News - Czech Republic

Czech Republic - May 2016

Proposed amendments to the Labour Code – Issue 1

Welcome to the first issue in our series discussing the proposed amendments to the Czech Labour Code.  The amendments, scheduled to take effect from 1 April 2017, are currently in consultation and have already raised numerous concerns.  We will explore each key change individually, starting with the introduction of top management employees.  

Top management employees

An entirely new concept to be introduced in Czech labour law is that of the “top management employee”.  Currently, Czech law only recognises “managing employees” as the highest tier of employees below the company’s statutory governing body.  Managing employees are classed as any employee who supervises subordinates and have different terms of employment than their subordinates (such as higher unpaid overtime limits and longer probation periods).  

Within the scope of the amendment, based on an agreement with the employer, employees in the two highest management levels under the company's statutory body may be classed as top management employees.  These employees should earn a contractual salary at an average monthly amount of no less than CZK 100,000.

This amendment is intended to provide greater flexibility in the regulation of working time and management of additional payments to employees.

Concerns

Determining top management employees by their "average" monthly salary rather than "basic" monthly salary could result in unnecessary complications as the average salary is calculated on all income received in the previous calendar quarter and as such may vary.

To prevent this, it is likely that the originally proposed average salary will be replaced by basic salary during the consultation procedure.

Increased flexibility in working time

As mentioned above, the main benefit of creating a new category of employees is increased flexibility in working time.  Under the amendment, top management employees will have the option to work as much as 48 hours per week.  This would be the maximum permitted working hours, with no differentiation between full-time weekly working hours and overtime work.   All work of top management employees (up to 48 hours per week) would be considered regular work, without extra pay, as the general provisions and compensation of overtime would not apply.

Top management employees will also only receive compensation for periods of medical leave (or leave due to illness) and not for periods of compassionate leave (such as attending a wedding or funeral).

Next issue 

In our next issue we will deal with the proposed amendments regarding the collective bargaining procedure when more than one trade union is established at the employer.

Further information

For further information or to discuss any of the issues raised, please contact Tereza Erényi on +420 221 430 111, PRK Partners

Disclaimer

Content is for general information purposes only. The information provided is not intended to be comprehensive and it does not constitute or contain legal or other advice. If you require assistance in relation to any issue please seek specific advice relevant to your particular circumstances. In particular, no responsibility shall be accepted by the authors or by Abbiss Cadres LLP for any losses occasioned by reliance on any content appearing on or accessible from this article. For further legal information click here.

Circular 230 disclosure

To ensure compliance with requirements imposed by the IRS and other taxing authorities, we inform you that any tax advice contained in this article (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.