provide wage or salary compensation during the first 14 calendar days of the duration of such obstacles,
• the employee is not entitled to a wage or salary or compensatory leave for overtime work. The same applies for a wage compensation or premium for work on holiday.

The employer is obliged to pay the employee’s expenses related to the work outside the workplace. Those expenses include, for example, internet connection from the house, electricity, etc. Mostly work outside the employer’s workplace is done on work equipment provided and maintained by the employer (computer, mobile phone, tools, etc.), but if employees use their own equipment, the employer should pay a certain amount of wear and tear.

It should also be noted that employees working outside the workplace are fully subject to regulation of the liability according to the Labor Code (including employer liability for damage resulting from work-related injuries suffered at home during performance of work tasks).

What are the rights for women who become pregnant during their employment contract, and are they protected from being dismissed?

A female employee is entitled, in relation to childbirth and care of the newborn baby, to the maternity leave for the period of 28 weeks; if the mother gave concurrent birth to two or multiple children, she shall be entitled to the maternity leave for the period of 37 weeks.

A female employee is not required to file any special application for maternity leave. It will suffice is she notifies her employer on her taking up of the maternity leave, using a statutory form signed by the relevant physician.

The time used by a female employee for her maternity leave shall be deemed a material personal impediment to work based on which an employee’s/female employee’s absence from work shall be excused. During this period, the female employee is not entitled to salary or wage compensation, but she is entitled to sickness insurance benefits.

Maternity leave is considered as performance of work for the annual leave recognition purposes.

If a female employee returns to her job upon termination of the maternity leave, the employer is required to assign original work and workplace to her again. If that is impossible because the work has ceased or workplace has been cancelled the employer shall assign another job to her, corresponding to their employment contract.

The employer may terminate the employment of an employee on maternity leave only if the employer or its part is liquidated.

What types of paid days-off are the employees entitled to in Czech Republic?

In general, the length of the annual leave is at least 4 weeks in a calendar year, 5 weeks for state/municipal/regional employees and 8 weeks for pedagogical and academic employees.

Additional leave in duration of 1 week is also provided for specific group of employees (e.g. mineworkers) engaged in particularly hard physical work.

In addition, under certain family circumstances or due to other personal reasons the employee is entitled to paid days-off (e.g. wedding, birth of child, death of relative, medical examination etc.).

In cases of temporary incapacity due to illness, injury or quarantine and in other cases in accordance with the regulations on sickness insurance, an employee is also entitled to sickness benefit received from the government from the 15th calendar day of his or her temporary incapacity for work up to maximum of 380 calendar days from the first day of the temporary incapacity to work or quarantine order. During the first two weeks of the temporary incapacity to work, an employer provides the employee with wage compensation.

Is it possible to include a non-competition clause in the employment contract, and what are the grounds for concluding a valid non-competition agreement?

Yes, it is possible.

Non-competition clauses are regulated by Sections 310 and 311 of Labor Code.

Under the Labor Code, a non-competition clause is essentially a written agreement between the employer and the employee under which the employee is obliged to refrain from engaging in a gainful activity which would be identical with the subject of the employer’s business or which would be of a competitive nature with respect to the employer’s business for a certain period after termination of employment, but not longer than for 1 year. The competition clause may be agreed between the employer and the employee if this can be reasonably required of the employee, taking into account the nature of the information, know-how and technological practices, he or she has gained during employment, the use of which in a competing activity could seriously hamper the employer’s business.

Is the employer obliged to pay compensation for the period of validity of a non-competition clause/agreement after the termination of employment?

Yes. In return for the obligation of the employee, the employer undertakes to provide the employee proportionate compensation at least in the amount of one half of the employee’s average monthly salary for each month of performance of the obligation.

What happens to employees if their employer goes bankrupt in Czech Republic, and are they entitled to severance pay?

The position of the employee and his or her claims against the employer is favored in insolvency proceedings.

These claims can be filed to the insolvency administrator at any time during the insolvency proceedings.

An employee may also file his or her employment related claims to the Labor Office of the Czech Republic.

An employee can be satisfied in the amount of the employment related claims payable for the three calendar months of the relevant period. Other claims against the same employer can be satisfied only after 12 months from the date of issue of the order for payment of employment related claims.

The total amount of employment related claims for one month is a maximum of 1.5 times the average wage in the national economy for the previous calendar year.

Afterwards, an employee can turn to the insolvency administrator with the remainder of his or her unsatisfied employment related claims.

According to the Labor Code, an employee whose employment is terminated by notice given by the employer due to the termination of the employer is entitled to a severance pay from one time the average monthly earnings up to three times the average monthly earnings depending on the length of his or her employment.

Are there any courts specially appointed for the purpose of dealing with labour law matters in Czech Republic?

There are no special labour courts in Czech Republic. Regular civil courts deal with the labour law matters.

In the event that an employee is a debtor in enforcement proceedings in Czech Republic, to what extent is it possible for a bailiff to seize remuneration?

There is a non-enforceable amount of the debtor (special formula is applied: 3/4 * (individual’s existential minimum + normative housing costs)) plus amount for each person dependent on the debtor.

Over this sum, a bailiff can also seize from 1/3 (non-priority receivable) up to 2/3 (priority receivable) from the amount of net wage of the debtor minus non-enforceable amount.

The amount over which the remainder of the net wage is deducted without limit equals to twice the sum of the individual’s existential minimum and the amount of normative housing costs.