News - Czech Republic

Czech Republic - January 2012

Amendment to the Labour Code

An extensive amendment to the Labour Code came into force on 1 January 2012.  The amendment brings many significant changes, the most important of which are summarised below.

Trial period

The amendment makes it possible to agree an extended trial period for managerial employees of up to six months (instead of the three month period permitted prior to the amendment).  A managerial employee is defined as any employee who supervises another employee; this includes both white and blue collar managers.  There is also a restriction on fixed-term periods of employment; the trial period can be no longer than half of the fixed term period of employment.  This is important in short employments.  In addition, there is a requirement to suspend (prolong) the trial period if the probationary employee goes on leave.

Fixed-term employment

Under the amendment the maximum length of a fixed-term employment relationship is extended from two years to three.  However, the crucial limitation is that such employment can be repeated (prolonged) only twice.  Thus, a fixed-term employment relationship can be no longer than nine years (three times three years) in total.  In addition the exceptions to the limits on fixed-term contracts which existed prior to 1 January 2012 have been abolished, e.g. the exception for serious operational needs, (this caused serious difficulties when employing seasonal workers).

Temporary assignments of employees

The amendment introduces the concept of temporary assignment (i.e. assigning an employee to another employer).  An employer may assign an employee to another employer for no fee, based on a written agreement with each employee to be assigned.  However, an employee may not be assigned during the first six months of his/her employment.  This is a significant change as previously employees could only be assigned within agency employment.

Termination of employment

The proposal introduces a new ground for terminating an employee’s contract of employment; especially gross breach of the treatment regime of sick employees, i.e. the obligation to remain at home while sick.

Discretionary power of judges

The amendment also grants a discretionary power to judges when awarding compensation for dismissing employees contrary to the law.  Currently, such employees are entitled to their full salary for the duration of the court proceedings.  Under the amendment if the employee’s entitlement to compensation exceeds six months the judge can mitigate compensation following a motion filed by the employer.

Compensation for overtime

Another key change makes it possible to agree the inclusion of potential overtime work as part of the non-managerial employees’ salaries, up to 150 hours in a calendar year.  With managerial employees it is possible to include up to 416 overtime hours in a calendar year.  Previously no overtime could be included in the salary of non-managerial employees and there was a maximum of 150 hours per calendar year for managerial employees.

Non-compete clause

Most significantly, the amendment reduces the minimum compensation for observing a non-compete clause to half of the average monthly earnings for every month the non-compete clause is effective (the minimum compensation was previously equal to average earnings).

For further information or to discuss any of the issues raised, please contact Jaroslav Škubal or Tereza Erényi at +420 221 430 111.