From the Courts03/08/12 / cata_tax-news

On 7 June 2012, the Supreme Administrative Court of the Czech Republic (the “SAC”) issued judgment Ref. No. 7 Afs 16/2012-52 on whether it is lawful to record in a company’s accounting estimated items of employees’ unused vacation time, remuneration, and bonuses.

According to the SAC’s judgment, only such compensation for unused vacation time that will actually be reimbursed in the subsequent year in compliance with the Labour Code can be recorded as an estimated liability. Concerning the recording of employee bonuses as an estimated liability, according to the SAC it is necessary to assess all criteria that must be complied with in connection with such bonuses and to start from whether the employer’s decision to pay bonuses is constitutive or only declaratory.