Fundamental changes in the Czech labour law since January 1 2007 – a new Labour Code and a new Act on Safety and Health Protection at Work01/07/06 / cata_legal-tax-update

The Labour Code (LC) cancels fifty-eight valid legal regulations with effect as of January 1, 2007 and is drafted as a labour-law code containing, save for certain exceptions, complete labour-law regulations. As up to now, the legal regulation of collective bargaining remains outside the Labour Code.

The new LC is based on a different legal conception than the existing LC. Whereas the still valid LC is a mandatory legal regulation with no exceptions, the new code allows that the rights or obligations in labour-law relations are regulated differently than in the Labour Code, unless the code expressly prohibits or unless it results from the nature of the relevant provisions that it is impossible to deviate from such provisions. As in the Commercial Code, you can find a list of mandatory provisions in the new Labour Code, from which it is impossible to deviate.

On May 23, 2006, the Chamber of Deputies of the Parliament of the Czech Republic definitively approved a governmental proposal for a new Labour Code. On June 7, 2006, the LC was announced in the Collection of Laws in release No. 84 under No. 262/2006, Coll. The same concerns the related act which amends certain acts in connection with adoption of the Labour Code, which was announced in the Collection of Laws in the same release under number 264/2006, Coll. These two acts will become effective on January 1, 2007, and until then the existing Labour Code fully applies (No. 65/1965, Coll.).

Whereas the existing Labour Code does not admit the following, pursuant to the new code it will be possible to apply the legal regulation of the Civil Code (CC) to labour-law relations, but only in the event that the code expressed so sets forth. It is thus a certain form of legal delegation to the legal regulation of the CC, but in no event it is possible to mention a relation of a subsidiarity between the CC and the new LC, as it is e.g. in the relation of the CC to the Commercial Code.

The new code introduces the following several significant changes:

  • The so-called employer’s offering obligation has been cancelled, i.e. employees do not have to offer another job to the employee in case of a notice on organizational grounds.
  • The employment relation is established by appointment only for persons on managerial positions at entities related to the state budget; the employment relations of managers of private companies will be established by an employment agreement.
  • The notice period has been unified to two months (now the notice period is two months but also three months for notices for the employer’s organizational reasons).
  • Severance pay in the event of redundancy or winding or relocation of the employer is increased from double to three times the average earnings.
  • It newly enables to terminate employment relation on the part of the employer for health reasons for a severance pay amounting to 12 wages.
  • It increases the maximum extent of hours for agreements on performance of work to 150 hours per calendar year from the existing 100.
  • It introduces the institute “working time account”; firms can adjust the determined weekly working time for employees and at the same time to pay them a fixed wage.
  • In the future, it will be impossible to agree on a wage taking into account work.
  • A new surcharge has been stipulated for work on Saturdays and Sundays amounting to at least 10% of the average wage.

In addition to the above amendments, a new Act on Safety and Health Protection at Work in Labour-Law Relations will become effective since January 1, 2007.

The new act newly sets forth requirements for safety and health protection at work (SHPW) not only in the area of labour-law relations but also for activities or provision of services outside labour-law relations. Persons who have not concluded a labour-law relation with the employer but who participate in activities in a certain manner (e.g. persons performing independent gainful activities or employers who are individual and him/herself work, individual or legal entities who/which are constructing entities or contractors or participate in completion of a construction) are included in the circle of persons to which the SHPW provisions apply.

The new act introduces an institute of a SHPW coordinator at building sites. A SHPW coordinator shall be qualified persons to be determined by the constructing entity – investor. Its task is to ensure safety and health protection during preparation and realization of the construction. The contractor shall be obliged to determine a coordinator in the event that employees of more than one contractor work simultaneously at the building site.