Czech Republic - League of Lawyers

Capital: Prague
Largest city: Prague
Official Language: Czech
Government: Unitary parliamentary constitutional republic
Area: 78,866 km2
Population: 10.7 million
Currency: Czech Koruna (CZK)
GDP total: CZK9.056 trillion (USD432 billion)
GDP per capita: CZK850,825.97 (USD40,585)
Time zone: UTC+1/+2
Calling code: +420
Internet TLD: .cz
[Source: Wikipedia]

The number/participation rate of people in the workforce:
59.7% (Q1 2022)
59.8% (Q2 2022)

The general unemployment rates:
2.5% (Q1 2022)
2.4% (Q2 2022)
[Source: www.czso.cz]

Q&A on Employment Law

What are the laws and regulations governing employment, labour and industrial relations in the Czech Republic?
Labour law is regulated by many laws and other legal regulations, however, the essential are Act No. 262/2006 Coll., the Labour Code, as well as Act No. 435/2004 Coll. (the Employment Act) and the Labour Inspection Act No. 251/2005 Coll.
Which authorities and/or regulatory bodies enforce employment, labour and industrial relations laws and regulations in the Czech Republic?
Civil courts and case law play a crucial role in enforcement. Generally, courts tend to protect employees over employers.Furthermore, the State Labour Inspection Office inspects and enforces the correct application of labour law.
What are the main employment requirements under the employment laws and regulations in the Czech Republic that employers should be aware of?
The key elements are simple:
- no employment below 15 years of age or without fulfilling compulsory school attendance as a minor (exceptions e.g. in the field of advertising etc.)
- work safety – especially for minors, pregnant women and those in dangerous jobs
- employment contract – to be clear and predictable
- working hours – the standard is 40 hours/week (8 hrs, Monday to Friday)
- administrative duties – a specialised accountant (internal or external) is needed
What are some of the employment rights and benefits to which employees in the Czech Republic are entitled to by law?
Strong protection of employees:
- regulated dismissal – generally takes over 2 months and employees are usually entitled to extra wages
- 4 weeks of paid vacation (usually 5 weeks – one week as a benefit)
- detailed regulation of night shifts, working overtime, working hours etc.
What are the procedures and requirements to employ foreign persons and expatriates in the Czech Republic?
- EU citizens – not regulated: free movement of persons throughout the Union
- non-EU citizens – a work permit from the state is needed: certain administrative burdens and the permit is usually limited by time
What are the common reasons that employers rely on to terminate employment contracts?
Termination of employment is heavily regulated. Employers need to be careful in dismissal – legal advisors often assist.Typical situations of one-sided dismissal by the employer:
- redundancy (the position is no longer needed) – 2 months’ notice and up to 3 times wages severance payment
- critical breach of employee’s duties (“red card”) – In this case, the employer may apply notice with a notice period or immediate termination of employment, depending on the severity of the violation etc.
- lesser breach of employee’s duties (“yellow card”) – dismissal only in repetitive cases
Employment may also be terminated by agreement; the terms are then left to the parties.
How do employees terminate employment contracts? Are employees strictly required to fulfil the termination notice period (if any)?
One-sided termination by the employee usually requires 2 months’ notice. The employee does not have to state any reason for termination.
What employment dispute resolution forums are there in the Czech Republic and what are their respective jurisdictions/purpose?
Most cases are heard by the civil courts at the district level. Typically, courts decide whether there was a wrongful dismissal or not. Case law usually protects employees – it is important to terminate employment agreements properly.
What are the laws governing trade unions and collective agreements in the Czech Republic?
The primary laws are the Labour Code and Act no. 2/1991 Coll., on collective negotiations.
Must a trade union be registered in the Czech Republic? If yes, what is the procedure for it to be registered?
Yes, a trade union must be registered. The procedure is simple: (1) the trade union is set up when it agrees on its Articles of Association; (2) the trade union is fully operational after a registration form to a registration court is filed.
What are the key elements to be incorporated in a trade union agreement?
Collective agreements are entered into between employers and trade unions. They must be in writing and duly signed on a single document.Collective agreements regulate the employer-employee relationship; either at a lower level (usually one company) or at a higher level (an entire sector).

Collective agreements always have to be beneficial to employees. They can never impose duties or restrict the statutory rights of employees.
What trade union dispute resolution forums are there in the Czech Republic?
In this respect, a distinction needs to be made as to whether the dispute is about the conclusion of a collective agreement or a dispute about the implementation of a collective agreement, where the procedure will differ across forums. The Collective Bargaining Act provides for proceedings before a mediator, who does not seek an authoritative decision but rather offers a solution between the parties to the dispute, followed by proceedings before an arbitrator and in some cases before a court.
When an employee’s wages are unpaid by the employer, what legal options are available to the employee?
- Immediate termination of employment by the employee and typically severance payment of 2 times wages.
- Simplified enforcement through the “payment order” judgment.
- In insolvency/bankruptcy of the employer – the state partially covers unpaid wages.
What are the types of (active) termination of the employment in the Czech Republic?
- Termination agreement – between employee and employer; usually means less potential for litigation.
- Dismissal by the employer – immediate (in defined cases) or upon notice (usually 2 months); higher litigation potential.
- Termination by the employee – immediate (in defined cases) or upon notice (usually 2 months).
Subsequent litigation is usually initiated by an employee who claims wrongful dismissal.
What factors are taken into account when determining the types of dismissal cases in the Czech Republic?
Employees are strongly protected by the Labour Code. Courts check the whole termination process in detail. The following factors are often in question:
- due delivery of termination notice to the employee
- (un)lawful dismissal reason
- immediate dismissal versus prior notice
When an employee has been unfairly dismissed, what legal options are available to the employee?
First, immediate consultation with a legal advisor. Second, immediate communication with the employer to explain the employee’s position and to reach an out-of-court settlement. And potentially third, court litigation.
What is the limitation period imposed on employees to commence legal action against the employer?
Two months only.
When an employee decides to take legal action against the employer, what are the steps to observe and comply with?
The employee must notify the employer that he/she insists on further employment – without undue delay – despite the dismissal. A court action has to be filed within 2 months from the disputable termination date.
When taking legal action against the employer, can an employee represent himself?
Generally yes, at least at the lower court instances. However, legal advice and representation are strongly recommended.
What happens if an employee’s death takes place before the completion of the legal action filed by the employee?
The proceedings should continue with their heir(s).
Does the aggrieved party have a right to appeal against the decision? If yes, is there a limitation period to file for an appeal?
Yes, there is a right to appeal – from a district court to a regional court. An appeal must be lodged with the court against whose decision it is directed within 15 days of the receipt of the written copy of the decision.

ABOUT THE AUTHORS

Veronika Civínová
Lawyer, KLB Legal

Veronika graduated from the Faculty of Law, Charles University and also took the opportunity to study for a year at Sutherland School of Law, University College Dublin. She started her law practice in an international investment bank in 2012 and joined KLB Legal in 2015. Veronika focuses on financial markets and both their Czech and European regulation. On a long-term basis, she cooperates with leading Czech financial institutions. Furthermore, she is active in the area of issuing securities, including working on IPOs or prospectus and matters related to investment funds. Last but not least, she acts as a mentor in the area of compliance and money laundering prevention and is focused on FinTech and innovations in financial services.

Ondřej Kučera
Junior Lawyer, KLB Legal

Ondřej graduated from the Faculty of Law, Charles University in 2020. During his university studies, Ondřej spent one year in Grenoble, France, where he got a Diploma in French Law. He also completed several internships, in particular at the Ministry of Finance of the Czech Republic and in an international law firm affiliated with a consulting company. He joined KLB Legal in September 2020. Ondřej focuses mainly on capital markets law, corporate law and European law. On a long-term basis, he is active in the field of issuing securities, including composing prospectus, setting up alternative investment funds, anti-money laundering policy or mergers and acquisitions.

ABOUT THE FIRM

Name: KLB Legal
Address: Letenská 121/8, Malá Strana, 110 00, Praha 1, Czech Republic
Telephone: +420 739 013 183
Email: info@klblegal.cz
Website address: www.klblegal.cz
Key contact: Veronika Civínová, Lawyer, civinova@klblegal.cz
Established: 2013
Number of lawyers: 11
Languages: Czech, English, German

Brief description:

KLB Legal was founded in 2013 by attorneys-at-law David Kuboň, Vojtěch Láska and Petr Budzinski. David and Vojtěch have gained many years of experience working for international law firms and leading Czech investment banks; Petr was a top litigation attorney with experience in restructuring troubled companies. Since then, KLB Legal has grown into a medium-sized law firm providing comprehensive legal advice in all areas of law. In terms of the law of capital markets, compliance, securities, structured financing, investment funds, damages and class dispute settlement, we undoubtedly rank among the few top lawyers with such specialization and unique know-how in the Czech Republic.

Key practice areas:

Financial law, Capital Markets law, Corporate law, Damages, Injury Compensation, Litigations, General Civil law, Class Dispute Settlement, Insolvency law.