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Termination of Employment Contracts in Czech Republic

1. Grounds for Termination (List)

While an employee may give notice to the employer on any grounds or without stating the grounds, the employer in contrast may give notice to an employee based only on a number of specific grounds (employer´s notice of termination given without grounds or on the basis of different grounds will be void).

2. Collective Dismissals

A collective dismissal means ending of employment law relationships within a period of 30 calendar days based on notices given by the employer on the grounds of “organizational changes” set out in Sec. 52 par. a) to c) of the Labour Code in relation to at least

  1. 10 employees, for an employer employing from twenty to 100 employees;
  2. 10 per cent of the employees, for an employer employing from 101 to 300 employees; or,
  3. 30 employees, for an employer employing more than 300 employees.

Prior to giving notice to the individual employees, the employer is obliged to notify the trade union and council of employees of its intention in writing in due time.

The employer is also obliged to demonstrably deliver, to the regional branch of the Labour Office competent for the place of the employer’s business a written report on his/her decision on the collective dismissal and on the results of negotiations with the trade union / council of employees.

The employment relationship of an employee affected by collective dismissal terminates by notice not sooner than upon expiry of 30 consecutive days from delivery of the employer’s written report to the regional branch of the Labour Office unless the employee declares that he/she waives the extension of the employment law relationship.

3. Individual Dismissals

Dismissal must be given in writing, otherwise it shall not be considered. The employer must specify the relevant grounds in the notice so that they cannot be confused with any other grounds.

The Labour Code sets out certain exceptions, when the prohibition of giving notice does not apply.

In addition to standard notice Czech law provides for an exceptional way of ending the employment contract unilaterally by the employer, which is immediate termination. When terminating the employment contract immediately the employee is not entitled even to the standard 2-month termination period. As an exemption, the employer may terminate an employment relationship by immediate termination only if:

  1. the employee has been validly convicted of an intentional criminal offence and sentenced to imprisonment for a term exceeding one year, or if the employee has been validly convicted of an intentional criminal offence committed in the performance of working tasks or in direct relationship to the performance of working tasks and sentenced to imprisonment for a term of at least 6 months;
  2. if the employee has breached a duty arising out of the legal regulations applicable to the work performed by the employee in an especially gross manner.

The employer may not immediately terminate a pregnant employee, a female employee on maternity leave or a male or female employee on parental leave.

a. Is severance pay required?

The Labour Code provides for the payment of severance pay only if the employment terminates due to notice given by the employer on the grounds of “organizational changes” or due to an accident at work, occupational disease or threat of such a disease; or by agreement on the same grounds. The employee is entitled to a severance pay in the amount of at least:

  1. once his/her average earnings if his/her employment law relationship with the employer lasted less than 1 year;
  2. twice his/her average earnings if his/her employment law relationship with the employer lasted at least 1 year and less than 2 years;
  3. three times his/her average earnings if his/her employment law relationship with the employer lasted at least 2 years;

Employees whose employment relationship is terminated by notice given by the employer due to an accident at work, occupational disease or threat of such a disease, or by agreement on the same grounds, are entitled to a severance pay equal to at least twelve times the average earnings.

4. Separation Agreements

If the employer and employee agree on termination of the employment law relationship, the employment law relationship shall end on the agreed date. The agreement on termination of the employment law relationship must be made in writing. Each contracting party must obtain one counterpart of the agreement on termination of the employment law relationship.

a. Is a Separation Agreement required or considered best practice?

A separation agreement is not required, but is considered best practice as long as the employer and employee are able to find some acceptable way of mutual termination of the employment law relationship.

b. What are the standard provisions of a Separation Agreement?

Besides obligatory provisions such as clear indication of the parties and indication of the termination date the usual standard provisions are agreements related to severance pay; obligation of confidentiality not to disparage employer´s reputation even after the termination date; obligation to return all assets, data and other values to employer; agreement that, by signing the separation agreement, all rights and claims are fully settled.

c. Does the age of the employee make a difference?

No.

d. Are there additional provisions to consider?

Other provisions to be considered are namely the obligation of confidentiality, settlement of non-compete clause, obligation not to disparage employer´s reputation even after the termination date, obligation to return all the assets, data and other values back to employer, agreement that by signing the separation agreement all rights and claims are fully settled etc.

5. Remedies for employee seeking to challenge wrongful termination

Any dismissed employee may bring a legal action if he/she deems that his/her dismissal is void.

For more information, please contact L&E Global.
This information was contributed by Dominik Bruha Advokat.
This entry was posted in Termination of Employment Contracts on and modified on .