Cautious welcome for changes to Labour Code

The new amendment to the Czech Labour Code came into force from 1 January 2012. It aims to provide employees and employers with more contractual freedom and increase labour market flexibility. It is the most substantial change in Czech labour law since 2007 and was prepared by the Minister of Labour and Social Affairs Jaromír Drábek. The unions, while welcoming some improvements to employment laws, say that the law reduces employees’ overall protection and job security.

The most important changes

The new amendment makes six major changes to the Czech Labour Code (no. 262/2006 Coll.).

Lower severance pay

This is paid to workers when their employment is terminated for ‘organisational reasons’ or long-term sickness.. It will now be calculated on the basis of the number of years worked for the employer instead of the previous arrangement of just three months pay regardless of length of service.

Contractual freedom

This provides for the legal protection of an employee’s status, a ban on abuse of the law, satisfactory and safe working conditions, fair pay, an employee’s proper performance of work in compliance with the rightful interests of the employer, equal treatment of employees and a ban on discrimination, and the obligation for companies to discuss substantial changes in work organisation, economic, financial and strategic development with employees.

New reasons for dismissal

Employers can now dismiss employees who grossly violate the rules during the initial 21 calendar days of his/her sick leave. Trade unions consider this anti-constitutional, since an employee is already punished for breaking the medical treatment regime by not being paid and should not be punished twice for the same misconduct.

Extra health insurance protection

Redundant employees can now use an ‘out-of-employment contract’ for working up to 300 hours a year (compared to 150 hours in the past). Now, however, employers must pay social and health insurance, if the income from such work contracts exceeds CZK 10,000 a month (€396 as at 13 February, 2012). The increase in the number of hours is appreciated by companies which have seasonal employment, although they consider the new payment thresholds administratively demanding.

Trade unions curbed

Unions will now be allowed to operate with an employer only if at least three employees are members. Up to now, union members could include former employees now unemployed and interns as well, which made agreement between the employer and his employees difficult.

Fixed term contracts

Fixed-term employment contracts must not exceed three years and can be renewed only twice. Previously there was no restriction on duration or renewals.

Social partners’ reaction

The Czech-Moravian Confederation of Trade Unions (ČMKOS), the largest trade union confederation in the Czech Republic, welcomed some measures, such as the payment of social and health insurance on short-term contracts. However, they claim that the new laws reduce the overall protection and job security of employees.

The confederation has also highlighted the absence of flexicurity in the new amendment – saying that while it allows more flexible work arrangements between employer and employee, it lacks an adequate level of protection for employees.

The Confederation of Industry of the Czech Republic (SP ČR) have welcomed the amendment. SPČR President Jaroslav Hanák said:

The Labour Code contains a number of points which we have long demanded. For employers, it is essential that the adjustments will increase the flexibility of the labour market, which is good for the competitiveness of our companies.

Sona Veverkova, Research Institute for Labour and Social Affairs