30.08.2012
Essential provisions of a Czech employment agreement
In accordance with section 34 of Labor Code the employment agreement must include the type of work which the employee will perform, the place or places of his work and the date on which the employee will start working.
1.1 Type of work
Description of the type of work to be performed must be specified in detail, description of the type of work as a “worker” or “employee” without further specification may result in invalidity of the agreement. It is possible to negotiate more than one type of work in one employment agreement. This is practical especially in small firms where the employer wishes to use the full qualification of his employee.
1.2 Place of work
It is always necessary to specify the place of the employee’s work. It must not be written in the agreement that the place of work is the Czech Republic, but according to the Czech courts, it might be a town (e. g. Prague), which is useful for the employer (relocations, delivery of documents, etc.). Any changes in the place of work may be made only with the consent of the employee.
1.3 Start of the employment relationship
The employment relationship starts at the day that is stated in the agreement even in the case that the employee does not start working at the specified day.
1.4 Other terms of the agreement
The employment contract may obtain other terms, in particular the salary, trial period, fixed-term employment relationship, etc. But these do not make the agreement invalid, if missing.
Types of employment agreements
The employment relationship may be established only by the employment agreement; in addition, the Czech Labor Code provides two other contracts which may be used for employing an employee.
2.1 Agreement on work performance (“dohoda o provedení práce”)
The scope of work for which an agreement on work performance is concluded, may not exceed 300 hours in a one calendar year. The said number of working hours shall also include those hours of work for which an employee carried out for the same employer in one calendar year based on another agreement on work performance.
2.2 Agreement on working activity (“dohoda o pracovní činnosti”)
An agreement on working activity may be concluded by an employer with an employee where the average scope of work does not exceed one-half on normal weekly working hours (40 hours). Observance of the agreed and maximum permissible amount of one-half of normal weekly working hours shall be assessed for the entire period for which an agreement on working activity was concluded. The agreement on working activity may be unilaterally terminated by stating any reason, or without stating it, with a 15-day termination notice period starting to run as of the day when the written notice is served on the other party.
2.3 Advantages
The relationship based on the agreement on working activity or work performance is much easier (faster) to be terminated than the employment relationship, for both sides – the employer and the employee.
The employer does not pay the social and health insurance on behalf of the employee if the salary is not higher than CZK 10,000 for the employee who works under the agreement on work performance, respectively CZK 2,500 for the employee who works under the agreement on working activity.
Termination of the employment relationship
A fixed-term employment relationship terminates on the expiry of the agreed period; note that the fixed-term employment relationship between the same parties may be agreed for a maximum period of three years in total.
3.1 Agreement
The employment relationship may be terminated by a written agreement between the employer and the employee. It will terminate on the agreed day. If the employee requests so, the agreement must obtain the reason of termination.
3.2 Notice of termination
The termination notice must be in writing and served to the other party. The employee may give his employer notice of termination for any reasons or without stating a reason.
The employer may give notice to an employee only for one of the reasons explicitly stated in the Labor Code (section 52): closing down or relocation of the employer’s company; the employee becomes redundant; the employee is not allowed or able to perform his current work due to health issues; the employee does not meet the prerequisites prescribed by statutory provisions for performance of the agreed work; the employee fails to fulfill the employer’s requirements and was notified in writing about this within the last 12 months; the employee seriously breached some duty; the employee repeatedly (but less seriously) breached some duty and had been notified in writing.
The notice period must be the same for both parties and shall be at least two months. It shall start to run on the first day of the calendar month following delivery of the notice and end upon the expiry of the last day of the relevant calendar month.
3.3 Immediate termination
The employer may immediately terminate an employment relationship only if an employee has been sentenced, under a final verdict, for a willful criminal offence to a term of unconditional imprisonment of over one year or if an employee has been sentenced for a willful criminal offence committed during performance of his working tasks to an unconditional imprisonment of no less than six months or if an employee has breached some duty, which ensues from the statutory provisions and relates to his work performance, in an especially gross manner.
The employee may immediately terminate his employment relationship only if he cannot perform his work any longer without a serious threat to his health and the employer has not transferred him to perform some suitable alternative work within 15 days of the submission of medical certificate. The employee may also immediately terminate his employment relationship if the employer has not paid this employee’s wage or salary within 15 days of the maturity day.
The employment relationship also may be immediately terminated for any reason within the trial period which may be agreed for up to 3 months.
Payments for employees
4.1 Minimum wage
The employer must provide to his employee the minimum wage in the amount of CZK 7,955 per month or CZK 48.10 per hour.
4.2 Insurance
Social and health insurance is 45 % (11 % is paid by the employee and the 34 % by the employer).
4.3 Severance pay
An employee whose employment relationship is terminated by a notice given by his employer for one of the reasons under section 52 (a) to (c) of the Labor Code or by agreement for the same reason (closing down/relocation of the firm/redundancy) is entitled to receive severance pay in the amount of at least once his average earnings if he worked for the employer more than 1 year, twice his average earnings if he worked for the employer more than 2 years and three times his average wage if he worked for the employer more than 3 years. If the employment relationship is terminated by a notice given by his employer for one of the reasons under section 52 (d) of the Labor Code or by agreement for the same reason (e. g. work injury), the employee is entitled to receive severance pay in the amount of at least twelve times his average earning.
Contact:
Monika Rutland, partner
rutland ježek, law firm
t: +420 226 236 600
About rutland ježek:
The rutland ježek law firm in Prague focuses mainly on business law, real estate law, litigation, finance and banking law; the firm is ready to provide adequate comprehensive consulting thus offering an alternative for clients of international law firms. The international dimension of the provided services is guaranteed by its track record and cooperation with leading law firms in most European countries, the USA and other jurisdictions. Czech lawyers of the rutland ježek team have long experience in providing legal consulting to transnational corporations, large Czech companies as well as medium size firms and individuals, acquired in leading international law and tax firms. More on www.rutlandjezek.com.
