Hire in Czech Republic

Two types of employment contracts exist in the Czech Republic:

• Employment Contract for a definite period
• Employment Contract for an indefinite period

In addition, an employee may perform work on the basis of other agreements:

• Agreement to complete a job: the scope of work shall not exceed 300 hours yearly
• Agreement to perform work: the scope of work may not exceed a maximum of one half of determined weekly working hours (20 hours).

It is possible for employees and employers to agree upon a probationary period of a maximum of three months with no statutory notice period. The maximum probationary period is six months for managerial employees.

In the case of a fixed-term contract, the probationary period must not be longer than half of the whole duration of the contract.

An employment relationship can effectively be terminated by agreement, by giving notice, by immediate termination or by termination within the probationary period. Any of these termination types must always be done in accordance with statutory provisions.

An employer is only permitted to give notice of termination for one of the reasons explicitly stated in the Labor Code:

1. Organizational reasons: The employer’s enterprise shuts down or the employer or its part is liquidated, relocates or the employee is made redundant.
2. Health reasons: An employee can be terminated on the basis of a medical report issued by an occupational health service provider or a decision of the competent administrative authority having duly reviewed the medical report if any of the following conditions exist:

• The employee may not continue to perform work due to occupational injury, occupational disease, the threat of occupational disease or the employee has been subjected to a maximum permissible level of harmful exposure.
• The employee has lost his or her capability to perform the current work due to the long-term state of their health.

3. An employee no longer meets the requirements outlined for the work they are performing without the fault of the employer
4. There are grounds for immediate termination of the employment relationship: the employee has committed a gross breach of duty or has been lawfully sentenced to prison for a crime;
5. The employee has seriously, or less seriously but repeatedly, breached a statutory duty relating to their work performance.
6. The employee breaches their obligation to observe the prescribed regime of an insured person being temporarily unfit for work in the first 14 calendar days of temporary incapacity for work due to sickness in an especially serious manner.

The employer may immediately (with effect upon delivery to the employee) terminate the employment within a period of two months of learning the reason for immediate termination. However, this must not be later than one year from the date of occurrence of the respective reason for termination.

Unfair dismissal

The dismissed employee has the right to challenge the validity of a dismissal by filing a claim to the court no later than two months after the date of the purported termination of the employment relationship. This is the statutory time limit. If upheld by court, the employment relationship is reinstated. The employee is then entitled to salary compensation for a specified time period. The salary compensation may be capped at six times the average monthly wage by the court, depending on particular circumstances of the case.

An employee may provide a notice of termination without stating the cause.

A written form is necessary and must be delivered to the other party. Both the employer and employee may terminate the employment relationship by notice of termination. Under specific and strict conditions, it is possible to deliver the termination documents electronically.

Involvement of a trade union or works council or the labor office

• The involvement of work councils is not necessary in the termination process, except in collective redundancies.
• The employer must discuss in advance any notices of termination. Any immediate termination of the employment relationship must be discussed with the trade union.
• Trade union approval is only required where the employee is a trade union officer. Such approval can be substituted with a court decision if the approval was withheld and the employer cannot be justifiably mandated to continue engaging the trade union officer.
• The labor office only needs to be notified of a collective redundancy or the dismissal of a disabled person or of an employee who is not a Czech citizen.

Collective Redundancies / Mass Layoff Rules

Collective redundancies are defined as dismissals for organizational reasons within a 30-day period. The thresholds for determining collective redundancies are:

• 10 employees if the employer has 20-100 employees
• 10% of employees if the employer has 101–300 employees
• 30 employees if the employer has more than 300 employees

The employer must inform the works council and trade union (or the directly affected employees if there is no works council or trade union) of its intentions at least 30 days prior to giving notice of termination. All parties must enter into negotiations to reach a compromise or reduce the number of affected employees,

Protected Groups of Employees

The employer may not give notice of termination during a ‘protection period’ which includes the following circumstances:

• an employee is temporarily unfit for work
• an employee is conscripted or relieved from work in order to fill a public office
• during pregnancy, maternity, paternity, or parental leave

These restrictions are typically lifted if the termination is for organizational reasons due to the closure or the relocation of the enterprise.

Managing Directors

In the Czech Republic, managing directors are not considered employees. Therefore, labor law protection does not apply to them. Therefore, the relationship between the managing director and the company is of a commercial nature, not an employment one. An appointment as managing director may be revoked without stating any reason.

Statutory right to pay in lieu of notice or garden leave

• No unilateral right exists to pay in lieu of notice. However, payment in lieu of notice can be agreed upon in a termination agreement.
• Garden leave is not expressly regulated in Czech employment law. However, it is increasing in practice. The employer must pay the employee a so-called compensatory salary throughout this period.

It is possible to include a non-competition clause in the employment contract. Non-competition clauses are regulated by Sections 310 / 311 of the Labor Code.

Under the Labor Code, a non-competition clause must be agreed upon in writing as part of the employment contract or as a separate agreement. Generally speaking, the employee will be obliged to refrain from engaging in gainful activity:

• which would be identical with the subject of the employer’s business or
• which would be of a competitive nature in regards to the employer’s business interests

This restriction can be in effect for a certain period after termination of employment. The maximum duration is one year.

The competition clause may be agreed between the employer and the employee if this can be reasonably required of the employee. This must take into account the nature of the information, expertise and technological practices the employee has gained during employment. It should also consider whether the use of these in a competing activity will seriously hamper the employer’s business.

Monetary compensation from the employer must, as a minimum, equate to half the average monthly salary for each month during which the employee met the obligation not to compete This compensation must be stated in the clause. The salary is based on the compensation the employee received prior to being terminated.

In practice, non-compete covenants usually include an obligation on the employee to pay a contractual penalty in case of breach. When no penalty is agreed upon, it is difficult to enforce the non-compete covenant in practice.

Non-competition clauses for Managing Directors

Non-competition clauses for managing directors may be agreed upon in a performance agreement. This is usually concluded with a member of a statutory body. The requirements set out in the Labor Code do not apply to managing directors, unless explicitly agreed.

Trade Unions

ČMKOS is the dominant union confederation, although others also exist in the Czech Republic. Around 15% of employees in the Czech Republic are union members.

Collective Bargaining

At least 45% of employees in the Czech Republic are known to be covered by CBAs. Under Czech law, collective bargaining can take place on both levels. Most typically, this happens at company level. Less commonly, it happens at industry level. The main goal of collective bargaining is to negotiate a CBA. Collective bargaining is more common in specific industries such as heavy industry, engineering, retail, education or healthcare.

Work Council

Work councils are largely uncommon in Czech Republic, with trade unions being more popular. This is caused by the fact that under Czech law, work councils enjoy fewer rights than trade unions. The areas in which work councils have the right to be informed or consulted on are limited to specific issues only.

There are no legal requirements pertaining to the minimum term for which a fixed-term employment contract can be concluded in Czech Republic. However, the maximum term is three years and only three fixed-term employment contracts are allowed to be concluded consecutively.

The statutory minimum is four weeks (20 working days) per calendar year. This figure excludes public holidays.

Generally, longer holiday entitlements may be agreed in CBAs. Certain groups of employees, such as those working in public administration, autonomous public bodies and contributory organisations, are entitled to five weeks. Other groups, such as teachers and academic staff, may be entitled to eight weeks.

The employee is entitled to a proportional part of annual leave for every month of their employment with the same employer. This proportional part equates to one-twelfth of annual leave for every calendar month of employment.

Employees will have the right to take a holiday after having worked for 60 days. However, if the employee works for a shorter time, they can take one-twelfth of the total annual leave entitlement for every 21 days on which he or she carried out work in the applicable calendar year.

The period when holiday may be taken is determined by the employer as agreed with the trade union or the employee. Every employee is entitled to take at least two consecutive weeks of holiday.

Additional leave of one week is provided for specific groups of employees engaged in particularly hard work. This applies when an employee performs such work for the entire calendar year.

Carry Over Rules

Employees are entitled to carry over unused leave to the next year’s annual leave. However, the employee will have to request the carry over in writing.

In cases of employees’ temporary incapacity due to illness, injury, quarantine and in other cases in accordance with the regulations on sickness insurance:

• The employer must pay sickness benefits for the first 14 days (that are working days) of work incapacity. The sickness benefit is equal to 60% of the employee’s average salary, capped at a ceiling. Higher-paid employees are entitled to less than 60% of average salary.
• From the 15th calendar day onwards of their temporary incapacity for work due to sickness, the employee is entitled to sickness benefit received from the Czech Social Security Administration (CSSZ). This benefit is payable for up to 380 days from the first day of sickness and is also set at 60% of the employee’s average salary.
• A medical certificate is required as proof of sickness and for the employee to receive sick pay. Doctors are obliged to submit the medical certificates online to the CSSZ, and whilst employees are responsible for informing their employers of work incapacity due to illness, employers should check online for proof of the medical certificate as employees are not required to present this to employers.

Military Leave

Employees are entitled to leave during their military training. The leave is paid by the military. Because military service is not compulsory in the Czech Republic, this provision only applies to persons who volunteer for military training. Its practical impact is marginal.

Election to Office Leave

When an employee is elected to public office, the employer is required to permit the employee to assume public office and grant them unpaid leave not exceeding 20 days per year.

Maternity Leave

• In order to carry out childbirth and take care of the newborn baby, a female employee is entitled to maternity leave for a period of 28 weeks. In the case of the birth of multiple children, the entitlement to maternity leave increases to 37 weeks.
• A female employee can take her maternity leave at the beginning of the sixth week before the expected childbirth. This is called confinement. However, this is not to happen earlier than the beginning of the eighth week before the expected confinement.
• If a child is stillborn, the female employee is entitled to a maternity leave of 14 weeks.
• If the mother has worked at least 270 days in the last two years before the birth, she is entitled to a maternity benefit under sickness insurance. This is paid for the entire duration of maternity leave at the rate of approximately 70% of daily salary. This begins at least six weeks before the birth (but not earlier than eight weeks before the birth) and within six months following the child’s birth.
• A female employee is not required to file any special application for maternity leave. It will suffice if she notifies her employer upon entering the maternity leave, using a statutory form signed by the relevant physician.
• During maternity leave, the employee’s absence is to be excused. However, the employee is not entitled to salary compensation. She is entitled to sickness insurance benefits.
• For annual leave recognition purposes, maternity leave is considered as performance of work.
• If a female employee returns to her job upon termination of the maternity leave, the employer is required to assign her to the original role and workplace again. If that is impossible because the work has ceased or the workplace has been closed, the employer must assign another job to her corresponding to the employment contract.
• The employer can terminate an employee on maternity leave only in the event the employer (or its part) is liquidated.

Parental Leave

Parental leave may be granted, upon request, to a mother following the end of maternity leave. It can also be granted to the father following childbirth. This can also be granted to an employee upon taking a child into their care. This can be taken at any point until the child reaches the age of four. The employer is obliged to provide this leave under the Labor Code but not after the child reaches the age of three years. Parental pay is available until the child reaches the age of four or until a total amount of up to CZK 300,000 is drawn.

Paternity Leave

For paternal postnatal care, the father is entitled to paternity leave if his name is stated on the birth certificate. Paternity leave corresponds to 14 days in relation to the care of a new-born child within 6 weeks after the birth of the child or from the date on which the child was taken into care. The date on which the father starts his paternity leave can be determined by each individual. The father is paid for the entire duration of paternity leave under sickness insurance (at the rate of approximately 70% of daily salary).

All employees on maternity/paternity/parental leave are subject to protection against termination.

Adoption leave

The right to maternity or parental leave (and the relevant payments) applies to female or male employees who have taken a child into their care. This includes situations of adoption, child custody and guardianship. A female employee is entitled to a maternity leave period of 22 weeks from the day she takes a child into her care. This is enhanced to 31 weeks for two or more children. This leave period cannot extend past the child’s first birthday. Parental leave in these circumstances is the same as for birth parents.

Childcare leave

• The Labor Code stipulates an employee can be absent from work to care for a child younger than 10 years of age or to provide care for a sick family member.
• If an employee caring for a child under the age 15 (or another dependent person) requests shorter working hours or some other reasonable modification to the work schedule, the employer must comply. The only exception is if serious operational reasons prevent the employer from doing so.