On 1 January 2014 a new Civil Code and a new Act on Corporations will come into force in the Czech Republic. This significant change in Czech law will have implications for employment relations and corporate officers. The key changes for employers are:
- Remuneration for corporate officers: As the law currently stands, unless a written agreement has been entered into between a corporation and the corporate officer, the officer is entitled to so-called “regular market remuneration”. Once the Code comes into force, if the corporate officer’s remuneration is not stipulated in a written agreement approved by a general meeting or the Supervisory Board of the corporation, then the corporate officer will be deemed to be performing his office for no remuneration. There are a limited number of circumstances in which this general rule will not apply. For example, if the agreement is not approved within a reasonable time after the appointment of the officer, the officer will be entitled to be paid such remuneration as is usual at the time the agreement was entered into or, if an agreement was not entered into at all, such remuneration as is normally paid to someone undertaking a similar activity at the time of appointment.
- Juvenile employees: Juveniles are currently allowed to enter into employment contracts once they reach 15 years of age, provided that this is not before completion of their mandatory school attendance. Under the Code, employers will not be able to enter into employment contracts with young people prior to completion of their mandatory basic schooling, with a few notable exceptions for certain sporting, artistic and cultural activities.
- Deductions from wages: Under the Code, the maximum amount that employers (or third parties) will be able to deduct from an employee’s pay, even under an agreement, will be half the employee’s wages or salary.
- Set-off: There will be new provisions governing the sums that can be set off against an employee’s wages or salary in relation to existing debts. For example, employers will be able to set off sums due to the employer for damage caused by an employee, provided again that these do not exceed half the employee’s wages or salary