Industrial relations

Czechia: Latest developments in working life Q4 2019

Government approval for an increase in the minimum wage for 2020 and an informal agreement between social partners and the government on a draft amendment to the Labour Code are the main topics of interest in this article. This country update reports on the latest developments in working life in Czechia in the fourth quarter of 2019.

Government approves increase in minimum wage for 2020

The minimum wage in Czechia will increase by CZK 1,250 (€50 as at 17 February 2020) to CZK 14,600 (€586) monthly from January 2020. [1] On 9 December, later than in previous years, the Czech government approved the relevant regulation. The ANO and Social Democratic coalition partners agreed on the amount of the increase two weeks after employer and trade union representatives had failed to come to an agreement.

The trade unions originally demanded an increase of CZK 1,650 (€66), while the employer organisations insisted on a maximum increase of CZK 700 (€28). While the unions welcomed the government’s increase, they felt that it was too little. The employers, however, argued that the approved increase of 9.4% is not realistic and could endanger a number of companies.

The Minister of Labour and Social Affairs Jana Maláčová originally proposed an amendment to the Labour Code that the minimum wage should correspond to 50% of average earnings of the year before last. However, a failure to agree on this formula led to the withdrawal of this proposed change to labour legislation. Minister Maláčová and trade unions have pointed out that neighbouring Slovakia and Poland will adopt a minimum wage of in excess of CZK 15,000 next year.

Along with the increase in the minimum wage, which benefits around 170,000 employees, the guaranteed wage will also be increased. [2] The guaranteed wage is paid in eight wage brackets. From January 2020 the current guaranteed wage range of CZK 13,350–26,700 (€536–1,072) will be increased to CZK 14,600–29,200 (€586–1,172).

The previous cabinet of Prime Minister Bohuslav Sobotka, which initiated regular increases, approved its increases in August or September. By comparison, the cabinet of current Prime Minister Andrej Babiš voted for a 2020 increase on 14 November 2019. With respect to the delay surrounding the agreement on increasing the minimum wage, the Minister of Labour and Social Affairs Jana Maláčová stated that the Labour Code should include a provision that the decision on the increase in the minimum wage must be made by the end of September each year. This recommendation has not yet been incorporated into legislation.

Social partners conclude informal agreement on Labour Code change

Draft changes, including a proposed amendment, to the Labour Code have been under discussion between the social partners and the government since the spring of 2019. To ease the passage of this proposal through parliament, an informal agreement was signed at the Office of the Government on 14 October between representatives of the government, trade unions and employers. [3] All parties agreed to support the proposal in its current form. ‘It is the first time in the history of social dialogue in the Czech Republic that we have signed such an agreement with our partners,’ stated President of the Confederation of Industry of the Czech Republic Jaroslav Hanák.

One of the proposed changes to the Labour Code covers job sharing (a new form of work that allows employers to employ several part-time employees to cover one job position). The amendment also proposes a fairer holiday entitlement calculation method that, for the first time, calculates holiday on the basis of hours worked and not on the number of days or shifts worked. It is anticipated that the amendment will simplify the administration of this calculation for employers.

A further draft change concerns the delivery of documents by the employer to individual employees on issues such as the creation, change or termination of employment, as well as wage and salary assessment. Another proposed change reduces the administrative burden placed on employers by abolishing the employer’s obligation to issue a certificate of employment to employees in the event of the termination of so-called agreements to complete a job.

One of the most important aspects of the informal agreement is the commitment of social partners and coalition parties of the government not to support any changes to this amendment or proposals from members of the Chamber of Deputies without the agreement of all the parties to the agreement. This is intended to prevent the politicisation of negotiations on the Labour Code in the Chamber of Deputies. The compromise draft amendment to the Labour Code was approved by the Government on 16 December and will subsequently be submitted to parliament for approval. If passed, it is expected to take effect from 1 July 2020.


Footnotes

  1. ^ iDNES.cz/ZpravodajstvÍ (2019), Minimální mzda se od ledna zvýší o 1250 korun na 14 600 korun měsíčně , 9 December.
  2. ^ SocialniDialog (2019), Roste i zaručená mzda, některé profese si vydělají minimálně 29 200 korun , 12 December.
  3. ^ SocialniDialog.nz (2019), Sociální partneři uzavřeli gentlemanskou dohodu o zákoníku práce , 10 December.

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