We would like to highlight an interesting case decided by the Supreme Court of the Czech Republic (the "Court"), No. 21 Cdo 4196/2007, which concerned the legality of the dismissal of an employee working in the Czech Republic on the basis of provisions of D.C. law.

The plaintiff concluded an employment agreement governed by D.C. law as an employee of an American company with a workplace in the Czech Republic. Later, the employment of the plaintiff was terminated with immediate effect, and she was granted additional severance pay, all in compliance with D.C. law. The payment represented compensation for the four-week notice period that would normally have been given to the employee on the basis of her employment agreement.

However, the plaintiff argued that her dismissal was invalid by drawing a comparison with Czech labor law, which grants a longer two-month notice period to an employee being dismissed, and does not allow this period to be shortened. The plaintiff argued that the rules for dismissal of Czech labor law are overriding rules in the sense of private international law, and therefore need to apply in any case, and further claimed that the D.C. rules for dismissal were not applicable in the Czech Republic anyway on public policy grounds.

The Court began by reviewing provisions of the Private International Law Act of 1963, applicable to the employment contract, and assessed the possibility of terminating an employment relationship in the Czech Republic in a manner that does not meet the conditions of Czech labor law. The Court ruled that the relevant provisions of the Czech Labor Code regarding the dismissal of employees are not overriding rules under private international law, i.e. those that have to be followed regardless of the law otherwise applicable to the situation. Also, it did not agree that the provisions of D.C. labor law on dismissal were contrary to Czech public policy.

On the basis of the above, the Court concluded that rules for dismissal under D.C. law were applicable to an employment agreement of an employee working in the Czech Republic that is governed by D.C. law, and dismissed the appeal.

Note: The employer was represented in court by the Prague office of White & Case.