Debate over regulating flexible forms of employment
According to the Czech news server iHNed, employers tend to abuse flexible forms of employment more frequently during times of economic recession. If an employee working on an employment contract is dismissed, the employer can rehire the worker on the basis of an agreement for performance of a work assignment. However, based on this agreement, neither the employer nor the employee is required to give back social and health insurance contributions.
Agreement for performing a work assignment
The agreement for performance of a work assignment is one of the ‘agreements concluded outside employment relationships’, which should make the Czech labour market more flexible. This agreement, governed by the Labour Code, is usually concluded for performing a specific work task and may be concluded between the employer and a natural person, if the estimated volume of work is not higher than 150 hours a year.
Advantages of this form of employment include the precisely specified duration of the contract for employers, as well as the fact that employers do not need to return health and social insurance contributions associated with it. For employees, it is then advantageous that, if they are employed on the basis of the agreement for performance of a work assignment, they may receive unemployment benefits if registered at the labour office as unemployed.
However, the labour law protection for this type of agreement is markedly lower compared with that in relation to the employment contract. The agreement for performance of a work assignment is not linked with provisions on, for example, termination of an employment relationship, severance pay or holidays.
Social partners discuss impact of agreement
This topic was discussed at a meeting of representatives of the government, trade unions and employers, which was held in August 2009.
Government views
The Ministry of Labour and Social Affairs of the Czech Republic (Ministerstvo práce a sociálních věcí České republiky, MPSV) does not want to intervene in the legal regulations on the agreement for performance of a work assignment. MPSV’s Director General of Employment Services, Marie Bílková, stated: ‘The agreements support flexibility of labour relations, which is increasingly needed. We will have to consider this issue very carefully.’
Trade union position
However, trade union leaders believe that the agreements for performance of a work assignment are being misused by employers to the detriment of employees. They also highlight that the state loses about CZK 3.5 billion (about €136 million as at 19 October 2009) annually in non-paid social and health insurance contributions. For this reason, the trade unions would prefer social and health insurance payments to be returned with regard to agreements for performance of a work assignment. According to the Chair of the Czech Metalworkers’ Federation KOVO (Odborový svaz KOVO, OS KOVO), Josef Středula:
Agreements would thus become less attractive. Employees would also understand that if a company dismisses them and rehires them based on this agreement, the situation will not be too favourable for them.
Mr Středula argues that the system of agreements for performing specific work assignments is currently being abused by more than 10,000 people in the Czech Republic.
Employer reaction
Employers consider any modifications of agreements for performance of a work assignment as unsuitable. The President of the Confederation of Industry of the Czech Republic (Svaz průmyslu a dopravy České republiky, SP ČR), Jaroslav Míl, believes that it is necessary instead to push for implementation of a more flexible Labour Code, which would encourage employers to maintain existing employment contracts where appropriate rather than misusing alternative options. ‘My concern is that, in the case of a change in rules for the agreement for performance of a work assignment, a good idea may turn into something that will annoy everyone,’ states Mr Míl.
Views of labour law experts
Labour law experts have similar opinions. Legislative amendment of agreements for performance of a work assignment and payment of social and health insurance from this form of employment would likely have a negative impact on labour market flexibility. Both the employers and the state administration would be overloaded with administrative tasks related to employee registrations and subsequent cancellations of their registrations for payments of social and health insurance, since agreements for performance of a work assignment usually take the form of short-term contracts. Agreements for performance of a work assignment would thus become less advantageous and employers would be deprived of an opportunity to hire workers quickly for fixed-term employment contracts. Regulation of agreements for performance of a work assignment will only force employers and employees to look for other legal and illegal solutions to replace such agreements.
Soňa Veverková, Research Institute for Labour and Social Affairs (RILSA)