Labour law in Czech Republic

1.1  The Employment Contract

Determination of employment

The employment relationship is created by either: 

• a written employment contract between the employer and the employee; 
• or by appointment: 

• in the case of heads of government agencies, state funds, state enterprises, the Police, organisations receiving contributions from state budget or their branches. 

The employment relationship commences on the date that was agreed as the date of commencement of work in the employment agreement.

Issues to be specified in the contract

The employment contract must state the type of work that the employee will perform, the place or places of work and the date on which the employee will start working.  
The employment contract can also specify other items that are of interest to the parties, such as wage/salary, working hours, probation period or benefits. The employee´s wage/salary can be stipulated in a separate wage clause, internal regulations, salary statement or in a collective agreement.  
The employer must hand over one copy of the contract to the employee. 

Written form required

The employment contract must be executed in writing. However, failure to do so can be rectified later. Due to lack of written form, the employment contract may be held invalid only if challenged before the date on which the employee starts performing work. Afterwards, the employment contract must be considered as valid but an employer who fails to conclude employment contracts in writing may be subject to a fine by the Labour Inspection Authority. An electric form can also be used if the legal requirements for the electronic execution are met. 

Term of the employment

The employment contract lasts for an indefinite period unless a fixed term has been previously agreed upon. The duration of an employment relationship for a fixed term between the same contracting parties must not exceed three years and may be repeated twice at most from the date of commencement of the first employment law relationship for a fixed term. Extension of an employment relationship for a fixed term shall also be deemed to be repetition of the employment relationship. If a period of three years has lapsed from the end of the previous employment relationship for a fixed term, no account shall be taken of the previous employment relationship for a fixed term between the same contracting parties. 

The Labour Code further states that employers have the right to deviate from the rules on fixed term employment described above if there are justified reasons to do so. As an example, the employer can renew an employee’s agreement on more than two consecutive occasions where the employer requires employees for the summer season only.

Probation period

The parties can agree on a probation period and it may not be longer than six consecutive months in the case of managerial employees and three consecutive months in the case of other employees. Once agreed, the probation period cannot be subsequently extended (even if it is originally agreed for a period of less than three/six months). It can be shortened, however, if the parties agree. The probation period cannot be agreed upon after the commencement of the employment relationship (i.e. at the latest, it can be agreed on the day when the employee starts performing work). If the employment relationship is concluded for a fixed term, the probationary period may not be longer than half of the period of duration of the employment relationship. 

Choice of law 

The choice of law made to govern the employer-employee relationship is possible if the employment contract relates to laws of different countries (e.g. if the employer or the employee are foreign nationals or if the substantial part of the work is to be performed outside the territory of the Czech Republic). Notwithstanding the above, the fact that the parties have chosen a foreign law shall not (where all other elements relevant to the situation at the time of the choice are connected to one country only) prejudice the application of rules of the law of that country, which cannot be derogated from by contract. Furthermore, a choice of law made by the parties shall not have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law, which would be applicable in the case of absence of choice of governing law by the parties (see below).  

Example: The work should be habitually carried out in the territory of the Czech Republic; therefore, the governing law would be Czech in the case of absence of choice of law (see below). With regard to the fact that the maximum standard working hours under the Czech Labour Code are 40 hours per week, the maximum standard weekly working hours of the employee will be 40, even if the governing law agreed by the parties would allow up to 45 hours per week. 

In other cases, the application of a rule of the governing law stipulated by the parties may be refused only if such application is manifestly incompatible with the public order of the country of the law, which would be applicable in the case of absence of choice of governing law.

Governing law in case of the Absence of Choice

In cases where the choice of a governing law is permissible (see above) and no governing law has been agreed upon by the parties, the governing law is determined by the private international law provisions. In such a case, the Convention on the Law Applicable to Contractual Obligations (to which the Czech Republic is a party) and Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I) provide that the employment contract shall be governed by the law of the country in which the employee habitually carries out work in performance of the employment contract (lex loci laboris), even if the employee is temporarily employed in another country. If the employee does not habitually carry out work in any one country, then the law of the country in which the place of business that engaged him shall govern the employment contract. However, should it appear from the circumstances as a whole that the employment contract is more closely connected with another country, then the contract shall be governed by the law of that country. 

EU-Directives

The Czech Republic Labour Code complies with EU law. 

Czech law does not allow agreements on the choice of court concerning disputes arising from employment relationships. However, jurisdiction of a foreign court may be agreed on after the dispute arises. 

1.2. Other contractual types

Contract for work that is not part of the employer-employee relationship

The Czech legal system only allows the establishment of labour relationships under the Labour Code under one of the following contractual forms: employment contract, agreement to complete a job and agreement to perform work. The basic type of contractual agreement in employment law is the employment contract. The agreement to complete a job and the agreement to perform work are intended only for part-time or temporary jobs since they provide less rights to the employee than the employment contract (e.g. the agreements are much easier to terminate for the employer than the employment contract, etc.). However, these types of contractual agreement still create an employer-employee relationship. 

The only method of “employing” other legal subjects (legal or self-employed physical persons who are holders of respective trade licences) outside the scope of labour law is outsourcing (i.e. to hire them under a commercial law contract such as a mandate agreement, a contract for work or another suitable commercial law contract). However, this may not result in permanent employment of particular natural persons, which would in fact replace labour law relationships between the employer and such persons. Such “commercial law relationships” would be regarded as a “hidden employment relationship” by the Labour Inspection Authority and the employer would be subject to monetary sanctions of up to CZK 10,000,000 (approximately EUR 410,000) from the Labour Inspection Authority, and subject to other monetary sanctions from the tax office, state social administration and health insurance company, including payment of due social and health contributions (including late interests). In more serious cases, the responsible managers of the employer and/or the employer company may also be subject to criminal liability. 

As stated above, under Czech law there are two types of employment agreements other than an employment contract: an agreement to complete a job and agreement to perform work.  

Part-time work agreements

The agreement to complete a job is intended for temporary and seasonal jobs only. Under this agreement, an employee cannot work for the same employer for more than 300 hours per calendar year. If the income under an agreement to complete a job does not exceed CZK 10,000 (approx. EUR 385), parties do not have to pay any social security and health insurance contributions (but do have to pay taxes). 

The agreement to perform work is intended mainly for long-term part time jobs and the average scope of work under an agreement to perform work may not exceed 20 hours per week (respectively 18.75 or 19.375 hours per week for certain jobs). The observance of the agreed, maximum permissible scope of weekly working hours shall be assessed for an entire period for which an agreement to perform work was agreed. However, this period must not be for more than 52 weeks (even if the agreement to perform work was concluded for longer or indefinite term).

With the help of part-time workers the employer can

1.3. Employment of foreigners

EU/EEA citizens and citizens of Switzerland 

Citizens of EU/EEA/Switzerland and their relatives have the same rights as citizens of the Czech Republic and do not need any work permits. The Labour Office, however, keeps records of all such employees.

Corporate and residence permit, blue cards 

Where a foreign citizen from somewhere other than EU/EEA country or Switzerland is to be employed (a “foreigner”), the employer can employ the individual only on the basis that he has permission to work and a residence permit, or if he holds an employee card, blue card or intra-company employee transfer card. A foreigner must apply for permission to work before he can start work in the Czech Republic. The Labour Office will grant the work permission for a maximum period of two years (in practice, work permissions for employees with higher level of education are usually granted for longer period than in the case of less qualified employees), the validity of which can be repeatedly extended. The work permission is not necessary in certain cases (e.g. if the foreigner has permanent residency in the Czech Republic or the foreigner is a refugee or asylum seeker, etc.).  

No exemptions for foreign personnel

All foreign citizens have the same rights in the employer-employee relationship as citizens of the Czech Republic. 

1.4. Special rules for executives?

Statutory representatives or members of statutory bodies

Labour law does not explicitly regulate the function of a statutory representative. An office of a statutory representative or a statutory body can only be performed under an agreement on the performance of the office of a statutory body, which must be in accordance with the Act on Business Corporations. It is not possible to perform the office of a statutory body under the employment agreement. 

Contract termination

The appointment and recall of executives or directors are exercised outside the terms of the employment contract. The dismissal of an executive or director leads to termination of the agreement on the performance of office of statutory body. 

2.1. Minimum wage

Statutory minimum wage

Negotiations regarding remuneration will usually result in a mutual agreement between an employer and an employee. The amount of the minimum wage, which cannot be reduced, is regulated by government decrees and is officially published. According to Government Decree No. 567/2006 Coll., as amended, the minimum wage in the Czech Republic is CZK 17,300 (approximately EUR 700) per month, or CZK 103.80 (approximately EUR 4.30) per hour. 

Guaranteed wage

Pursuant to Government Decree No. 567/2006 Coll., as amended, the minimum wage in the amount as stated above can be paid only to employees with the lowest qualifications (e.g. luggage carriers, unqualified workers, etc.) The jobs are divided into eight ranks according to their qualification requirements, responsibility and strenuousness, and the higher the rank, the higher the minimum wage (“guaranteed wage”) that is prescribed. Therefore, whereas the guaranteed wage for rank 1 (e.g. luggage carriers, unqualified workers) is CZK 17,300  (approximately EUR 700) per month or CZK 103.80 (approximately EUR 4.30) per hour, the guaranteed (i.e. in fact minimum) wage for rank 4 (e.g. train drivers, tourist guides) is CZK 21,800 (approximately EUR 890) per month or CZK 129.80 (approximately EUR 5.30) per hour, and the guaranteed (i.e. in fact minimum) wage for rank 8 (e.g. managers, scientists) is CZK 34,600 (approximately EUR 1,400 per month or CZK 207.60 (approximately EUR 68.50) per hour.

Salary changes

Wages are either agreed upon and stated directly in the employment agreement, in the respective collective agreement, or in another contract signed by parties, or in an internal regulation or in a separate salary statement. If the wage, however, has been agreed upon in the employment agreement, salary agreement or collective agreement, any changes are subject to mutual agreement and an employee may not be forced to accept such agreement.

2.2. Salary increases

The law does not determine a coefficient for the wage raise. Regular wage raise regulations are usually included in the collective agreement, if existing. 

If there is no collective agreement that regulates wage increases separately, this regulation can only be carried out on the basis of mutual agreement between an employer and an employee. 

2.3. Salary decrease

An employer can unilaterally decrease the wage only if the wage is determined by the salary statement or by internal regulations.

3.1. Standard working hours and breaks

Daily and weekly standard working hours

A standard working week consists of 40 hours, which amounts to eight hours per day when distributed evenly over a common working week. 

Working hours of employees per week are as follows: 

• employees whose daily work is underground on coal, ore and other non-metallic raw materials extraction, or on mine-works construction, as well as of those working in geological exploration sites may not exceed 37.5 hours per week; 
• employees who are on a multi-shift or continuous pattern of work may not exceed 37.5 hours per week; 
• employees who are on a two-shift pattern of work may not exceed 38.75 hours; 
• employees who are younger than 18 years of age should work a maximum of 40 hours per week, provided that the working hours per day does not exceed eight hours.

Lunch break

The minimal rest periods designated by law (lunch and rest breaks) are not included in the working hours and thus are not paid. An employee is granted at least 30 minutes rest period after six hours of continuous work. A minor employee (15 to 18 years of age) is granted the same rest period after 4.5 hours of continuous work. Lunch and rest breaks are neither allowed at the beginning nor at the end of a shift. If the work cannot be interrupted, the employee must be provided with an appropriate period of time for rest and lunch, and this time must be included in the working hours. 

3.2. Minimum rest periods

Minimum daily rest period

The working hours are to be distributed in such a way that employees have at least 11 hours of uninterrupted rest time over the course of 24 hours. In special cases, this uninterrupted rest time can be shortened to eight hours (provided that the subsequent rest period is extended by the time for which the preceding rest period was reduced). A minor employee (15 to 18 years of age) must have at least 12 hours of uninterrupted rest time over the course of 24 hours. 

Minimum weekly rest period

The working hours are to be distributed in such a way as to enable the employee to have at least a total of 35 hours of rest time once a week (uninterrupted weekly rest of 24 hours provided mandatorily together with uninterrupted daily rest of 11 hours). In case of a minor employee, such periods may not be less than 48 hours. Where operations allow, this weekly uninterrupted rest time should fall on the same day for all employees and in such manner that it includes Sunday (see 3.5 below). 

In special cases (e.g. work in agriculture, services to the population), and in the cases of technological processes that cannot be interrupted, the employer may schedule the working hours of employees who are not minor so that a period of uninterrupted rest period per week is at least 24 hours, provided that these employees are granted a continuous rest period of at least 70 hours within two weeks. 

If agreed upon, minimum uninterrupted period in agriculture may be scheduled differently: 105 hours over three weeks period or 210 hours over six weeks period in high season.

3.3. Maximum allowed working hours

Weekly maximum

According to the Labour Code, the maximum working hours allowed (excluding overtime) per week amount to 40 hours (see exceptions in 3.1 for certain jobs). 

The duration of a shift may not exceed twelve hours.  

3.4. Overtime work

Limitation on overtime work

Employers may require employees to work overtime only due to serious operational reasons. The employer may order overtime work of up to eight hours per week and 150 hours per year. A total scope of overtime work may not exceed eight hours on average per week calculated over a period of no more than 26 consecutive weeks (52 consecutive weeks when collective agreement allows so). This amounts to a maximum of 416 overtime hours. Overtime exceeding 150 hours per year can only be performed upon agreement with the employee. 

Exceptions

The total amount of permissible overtime work does not include overtime work for which the employee was granted time off (paid release).  

Compensation for overtime work

An employee is entitled to be paid his regular wage and a premium at the rate of at least 25% of the employee’s average hourly wage for any overtime work hour unless the employee and the employer have agreed that instead of the premium, the compensatory time off will be granted for the hours when the individual worked overtime. 

In an employment contract, it can be agreed that the remuneration for overtime work in the scope set out by the Labour Code is already included in the salary/wage. The maximum amount of such unpaid overtime is eight hours per week in the case of managerial employees (i.e. up to 416 hours per year) and 150 hours per year in the case of other employees. The extent of the overtime work included in regular salary must be explicitly stated in the agreement (and this must conform with the maximum limits stated in the previous sentence). Otherwise, the clause is void. 

Penalties

The Labour Inspection Authority controls the amount of overtime and in case of disregard of a standing rule, monetary fines of up to CZK 2 million (approximately EUR 77,000) can be imposed. 

3.5. Working during the weekend and on public holidays

Weekly rest period

Same as 3.2

Shift-work

Same as 3.2

3.6. Premiums for work during public holidays and night work

Premiums are paid for overtime, work during public holidays, night-work, weekends and work in an aggravated or health-damaging environment. Premiums are compounded if more than one criterium is met at the same time.

Work during holidays

For work during holidays, an employee is granted either compensatory time off (paid for in the amount of the average hour earnings) in the scope of hours for which the individual worked on a public holiday or, instead and upon agreement, the employee can receive a premium at the rate of at least 100% of the employee’s average hourly wage for every such hour. 

Night work, work during weekends, work in aggravated and health damaging environment

In the case of night-work, work during weekends and work in aggravated and health-damaging environment, an employee is entitled to a premium of at least 10% of the average hour wage in addition to the usual hourly rate of pay. 

The regulation above applies to the non-governmental sector. There is slightly different regulation for the governmental sector, which respects the minimum requirements stated above.

4.1. Minimum holiday entitlement

Minimum holiday entitlement

The minimum holiday entitlement is four weeks per calendar year (for full-time employees in the non-governmental sector). Employees in the governmental sector are entitled to five weeks of holiday. 

Teachers and professors

Holiday for teachers and professors lasts for eight weeks in one calendar year. 

Additional vacations

If an employee works for the same employer for an entire calendar year in certain exceptional conditions, the employee is entitled to additional leave of one week in length that is over and above the main holiday entitlement. If such employee works for the same employer for only a certain part of a calendar year,  the individual is entitled to 1/52 of additional leave for each week worked.  

The following employees have the right to receive additional leave for: 

• working underground; 
• extracting mineral mines; 
• tunnelling and mine shaft driving or 
• working in a particularly hard environment (e.g. in a contagious/infective environment). 

4.2. Forfeiture of the holiday entitlement

Holiday consumption 

When planning the employee’s holiday, an employer should issue a written vacation schedule, which should be approved by the trade union (if any).  The employer should ensure that the employee uses all of the holiday entitlement, preferably en bloc by the end of the calendar year. The employer should take into account operational conditions and employee’s interests in preparing the holiday schedule. If the holiday is granted in parts, one part must be at least two weeks in length (unless agreed otherwise). The employer shall notify the employee at least 14 days in advance unless the employer agrees with the employee on a shorter notice.

Transfer to the next year

If an employee does not use the whole vacation (except for the additional leave) by the end of the year, the leave can be carried over to the subsequent year. If the time when leave is to be taken is not specified at the latest by 30 June of the following calendar year by the employer, the employee shall also have the right to specify when the leave is to be taken. The employee shall be obliged to notify the employer in writing of the time for taking leave at least 14 days in advance unless the employee agrees with the employer on a different time for such notification.

Money compensation

An employee should receive a compensatory wage in the amount of the individual’s average earnings for the leave that has been used. The employee is entitled to compensation for any unused holiday, but only if the employee is not able to use the holiday due to the termination of employment. In such a case, the former and the current employer of the employee may also agree on the transfer of the holiday from the former employer to the current employer.

Sick pay

An employee is entitled to compensation from the employer in the case of a validated temporary disability (i.e. the employee is unfit for work due to a cause, such as sickness), for the first 14 calendar days of such disability. The compensation equates to 60% of the average daily earnings of such employee and is payable entirely from the employer’s funds. 

If the disability exceeds 14 days, the state compulsory insurance system pays sick pay for the remaining period of the disability in the amount of: 

• 60% of reduced average daily earnings per day until the 30th day of disability; 
• 66% until the 60th day of the disability; 
• 72% from the 61st day of the disability. 

The employer is entitled during the first 14 days of the employee’s incapacity to check whether the employee complies with the regime prescribed to that employee (usually to rest at home if not hospitalised with the exception of walks allowed by a doctor). The employer is entitled to hire a third party to perform the checks. From the 15th day of incapacity (i.e. when the state begins payment of sick pay), this right passes to the state social administration. 

Health examination

In cases set out by special legislation, an employer must arrange that an employee undergoes a medical examination prior to the start of the employment (the “entrance examination”). An employer is obliged to arrange an entrance examination for minor employees prior to the start of the employment and at least once a year. The costs of the entrance examination shall be borne by the employer if an employment contract is concluded with the candidate. If the candidate does not enter into an employment relationship, the candidate must bear such costs. The employer always bears the costs in the case of minor employees.  

General background

The employment relationship can be terminated by a notice of termination, mutual agreement, immediate termination (mainly due to gross breach of working discipline), termination during probation period, death of an employee and upon expiry of agreed term. Furthermore, there are specific grounds of termination of the employment relationship of foreigners and persons without citizenship. When terminating an employment contract, the following conditions must be observed in particular circumstances:

Mutual agreement

• Termination of an employment contract based on the agreement between an employer and an employee – no special conditions;

Probation period

• Termination of an employment contract during a probationary period – dismissal without any reason is possible during the probation period, both by the employer and the employee. In this case, a simple written notice stating the contract termination without detailing the reasons is sufficient. The employment terminates on the date when the notice has been delivered to the other party, unless a later day is indicated in the notice. The precondition is that at the time of the contract termination, an employee is on a probation period and the employer cannot terminate the contract within the first 14 days of temporary disability of an employee during a probation period;

Termination notice by the employer

• Unilateral termination of an employment contract by dismissal (termination notice) on the part of an employer – the precondition here is that an employee can be dismissed only based on legal grounds determined in the Labour Code and with a notice period of at least two months;

Termination notice by the employee

• Unilateral termination of an employment contract by an employee – can be done by serving a termination notice for any reason or without stating the reason, but the two months’ notice period applies; 

Termination with immediate effect

• Termination of an employment contract with immediate effect on the part of an employer is possible only based on legal grounds determined in the Labour Code and in the two-month period from the day an employer has found out about the reasons and at the latest within one year of the occurrence of such reasons. The employer cannot immediately terminate the contract if the employee is pregnant or on maternity/paternity leave. 
• Termination of an Employment Contract with immediate effect on the part of an employee is possible only based on legal grounds determined in the Labour Code and in the two-month period from the day an employee has found out about the reasons and at the latest within one year of the emergence of such reasons 

• A fixed-term Employment Contract terminates when the specified timeframe agreed upon in relation to that contract has elapsed. 

6.1. Formal requirements to be observed by the employer

Written form required

Termination of Employment Contracts, both from the side of the employer and the employee as well as their mutual agreement, must be in writing and handed to the parties involved. Terminations can be delivered personally, electronically or via post.  If the statutory requirements for delivery are not met, the dismissal is considered invalid. In all cases, the trade union (if any) must be consulted about the dismissal in advance.  

In some exceptions required approval 

The dismissal does not require an approval procedure, except in the case of the following:

Representatives of the trade union

When an employer wishes to dismiss or terminate the contract of an employee who is a member of the relevant trade union operating within the employer’s company during the member’s term of office or for a period of one year afterwards, the employer must ask the trade union for its prior approval to such termination. 

6.2. Notice Period

Duration

The statutory notice period is the same for both the employer and the employee and lasts for at least two months (unless otherwise agreed) and must be the same for both the employer and the employee. For agreement to complete a job and agreement to perform work, the notice period is set at 15 days (unless otherwise agreed). 

Beginning and ending

The notice period starts on the first day of the calendar month following delivery of the notice to the other party and ends upon the expiry of the last day of the relevant calendar month. There are several exceptions stipulated by law. For agreement to complete a job and agreement to perform work, the notice period starts on the day when the notice is delivered to the other party (unless otherwise agreed). 

6.3. Limited reasons to terminate the employment

Probation period

Dismissal without any reason is possible during the probation period, both by the employer and the employee. In this case a simple notice stating the contract termination without detailing the reasons is sufficient. The contract is terminated on the day of the notice. A later day may be set out. 

Termination notice by the employee

An employee can always terminate a contract for any reason or without stating a reason.

Employer has to provide a “valid reason” for the termination of employment

On the other hand, the law states that an employer always has to state the reason for the dismissal.

Redundancy payment

The following reasons for dismissal by the employer may be given:

• company re-organisational reasons: statutory severance pay on dismissal in the amount of (a) one average monthly earning of the employee if the employment lasted less than 1 year, (b) two average monthly earnings of the employee if the employment lasted 1-2 years, (c) three average monthly earnings of the employee if the employment lasted more than 2 years,
  • relocation of a whole company or its part or
  • closure of a whole company or its part or
  • the work of the employee is no longer required due to organisational changes at the employer (i.e. redundancy of an employee);
• work injury: employee is not allowed to perform his currentwork due to a work injury, occupational disease or its threat or an employee has been subjected to a maximum permissible level of harmful exposure. There is a statutory severance pay of at least 12 times average monthly earnings in this case;
• personal reasons: no statutory severance pay
  • employee has lost, his capability to perform the current work due to state of his/her health (long term);
  • employee does no longer meet the prerequisites prescribed by statutory provisions for the performance of agreed work or he does not meet requirements for proper performance of such work (if the latter is reflected in unsatisfactory work results the termination is possible only when an employer’s prior written demand to meet such requirements has been filed within the last 12 months);
  • reasons on the employee’s part that allow the employer to immediately terminate the contract;
  • serious breach of statutory duty relating to work or ongoing less serious breach of statutory duty relating to work (a prior written warning during the last 6 months is required);
  • serious breach of some duties relating to sickness regime of an employee during the first 14 days of sick leave;

The employee is entitled to redundancy payment if the employment contract is terminated by mutual agreement on the same grounds for which the employee is entitled to redundancy payment in case of dismissal.

6.4. General protection against termination of employment

Explicitly determined reasons

The following provisions of the Labour Code protect the employees when terminating their employment:

• An employer can dismiss an employee only based on legal grounds determined in the Labour Code;
• An employer is obliged to consult every dismissal in advance with the trade union concerned and in case of a member of the trade union the union´s approval of the dismissal is required;
• An employer is obliged to follow certain formal requirements regarding the form, delivering and in content of the of the termination document;
• An employer cannot dismiss an employee during a protection period (see below 6.5.);

6.5. Employees with special protection against termination of employment

Prohibition of termination of employment

An employer cannot dismiss an employee during a protection period, which applies in following situations:

• employees that are temporarily disabled and unfit for work (e.g. sickness);
• employees called up for military exercise;
• employees fully released from work to exercise a public office;
• pregnant employees, or employees on maternity/paternity leave, or employees on parental leave;
• employees who work at night and are temporarily unfit for night work.

Exceptions from prohibition

The prohibition to terminate the contract does not apply for above employees if the termination is executed due to:

• relocation of a company or the closure of a company or its part
• grounds on which the employer may terminate the contract immediately, unless it concerns an employee on maternity/paternity leave
• breaches of statutory duty relating to work unless it concerns a pregnant employee, an employee on maternity/paternity leave or an employee on parental leave

Approval required

Dismissal of members of trade unions requires approval of such union (see 6.1).

6.6. Involvement of employee representatives

Consultation with the trade union

If there is an active trade union operating at employer, the employer is obliged to consult every dismissal of an employee with this union in advance. If these requirements are not fulfilled, the dismissal is still considered to be valid, but the employer may be sanctioned by the Labour Office.

Absence of approval of trade union

In case of a dismissal of a member of the trade union (see 6.1.) when a prior approval of the trade union is required, a dismissal without such approval being obtained is considered to be invalid. The court might rule that such a dismissal is valid if it considers that the employer cannot be justly expected to employ such an employee any further.

6.7. Termination in connection with reduction of salary

Mutual agreement

It should be noted that it is possible to conclude an agreement which makes changes in the working conditions as long as the changes have been mutually agreed between the employer and employee.

The term “dismissal with the option of altered conditions of employment” is not recognised in the legal system of the Czech Republic. 

Social obligation to offer another job

There is no obligation for an employer to offer an employee that has been dismissed another job, or to help him look for one.

The rights and duties in labour relations may derogate from the Labour Code provided such derogation is not expressly prohibited by the Labour Code or if the nature of the Labour Code’s provisions do not imply impermissibility to depart from. The regulation of wages and salaries may derogate from statutory rights, although this regulation may not introduce lower or higher wage or salary than the lowest or highest permissible wage or salary provided for in the Labour Code. 

Legal basis

The Czech Labour Code does not contain general regulations for the purchase/takeover of a business. The Civil Code regulates this type of business activity. Notwithstanding the above, certain aspects of transfer of business in relation to its employees are provided for in the Labour Code (Sections 338 to 345). 

The transfer of rights and obligations arising from employment relations (TUPE) may only occur in cases specified in the Labour Code or in other statutory provisions. 

According to Czech Labour Code, where the activities or tasks of an employer or a part thereof are transferred to another employer, the rights and obligations under employment relationships shall transfer to the full extent to the new employer; the rights and obligations from the collective agreement shall transfer to the new employer for the term of the collective agreement, but no later than until the end of the following calendar year. 

Automatic transfer of contracts of employment

As follows from the above, in the case of a transfer of a business, the rights and obligations underlying the relationship between the employees and the transferring employer are transferred to the transferee in their entirety. Therefore, the transfer of a business has no legal consequences for the employee. The working conditions of the employees shall be preserved.

Information and consultation obligation

Both the former and the future employer must inform and consult the respective trade union and the works council (see 8) about the pending transfer before it takes place. Furthermore, the legal, economic and social consequences of the transfer must be discussed, together with the reasons and the likely effect of the transfer on the workforce. In case there are no trade unions or works council, the employer must directly inform all affected employees.

Specific rights of the employees

The employees who shall be subject to the transfer have the right to be informed and consulted at least 30 days prior to the transfer of the rights and obligations to the other employer, of this fact and in particular of: 

a) the set or proposed date of the transfer; 

b) the reasons for the transfer; 

c) the legal, economic and social consequences of the transfer for employees; 

d) the prepared measures related to employees. 

If an employee gives notice in connection with the transfer, the employment law relationship ends at the latest on the day preceding the day when the transfer enters into effect. Different notice periods apply if the employer fails to inform about the transfer in due time. 

If an employee’s notice was given within two months from the effective date of the transfer, or if the employee's employment relationship was terminated by agreement within the same period, the employee may seek a determination at the court that the employment relationship was terminated on the grounds of considerable impairment of working conditions in connection with the transfer. In such a case, the employee may be awarded a severance payment in the same amount as in the case of notice due to organisational changes (point 6.3).

8.1. Trade unions and management

Right of co-determination

According to Czech law, trade unions have rights of co-determination and in addition, the employer has a duty to provide information and an obligation to consult the trade unions/works council/employee representative for occupational health and safety protection. The employer is obliged to fulfil its duties to all trade union organisations and/or work councils/ employee representatives exercising their activities within the company.

Obligation to inform

The employer is obliged to inform the trade union about: 

• the development of salaries or public sector pay, the average earnings or public sector pay and its individual components including classification according to the individual professions, unless agreed otherwise; 
• other information as stated in point 8.2 below. 

Obligation to consult

The employer is obliged to consult with the trade unions on the following:  

• the employer’s economic situation; 
• the quantity of work and the pace of work; 
• changes in the organisation of work; 
• the system of remuneration and evaluation of employees; 
• the system of training and education of employees; 
• measures to create preconditions for employing natural persons, particularly minors, persons taking care of children under 15 years of age and natural persons with a disability, including substantial matters of care for employees; measures to improve occupational hygiene and the working environment; 
• organisation of social, cultural and sporting needs of employees; 
• other measures concerning a major number of employees; 
• other information as stated in point 8.2 below.  

8.2. Information and consultation obligation towards employee representatives

Obligation to inform

The employer is obliged to inform the employees (trade union, works council and the employee representative for occupational health, safety protection, if any) on: 

• the economic and financial situation of the employer and its probable development; 
• activities of the employer, their probable development, their environmental impact and environmental measures taken by the employer; 
• the legal status of the employer and changes therein, internal structure and the person authorised to act for the employer in employment relationships, the employer’s major activity designated with the Economic Activity Classification code and the performed changes in the employer’s objects of activities; 
• the basic aspects of the working conditions and changes therein; 
• matters on which the employer is obliged to consult with employees; 
• measures whereby the employer ensures equal treatment of male and female employees and prevention of discrimination; 
• available jobs for an indefinite term that would be suitable for further working assignment of employees employed by the employer for a fixed term; 
• occupational health and safety protection; 
• matters within the scope stipulated by the agreement on establishment of a European Works Council or on the basis of some other agreed procedure for the provision of information and consultations at a transnational level.

Obligation to consult

The employer is obliged to consult employees (trade union, works council and the employee representative for occupational health, safety protection, if any) on: 

• the probable economic trends in the employer’s organisation;  
• any contemplated structural changes in the employer’s organisation, rationalisation or organisational measures, measures affecting employment, particularly measures related to collective redundancies; 
• the latest state and structure of employees, the probable trends in employment in the employer’s organisation, the basic aspects of the working conditions and changes therein; 
• a transfer of rights and duties obligations arising from employment relations (TUPE); 
• occupational health and safety protection; 
• matters within the scope stipulated by the agreement on establishment of a European Works Council or on the basis of some other agreed procedure for the provision of information and consultations at a transnational level.

8.3. Creation of a works council or employee representatives mandatory

Existence of an active trade union

If there is an active trade union, the trade union statute governs all conditions for establishing trade union bodies of the respective union organisation, elections taking place in these bodies, membership, term of office, as well as the whole internal structure of the trade union. There may be more trade unions at a single employer. 

A works council or employee representative for occupational health and safety protection at work may be created even when there is a trade union. 

Works council

TThe works council of employees has at least three but not more than 15 members. The number of members at this council must be an odd number. 

Employee representative

Employees may also designate a representative for health and safety protection at work. A total number of such representatives depends on the number of employees and a risk factor of the types of work performed, but no more than one representative may be appointed per ten employees. 

Elections

The Labour Code governs elections for members of the works council and employee representatives. The term of office for both the works council and employee representatives is three years. 

The Czech Labour Code contains legal regulations for the European Works Council. The European Works Council is established on the basis of an agreement between a special negotiating body representing employees and the relevant central management to ensure right of employees to transnational information. The term of office is four years. 

8.4. Rights of employee representatives

No right of approval

The right of co-determination with the employer is the exclusive right of the union body. The majority of other consultation and information rights can be exercised interchangeably with any of the employees´ representatives (trade union, works council, employee representative). For more details about the information and consultation, see point 8.2 above. 

Collective agreements

The relations between the employers and one or more trade unions may be governed by the collective agreement to the greater benefit of the staff than the provisions in the Labour Code (or other legal regulations) as long as it is not expressly forbidden to deviate from the provisions of the Labour Code. Similarly, the collective agreement cannot limit the employment rights and obligations that have been agreed upon. 

No member of the employee organisation is protected from dismissal (but trade union approval is required for dismissal of a union member). However, the members of the works council, trade union or staff’ representatives must not be exposed to any discrimination or penalised due to their role as a member. 

8.5. Employee representatives and the right of paid release

The activity connected with the execution of the office of trade union, works council member and employee representative should not be conducted during work time unless it is not possible to carry out these activities in free time. 

However, the employee is entitled to compensatory time off with compensation of salary when he exercises the office of a member of a trade union, works council or employee representative

8.6. Employee representatives and material expenses

Rooms and technical support

The employer shall create at its own cost the conditions, which enable the trade union/works council/ employee representative the proper exercise of office. In particular, the employer must provide rooms and equipment, and cover both the costs relating to their maintenance and technical operation as well as the costs of required documentation. 

Such technical assistance by the employer depends on the size of the company; the employer is obliged to provide the above conditions within the operational possibilities and within an appropriate scope. 

8.7. Collective Agreements

The right to conclude a collective agreement on behalf of employees pertains only to a trade union organisation. A collective agreement may in particular regulate wage and salary rights and other rights in labour relations as well as rights or duties of the parties of such agreement. However, it may not impose duties on individual employees.

One union organization

If there is one union organisation operating at the workplace, a collective agreement may be concluded between the employer and the trade union. The terms agreed to in the collective agreement are applicable to all employees irrespective of membership. All unilateral violations of such agreement have the same consequences in the same way as a breach of contract.

Several union organizations

If there are several union organisations at the workplace, the employer must negotiate the conclusion of the collective agreement with all such trade unions. The employer must fulfil its obligations to all trade unions in cases concerning all employees or a majority of employees unless agreed otherwise. Each trade union represents its members. Employees who are not members of any trade union are represented by the trade union with the highest number of members. 

Courts

There are no special labour courts in the Czech Republic.  

General courts are competent to deal with all decisions in the context of employment law. However, there is a three-person senate for labour disputes at all general courts of a first instance consisting of one judge and two associate justices. 

Arbitration and mediation

Parties to an employment agreement may voluntarily agree that their dispute will be resolved in a mediation proceeding. Disputes relating to property affairs (e.g. claiming unpaid salary, restitution of damage, etc.) may also be tried before an arbitration court or individual arbitrator if the parties agree. It is argued that disputes relating to establishment and termination of employment relationship may not be subject to arbitration. 

General background

There are two systems of state insurance in the Czech Republic – social insurance and public health insurance.  

Social insurance is comprised of: 

• retirement insurance and pensions; 
• illness insurance; and 
• government employment policy. 

The two systems cover the following:  

• retirement, invalidity, etc.; 
• social care (family care, the elderly etc.); 
• health insurance allowances (sick pay, support during care of a family member, compensation during pregnancy and maternity leave, financial support during maternity leave); and 
• support by the state-owned social insurance system (family support, housing benefit, transportation allowance etc.). 

10.1. Contributions for social insurance

Social Security and Health Insurance contributions

The employer pays a contribution of 24.8% of the total salary, which will be transferred to the state social security system and 9% to the employee’s health insurance company. In addition, the employer is obliged to deduct from the employee’s salary, social security and health insurance contributions that in total amount to 13.5% of the gross salary. 

10.2. Retirement age

Men

The standard retirement age for men is 60 years of age if they were born before 1936. If they were born between 1936 and 1971, the exact retirement age will be set out pursuant to an annex to Act No. 155/1995 Coll. and will amount to 60 to 65 years. If an employee was born after 1971, the exact retirement age shall be 65 years.  

Women

The standard retirement age for women, if they were born before 1936, depends on the number of children brought up – 57 years for no children, 56 years for one child, 55 years for two children, 54 years for three or four children and 53 years for five or more children. If they were born between 1936 and 1971, the exact retirement age will be set out pursuant to an annex to Act No. 155/1995 Coll. and will amount to 57 to 60 years. If they were born after 1971, the exact retirement age shall be 65 years.  

10.3. Calculation of the pension

The amount of the retirement pension is limited by law and depends on the employee’s income level during the decisive period and on the number of years worked. It is comprised of a basic pension (10% of the average salary in the Czech Republic) and an individual pension. The amount of the individual pension is in principle specific to the individual and many factors have influence on its determination. The average pension is approximately CZK 20,216 (approximately EUR 825).

Maximum pension

The maximum pension is unlimited, but if it exceeds CZK 622,800 (approximately EUR 25,400) per year the exceeding part of the pension is subject to tax.  

10.4. Private Pension Systems

Pension funds

Current laws govern the private retirement insurance via the pension funds. If an employer pays the pension contribution for the employee, up to CZK 50,000 for each such employee is tax deductible. The only condition is that the employer must stipulate such entitlement in the collective agreement or in the internal regulation.

10.5. Unemployment benefits

Entitlement to unemployment benefits

An employee having lost his job and having registered at the relevant Labour Office is entitled to receive unemployment benefits if the employee has been employed for a period of at least 12 months in the last two years before registering as unemployed. The unemployment benefit is paid for five, eight or 11 months, depending on the age of the unemployed. The older the unemployed, the longer the period for unemployment benefits. Unemployed persons under 50 years of age are entitled to five months of unemployment benefits, persons between 50 to 55 years of age are entitled to eight months and persons over 55 years of age are entitled to 11 months of unemployment benefits. 

Amount of the unemployment benefit

The amount of the unemployment benefit is based on the average earning after tax that the applicant received in his last job, being in the amount of 65% of his salary during first two months, 50% for the next two months and 45% for the remaining period. The unemployment benefit cannot exceed 0.58 times the national average earnings for the previous year, or 0.65 times in case of change in qualification. The national average salary after tax is CZK 39,306 (approximately EUR 1,600), thus the maximum unemployment benefit equals CZK 22,798 (approximately EUR 928). 

Funding of the unemployment scheme

As of 2009, only the employer pays contributions to the unemployment benefit system. 

Employer

The employer pays contributions amounting to 1.2 % of the assessment basis (monthly earnings) of its employees.

Employee

The employee pays no contributions.