Sources of regulation
The most important source of law in relation to the termination of employment
is the Labour Code (Act no. 65/1965 Coll.), as amended (hereinafter
“LC”).[1] It is necessary to emphasise that
abovementioned applies in the time of processing of this text for the year
2006 and that for the next period it is necessary to take into account the
already enacted amendment of the labour law legislation.[2]
If there is a dispute regarding the termination of employment between an
employer and an employee, the important source of the procedural law according
to which such a dispute tried is the Civil Procedure Act (Act no. 99/1963
Coll.) as amended.
Concerning the monitoring of observance of the labour law regulation on
the termination of the employment relationship, the Labour Inspection Act
(Act. no. 251/2005 Coll.) can be designated as the source of regulation in
this field, as well as the Employment Act (Act no. 435/2004 Coll.), as amended,
which is in connection with employment legislation, particularly for assistance
in finding employment.
Scope of legislation
The laws on the termination of employment regulate all workers, including
State employees. Sec. 2 to 5a of the LC determine some groups of employees
whose employment relationships are governed not only by the LC but by other
regulations as well, in some cases concerning the termination of employment
and related claims. The devious regulation for these minority groups of employees
is legitimised by objective reasons and particularities of their work (for
example, navy crews, articling judges, university teachers, etc.). The LC
also applies to foreign employers and foreign nationals employed in the Czech
Republic, unless private international law or a relevant treaty provides
otherwise (sec. 6, LC).
Contracts of employment
Contracts of employment may be agreed for an indefinite or fixed-term duration.
Contracts are valid for an indefinite period of time, unless it is a fixed-term
contract, in which case such term must be explicitly stated in the contract
(sec. 30(1), LC). However, a specified fixed term does not preclude the possibility
of dismissal on notice on identical grounds as exist for contracts of indefinite
duration.
Contracts for a fixed
term between the same parties may not be agreed or extended by an agreement
to more than two years from the creation of the employment relationship (sec. 30(2), LC). This applies also to other fixed-term employment relationships
agreed between the same parties during the abovementioned period. If the
period longer than 6 month from the termination of employment expires, the
previous fixed-term employment relationship between the same parties is not
taken into account.
The legislation regulates some specific cases: exceptions from the above
limitations when it is possible to agree to a fixed-term contract repeatedly
or when it is possible to agree to a fixed-term contract for period of more
than two years (sec. 30(3), LC).
Contracts of employment may also contain a provision for a trial period,
which unless a shorter period is agreed upon, shall last three months (sec. 31(1), LC). An agreed trial period may not be subsequently extended.
Termination of employment
An employment relationship for a fixed or indefinite term can terminate:
- by an agreement between an employee and an employer (sec. 42(1)a), LC);
- when meeting requirements stipulated by the
LC, also unilaterally on the part of an employer as well as on the part
of an employee by one of following acts:
- notice of termination;
- instant termination of employment;
- termination in the trial period (sec. 42(1)(a) to (c), LC).
An employment relationship agreed for a fixed term also terminates upon
expiry of the agreed period (sec. 42(2), LC).
An employment relationship of a foreigner or a
stateless person also terminates (if it has not terminated in some of abovementioned
manners) on the day on which his/her stay (residence) in the Czech Republic
is to end according to an enforceable decision cancelling his/her residence
permit or on the day when a decision to expel such person from the Czech
Republic acquires legal force (sec. 42(3), LC).
Dismissal
Unilateral termination of an employment relationship on the part of an employer
in case of notice of termination (sec. 46(1), LC) and in case of instant
termination of employment (sec. 53, LC) may be made only for reasons
exhaustively named in the LC and in compliance with another provisions of
the LC concerning, for example, questions of appropriate periods and concerning
demands on the form and deliverance of such an act. An employer may give
notice to an employee only for reasons originating:
a) from re-organisational
changes made by the employer (notice for grounds stipulated in sec. 46(1)(a) to (c) LC),[3]
b) from the state of the
employee’s health which prevent doing the agreed work in the long term (notice
for a reason stipulated in sec. 46(1)(d), LC),[4]
c) from abilities (notice
for a reason stipulated in sec. 46(1)(e), LC)[5] and from the behaviour of an employee (notice
for a reason stipulated in sec. 46(1)(f), LC;[6] in
exceptional cases, an employer is allowed to terminate an employment relationship
instantly from grounds determined in sec. 53, LC – see below).
An employer may only give notice of termination
to an employee, in cases which do not involve serious breaches of work discipline
or grounds for which the employment relationship could be terminated instantly,
if:
a) it is not possible for the employer to employ
him/her further in the place which was agreed as his/her place of work, or
in the employee’s place of residence, even after a prior period of retraining,
b) the employee is not willing to be transferred
to other work which the employer offered him/her in the place agreed as his/her
place of work, or in the place of the employee’s residential address, or
if the employee is not ready to undertake retraining for such other work
(sec. 46(2), LC).[7]
Certain categories of workers are given special protection against dismissal
by a notice of termination under the LC. According to sec. 48(1), LC, the
employer may not give a notice to an employee during a protective period,
namely:
a) during a period when it is recognised that the
employee is temporarily unable to work due to illness or injury, unless he/she
intentionally brought this incapacity or it was caused by drunkenness,
b) during a period when the employee is called
up for duty in the armed forces,
c) during a period when
the employee has been given long-term unpaid time off in order to hold public
office,
d) during a period when a female employee is pregnant
or on maternity leave and during a period when a female or male employee
is on parental leave,
e) during a period when a night worker is recognised,
on the basis of a medical expert’s opinion, as being temporarily unfit for
night work.
This protection is not absolute; it is broken in some cases as determined
in sec. 49, LC.
From the above implies that an attainment of the retirement age is not expressed
to be a valid reason for termination of employment.
The employer may terminate the employment relationship instantly only exceptionally
in the following cases:
a) if the employee is sentenced for an intentional
criminal act to unconditional imprisonment of at least one year and such
sentence is final, or if he/she is sentenced to unconditional imprisonment
of no less than six months for an intentional criminal act committed while
performing his/her work tasks or in direct connection therewith and such
sentence is final,
b) if the employee breaches work discipline in
an especially gross manner (sec. 53, LC).
Notice and prior procedural safeguards
If a notice of termination is given, the employment relationship will end
upon expiry of the notice period. The notice period is the same for an employer
and an employee and shall be two months. If the notice of termination is
given for re-organisational grounds (that means for grounds stipulated in
sec. 46(1)(a) to (c), LC)), the notice period shall be three months (sec.
45 (1), LC).[8]
Such a notice of termination must be in writing and must give the reasons
for the pending dismissal (sec. 44, LC).
As previously mentioned, one of the reasons for which a notice of termination
may be given by an employer is if there exist grounds upon which the employer
might terminate the employment relationship instantly, or due to serious
breaches of work discipline; for consistent but less serious breaches of
work discipline; the employee may be given notice if, during the previous
6 months in connection with such breaches, he/she was warned in writing of
the possibility of being given notice of termination (sec. 46(1)(f), LC).
For a breach of work discipline, or on grounds for which the employment relationship
may be terminated instantly, the employer may only give the employee notice
during a period of two months from the day on which he/she learned of the
grounds for termination, and, if the employee breaches work discipline in
a foreign country, within two months of his/her return from abroad, but in
all cases no later than one year after the day on which the reason for giving
notice arose (sec. 46(2), LC).
The employer may only terminate an employment relationship instantly within
a period of one month from the day when he/she learned of the grounds for
instant termination, and at the latest within one year of the day on which
those grounds arose (sec. 53(2), LC).
Also previously mentioned, another reason for which the employee may be
given a notice of termination is if the employee does not meet the prerequisites
prescribed by statutory provisions for performance of the agreed work, or
if, through no fault on the employer’s part, he/she does not meet the requirements
for proper performance of such work; if his/her failure to meet these requirements
is the result of unsatisfactory work, the employee may be given notice for
this reason only if, during the previous 12 months, the employer called upon
him/her in writing to eliminate the defects (in his/her work), and the employee
failed to do so within a reasonable period of time (sec. 46(1)(e), LC).
An employer should discuss notice of termination or instant termination
of an employment relationship in advance with the competent trade union body
(sec. 59(1), LC).[9]
If an employee is given notice of termination for any of the reasons stated
in section 46(1)(a) to (d) of the LC, the employer should, in cooperation
with the competent state administrative authority, actively assist him/her
in obtaining another suitable job (sec. 47(1), LC).
A special situation occurs in the case of trade union officials. If the
notice of termination or instant termination of an employment relationship
concerns a member of the trade union body authorised to co-decide with the
employer during such member’s term of office or for a period of one year
afterwards, the employer should ask such body for its prior consent to the
notice of termination or instant termination of the employment relationship
(sec. 59(2), LC).
If the competent trade union body refuses to give its consent (to dismissal
of the trade union official), the notice of termination or instant termination
of the employment relationship is thereby void (sec. 59(4), LC).
In some cases, which are worth mentioning here, such as the
case of a notice of termination given to a single female or single male employee
who is raising a child under the age of 15 years or to a disabled employee
who is not a recipient of a pension, for reasons stated in sec. 46(1)(c)/redundancy/
and others (see sec. 47(2), LC), the employer is obliged to ensure to such
an employee other suitable work, and the notice period does not end until
the employer fulfils this duty, unless the employer agrees otherwise with
the employee.
If an employee is willing to contest the validity of the termination of
an employment relationship, he/she should do it during the foreclosure (lapse)
period before the relevant court by means of an action to determine that
the termination of the employment relationship is void (see below).
The Employment Act (Act. No. 435/2004 Coll. as amended) regulates in the
framework of active labour policy (among others) the possibility of providing
a grant to an employer to partially cover the expenses for re-qualification
of the present employees (§ 110(1) of the above Act). Sec. 117 of the same Act
regulates a “switch-over allowance” which could be provided to the employer
by the employment office on the basis of an agreement between the employer
and the office if the employer switches over to a new business programme
and for this reason the employer is not able to ensure work for his/her employees
within established weekly working hours. The allowance provides for a partial
settlement of compensatory wage to which employees are entitled according
to labour legislation for a maximum of 6 months and for a set ceiling (half
of the minimum wage/month/employee).
An employer is also obliged to perform specific duties if a so-called large-scale
dismissal occurs (sec. 52, LC). The criteria for considering
whether there is a large-scale dismissal or not are fixed in the LC.
If there is a large-scale dismissal, the employer shall perform other duties
established in the LC in relation to the employees’ representatives and the
relevant employment office.
Severance pay
An employee whose employment relationship is severed by a notice of termination
given by an employer on the grounds under section 46(1)(a) to (c), LC (re-organisational
reasons), or by agreement on the same grounds, is entitled to severance pay
in the amount of twice his/her average earnings at the end of his/her employment
relationship.[10] A
collective bargaining agreement, or an internal regulation, may increase
the severance pay by further multiples of the employee’s average earnings
or stipulate further conditions under which an employee is entitled to increased
severance pay. This shall also apply to employers who are not engaged in
an entrepreneurial activity (sec. 60(a), LC).
A collective bargaining agreement or an internal regulation may establish
that an employee who is given a notice of termination on the grounds under
section 46(1)(d), LC (grounds concerning state of health), or an employee
whose employment relationship is severed by agreement on the same grounds,
is, at the end of his/her employment relationship, entitled to severance
pay under the conditions and in the amount of multiples of the employee’s
average earnings established in the collective bargaining agreement or internal
regulation.[11]
Avenues for redress
The appropriate avenue for redress for unlawful dismissal is a court of
law under civil proceedings. Both an employer and his/her employee may claim
before the court the fact that the severance of an employment relationship
by notice, by instant termination, by termination during the trial period,
or by agreement, is void, but no later than two months after the day when
the employment relationship should have ended as a result of such severance
(sec. 64, LC). In legal proceedings pertaining to dismissal from employment,
the burden of proof is on the person alleging the invalidity of the dismissal.
Where a dismissal is found to be void, the employee is entitled to compensation.
Where an employer gives an employee notice which is void, or terminates an
employment relationship either instantly or during the trial period in a
manner which is void, but the employee notifies the employer that he/she
insists on the employer continuing to employ him/her, such employee’s employment
relationship persists and the employer shall pay him/her compensatory wage.
Such earnings shall be in the amount of his/her average earnings as of the
day when the employee notified the employer of his/her insistence that the
employer continue to employ him/her until the time when the employer enables
this employee to continue his/her work, or until the employment relationship
is terminated in a valid manner (sec. 61(1), LC).
If the entire period for which such employee should be paid a compensatory
wage exceeds six months, a court, acting on a petition filed by the employer,
may reasonably reduce such compensatory wage for a further period, or not
admit the employee’s entitlement to a compensatory wage; in coming to such
decision the court shall in particular take into account whether the employee
was employed elsewhere in the meantime, what kind of work he/she was engaged
in and his/her earnings, or why he/she did not take on other work (sec. 61(2), LC).
The result of the court’s decision on invalidity of termination of the employment
relationship is the fact that the employment relationship persists, with
the exception if the employee who attempts for determination of invalidity
by the court has no interest in further continuation of the employment relationship.
In this case it is assumed that the employment relationship is terminated
by agreement and in some cases an employee is entitled to a particular compensation
in these conditions.
Further information
[1] Most Czechoslovak (federal) legislative acts and
regulations continued to apply after 1 Jan. 1993 in both the Czech Republic
and Slovakia, unless specifically
repealed.
[2] In May 2006 the new Labour Code was enacted (after
a complicated and ambiguous legislative procedure in which i.a. the Chamber
of Deputies of the Parliament of the Czech Republic had to override the President’s
veto) which shall replace the present LC with effect from the 1st of
January 2007. This new Labour Code – Act no. 262/2006/Coll. (hereinafter
“NLC”) – is stigmatised negatively by its origin in bustling “pre-election”
speed, during which expert discussions on it were overridden by political
discussions. There was no wide consensus among the users of the NLC (employers
and employees) for its enactment, and future developments will indicate to
what extent it will be amended. It is commonly held between the supporters
and opponents of the present NLC that the NLC should be amended, preferably
before its entering into force. At
present (June 2006) the question is not whether the NLC should be amended
but the extent of its possible amendment.
[3] The grounds for a notice stipulated in sec. 46(1)(a) to (c), LC are cases if:
a) the enterprise or its part shuts down,
b) the enterprise or its part is relocated,
c) the employee is to
be redundant because of decision by the employer on organisational changes.
[4] The reason for a notice stipulated in sec. 46(1)(d), LC is if the state of the employee’s health is such, according to
the opinion of a medical expert or a ruling of the State health administration
authority or social security authority, that he/she is no longer able in
the long term to do his/her existing work.
[5] The reason for a notice stipulated in sec. 46(1)(e), LC is if the employee does not meet the prerequisites prescribed
by statutory provisions for performance of the agreed work, or if, through
no fault on the employer’s part, he/she does not meet the requirements for
proper performance of such work; if his/her failure to meet this requirements
is the result of unsatisfactory work, the employee may be given notice for
this reason only if, during the previous 12 months, the employer called upon
him/her in writing to eliminate the defects (in his/her work), and the employee
failed to do so within a reasonable period of time.
[6] The reason for a notice stipulated in sec. 46(1)(f), LC is if there exist grounds upon which the employer might terminate
the employment relationship instantly, or due to serious breaches of work
discipline; for consistent but less serious breaches of work discipline,
the employee may be given notice if, during the previous 6 months in connection
with such breaches, he was warned in writing of the possibility of being
given notice of termination.
[7] In connection with this substantive condition
of the notice, which is sometimes called the “employer’s duty to offer”,
it is necessary to note that the NLC no longer contains such a provision.
But this is in principle the only important liberalising change contained
in the NLC as compared to the LC in the field of termination of employment.
If we put aside the fact that the provisions concerning the termination of
employment will be numbered differently (provisions sec. 48-73, NLC), then
there are no substantive content changes in the grounds for which the employer
may terminate the employment relationship.
[8] In the provisions of the NLC, the notice period
has been “unified” in the following manner: “The notice period shall be the
same for an employer as well as for an employee and shall be two months”
(sec. 53(1), NLC).
[9] Section 18(1), LC stipulates: “Employees have
the right to information and consultation. The employer shall inform his/her
employees and discuss matters with them directly, unless at such enterprise
there is a trade union body or works council, or there are health and safety
representatives (collectively referred to as “employees’ representatives”).
Consultation shall mean discussions between the employer and his employees,
or between the employer and employees’ representatives, which are aimed at
reaching an agreement. Information shall mean supplying data by the employer
to his employees or to employees’ representatives in order to get acquainted
with and explore them. The employer is obliged to supply information by an
appropriate manner...”.
[10] Sec. 67, NLC increased for these cases the amount
of severance pay up to minimum of triple his/her average earnings.
[11] Sec. 67, NLC increased for the cases when an employee
gives a notice of termination under grounds of (medical) prohibition to perform
the existing work because of an accident at work or occupational disease
(risk of this disease) the amount of severance pay up to minimum of twelvefold
his/her average earnings.
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