Trial period
Fixed-term employment relationship
Temporary assignment of employees
Termination of employment
Discretionary power of judges
Compensation of overtime work
Non-competition clause
An amendment to the Labour Code has recently been introduced that aims to encourage greater flexibility in employment relationships and increase the motivation of employers to create new jobs. The amendment is effective as of January 1 2012 and brings many significant changes, the most important of which are summarised below.
The amendment makes it possible to extend the trial period for managerial employees to six months (instead of the current three-month period). A 'managerial employee' is defined as any employee that supervises another employee; this includes both white-collar and blue-collar managers. The amendment adds a restriction to fixed-term relationships, for which the trial period can now be no longer than half the employment relationship - this is particularly important for short employment contracts. The amendment also requires a suspension (or prolongation) of the trial period if the probationary employee goes on leave.
Fixed-term employment relationship
The amendment extends the maximum length of a fixed-term employment relationship from two years to three years. Furthermore, such employment can be repeated (or prolonged) only twice. Therefore, the maximum duration of fixed-term employment relationships is now nine years. Previous employment relationships will be disregarded after a three-year gap (instead of a six-month gap, as at present). In addition, the amendment will annul the current exceptions to the limitations of fixed-term contracts (eg, the exception based on serious operational needs).
Temporary assignment of employees
The concept of temporary assignment (ie, the hiring-out of an employee) has been introduced by the amendment. An employer may therefore assign an employee to another employer for no fee, based on a written agreement to be completed by each employee to be assigned. However, such reassignment cannot occur during the first six months of employment.
The amendment introduces a new reason for giving notice to employees - namely, for a gross breach of the treatment regime of incapacitated employees (ie, those suffering from illness).
The amendment introduces discretionary power for judges to award compensation for employees dismissed in circumstances contrary to law. At present, such employees are entitled to 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 such compensation on a motion filed at the employer's request.
It will now be possible to negotiate the inclusion of potential overtime work in an employee's salary for up to 150 hours in a calendar year, if agreed with the employee in their contract. This is increased to a maximum of 416 hours of overtime in a calendar year for managers.
The amendment lowers the minimum compensation to half of the average monthly earnings for every month in which the employee observes the non-competition clause (at present, minimum compensation equals average earnings).
For further information on this topic please contact Tereza Erényi at PRK Partners Attorneys at Law by telephone (+420 221 430 111), fax (+420 224 235 450) or email ([email protected]).