Although the amendment to the Czech Labour Code was dismissed by the Czech Senate, it is expected that the Chamber of Deputies will overcome this easily. As a result, the Czech Republic is preparing for significant employer-friendly changes to the labour law.

Even though the amendment does not address all difficulties employers are facing in the Czech Republic, and many changes mean only the implementation of regulations erased from the Czech labour law from 2004 to 2007, it is definitively a step forward.

What are some of the most important changes?

Probation period

The probation period for managing employee will be prolonged up to six months from the original maximum three months. For other employees, the duration remains unchanged.

Secondment

It will be again possible to second employees to other employer without being an employment agency. Such an option has been missing from Czech law since 2004. The secondments cannot generate a profit but costs can be recharged.

Termination of employment

The severance payment in case of dismissal for organisational changes, currently always three times average monthly earnings, will be newly differentiated depending on the duration employment: up to one year one, up to two years two and over two years three times average monthly earnings.

The court can, if proposed by the employer, decrease the compensation payable to the employee in case of invalid termination of employment if the period for which the compensation is to be paid exceeds six months. At the moment, the employee is always entitled to compensation for the entire period from the date of the invalid termination until he or she recommences to work or is validly terminated (even if the employee had other work).

Overtime pay

Currently, overtime pay can be agreed as included in the salary for managing employees for a maximum of 150 hours of overtime work per year. As a result, managing employees are entitled neither to a wage nor to an additional payment. Now such an arrangement can be agreed with each employee. For managing employees, the possible limit will increase to 416 hours per year. Special rules apply in the public sector.

Vacation

It is now up to the employer to order employee vacation. If the employer fails to order the vacation by 30 October of the following year, the employee is automatically on vacation from 1 November of the following year. This is currently ignored. Under the amendment, if the employer does not order vacation by 30 June for the following year, the employee has the right to determine when he or she will take the vacation subject to 14 days’ notice. Also, the right to vacation will not be lost if not taken within the statutory limits.

Non-competition clause

A non-competition clause cannot currently be agreed during the probation period. This limitation will be removed. The employer must currently pay the employee a consideration corresponding to at least one average monthly earnings per month for the duration of the noncompetition commitment. This will be decreased to half an average monthly earnings. Although the amendment has not solved all difficulties encountered by the practice in connection with the non-competition clause, it has made it a bit more employer friendly. Until now it has only served as a golden parachute for employees.

Transfer of undertaking

Finally, important changes will be implemented in connection with the transfer of undertaking. The advance period in which the representatives of employees or employees must be informed and consulted will be 30 days. Until now, employees could not challenge or object to their transfer, but could only file a normal termination notice with the statutory or an agreed notice period. Employees will now be entitled to serve the notice in connection with the contemplated transfer of undertaking at any time before the transfer and, as a result, the employment will terminate on the transfer date. This applies even if the employee serves the termination notice one day before the transfer. This may have very negative impacts on employers.

Furthermore, if, within two months of the transfer, the employee serves termination notice or enters into a termination agreement, and proves that the reason of the termination was a deterioration of employment conditions in connection with the transfer, he or she will be entitled to severance payment as in the case of termination for organisational reasons.

As can be seen, we face many challenging changes to the Czech labour law. To benefit from the new possibilities, employers will often have to amend existing employment contracts or change internal directives.

The Czech Republic is preparing for significant employer- friendly changes to the labour law. Even though the amendment does not address all difficulties employers are facing in the Czech Republic, and many changes mean only the implementation of regulations erased from the Czech labour law from 2004 to 2007, it is definitively a step forward.