Amendment to the Labour Code and the Employment Act

On 1 October 2015, amendments to the Czech Labour Code and the Employment Act came into effect and brought about substantial changes to Czech labour law, affecting most employers in the Czech Republic.

Key changes include:

  • Government support for payment of wages

A new “Kurzarbeit” system allows employers affected by economic crisis or natural disaster to ask the Labour Office for a contribution to their wage bill. For example, if an employer does not have enough work and pays its employees at least 50% of their wages rather than dismissing them, the State will supplement those wages by an additional 20%, subject to agreed terms.

Despite this new support system, because of the associated administrative costs, many Czech employers are expected not to take up the pay subsidy. Instead, it seems likely that many will continue with the pre-existing practice of reducing employee wages to 60% of usual levels, without any State subsidy, if this is able to be agreed with trade unions or is stipulated by an internal policy.

  • Compensation for work injuries and occupational diseases

The regulation of compensation for work injuries and occupational diseases now forms part of the  Labour Code provision dealing with compensation for pecuniary and non-pecuniary losses. The Casualty Employee Insurance Act, which had proved ineffective, has accordingly been repealed.  

Whilst all employers in the Czech Republic are covered by mandatory liability insurance in case of work-related injury or occupational diseases, a further development in this area is that a new governmental decree (no. 276/2015 Coll.) has been adopted concerning  compensation for pain and impairment of social life caused by work-related injury or occupational diseases. This decree should give rise to substantially higher levels of compensation.

  • Terminating secondary employment roles

The revised Labour Code standardises provision for employees who undertake part-time roles for third party employers outside of their normal working hours and their principal employment. Employment which is based upon work performance of up to 300 hours per year or upon particular working activity of up to 20 hours per week on average, may be now ended upon 15 days’ notice by agreement between the employer and the employee. However, this does not prevent the employer from summarily dismissing the employee in the event of gross misconduct.  

  • Minimum wage increase

Governmental decree no. 233/2015 Coll., which took effect on 1 January 2016, increases the basic minimum national monthly wage  from CZK 9,200 (approximately EUR 340) to CZK 9,900 (approximately EUR 366) and the basic minimum hourly wage from CZK 55.00 to CZK 58.70 (approximately EUR 2.2). Along with these national minimum wage increases, the eight minimum wage tariffs for different groups of workers rose similarly

The current Czech government plans further gradual increases in the national minimum wage, expected to reach 40% of average wages in 2018 ie approximately CZK 11,200 (or  EUR 415).

Radek Matouš