News - Czech Republic

Czech Republic - November 2018

Extensive changes impacting employment law in the Czech Republic in 2019

Extensive changes impacting employment law in the Czech Republic in 2019

Employers will want to take note of proposed changes to sick leave provisions and extensive amendments of the Czech Labour Code.

Sickness benefits to be paid from day 1

The Chamber of Deputies (the Czech Republic Parliament’s lower chamber) is discussing an amendment to the Labour Code which proposes a reintroduction of sickness benefits for employees during the first three days of their sick leave.

Currently, employers pay this compensation from the fourth to fourteenth day only in order to restrict employees from taking short-term sick leave. However, this has led to employees attending work while ill and is to be reconsidered according to Czech government. If the amendment gets approved, the exact effective date is yet to be determined although it will be from at some point in 2019.

Extensive amendments to the Czech Labour Code from July 2019

An extensive amendment to the Labour Code has currently passed the inter-ministerial comment procedure and should be soon introduced to the Chamber of Deputies. The effective date for the amendment is set to be 1st July 2019, except for the new concept of holiday, which should come into force on 1st January 2020. The amendment includes many changes. We address the most important below.

Automatic increases to minimum wage

Probably the most important of all the changes to the Labour Code is the new automatic mechanism to adjust the minimum wage. The main aim is to effect an annual increase in the minimum wage linked to movements in the average wage in the Czech Republic (which is a statistic published by the Czech Ministry of Labour and Social Affairs). The reasoning is to adjust the minimum wage without major fluctuations so that it can be easily estimated and expected. On the other hand the mechanism is controversial as it would lead to automatic minimum wage increases (provided that the average wage in the Czech Republic will continue to increase). Currently, it is the government, who annually decides whether and in what amount the minimal wage shall be increased for the next year. The potential increase for 2019 will be the last such increase under the existing arrangement.

Changes to an hourly calculation of paid holiday and new rights to carry forward leave will require changes to employer systems

Another major change is the new concept of paid leave. The amendment introduces a completely new method of calculation of holidays and (if approved), internal company systems will need to be adapted. The current paid leave is calculated according to the days worked, the new concept is based on calculation of the entitlement based on weekly working hours. This means that the right to paid leave will be expressed in hours.

This is the principle of the main change with respect to paid leave, but more are proposed. For example, the employees will be able to transfer the additional week of paid leave above the statutory minimum of 4 weeks of paid leave to the next year. Currently, all paid leave entitlement shall be taken in the respective year for which it belongs (unless there are specific reasons for transfer such as maternity leave or serious operation needs).

New right to job sharing

Third change is introduction of job sharing, allowing flexible employment for employees that cannot work fulltime. Proposed legislation enables job sharing by an agreement of employees that specifies the working hours and task management responsibilities of the job sharers. It is to be seen whether the job sharing will be used in practice as the current wording of the amendment indicates many limitations and practical difficulties.

A welcome simplification of rules governing the delivery of employment related documents and notices

Another important proposed Labour Code change involves the simplification of rules governing the delivery of the employment law documents, namely termination notices, by the introduction of rules that would make it easier for employers to deliver documents to employees when they are not available at the workplace. Currently, the legal regulation of distant delivery of employment documents is very complicated and makes it difficult for employers to terminate employment if the employee is, or suddenly becomes, unavailable, through sickness or otherwise. Failure to comply with the delivery rules may result any dismissal being held invalid and the simplification is to be welcomed.

Changes to Czech TUPE rules to align with the EU Acquired Rights Directive

The Labour Code amendments also introduce changes to the rules on the automatic transfer of rights and obligations of employment in transfer of undertaking scenarios (TUPE). Current Czech legal regulation does not recognise the concept of an economic entity retaining its identity according to the Acquired Rights Directive and the case law of Court of Justice of the EU. The application of automatic transfer rules is thus very broad and case law of the Czech Supreme Court inconsistent. Based on the main change in this field introduced by the amendment the automatic transfer principles in the Czech Republic should be more aligned to EU law and, as such, fewer situations should be caught by the transfer of undertaking rules and accompanying employment protection provisions.

Further information

For further information or to discuss how the changes will affect your company, please contact Tereza Erényi on +420 221 430 111, tereza.erenyi@prkpartners.com.