Labour relations in the Czech Republic

Labour relations in the Czech Republic are mainly regulated by the Labour Code (Act No. 262/2006 Coll., as amended). This Act covers a wide range of employment-related issues, including rights and obligations of employees and employers, labour protection, conditions of remuneration, working hours and holidays.

Basic aspects of labour relations:

Employees and contracts of employment:
- Employees are required to enter into a written contract of employment, which must clearly define:
  - Type of job (e.g., position or duties).
  - Place of work (e.g., city or specific workplace).
  - Commencement Date.
- Additionally, terms and conditions may be specified relating to:
  - Salaries: base salary and any variable payments such as bonuses, bonuses and allowances.
  - Benefits, including paid holiday entitlement.
  - Working hours: number of working hours per week, possible schedule changes.
  - Overtime work and the procedure for its payment.
  - Travel expenses and other travel reimbursements.
Implied conditions:
- Many terms and conditions of employment are implied and apply regardless of their existence in the contract of employment:
  - Extra pay for overtime or night shifts.
  - Probationary period: may not exceed three months, and for executive employees – six months.
  - Notice of dismissal: minimum notice periods are provided.
  - Information from the employer: the employer is obliged to provide the employee with important information about the company and his/her job duties.
Collective bargaining agreements:
- A number of industries have collective bargaining agreements that may provide employees with additional rights and benefits compared to individual labour contracts.
- Collective agreements can be concluded at the company level or be binding for entire industries.
Working hours and holidays:
- The normal working week is usually 40 hours, with the possibility of overtime for which appropriate allowances are paid.
- Employees are entitled to at least 4 weeks of holiday per year, but some collective agreements may provide for longer holidays.
- Holidays and fringe benefits on weekends and public holidays are regulated by law.

Special forms of employment contracts:

Part-time employment:
- The Labour Code allows flexible forms of employment for employees working no more than 20 hours per week. Such workers may be dismissed without explanation and without severance pay.
Working with limited volume:
- This is a special form of employment relationship used for temporary or part-time work contracts. Employees under such conditions have limited rights compared to those working under standard employment contracts.

Legal regulation of foreign workers:

Foreign nationals working in the Czech Republic on the basis of employment contracts concluded with Czech companies are subject to Czech law, including the Labour Code.
If a foreign employee works in the Czech Republic on a temporary assignment, he or she is subject to the mandatory rules of local law, even if the contract is concluded in accordance with foreign law.

Dismissal and severance pay:

An employee may be dismissed only for legitimate reasons provided for in the Labour Code, such as reorganisation, liquidation of the workplace, serious breaches of discipline or inability to perform the job.
The notice period for dismissal is at least two months, unless otherwise stipulated in a contract or collective agreement.
In the event of dismissal, an employee may be entitled to severance pay, the amount of which depends on the reason for dismissal and the length of employment with the company.

Thus, the Czech Labour Code provides a high degree of protection of employees’ rights and regulates in detail the relationship between employers and employees, including terms and conditions of remuneration, social benefits and protection in case of dismissal.

Work permits and residence permits in the Czech Republic

In the Czech Republic, work permits and residence permits are regulated by several laws, and the application process may vary depending on citizenship, length of stay and nature of employment.

Principles of free movement

The principle of free movement of labour applies to citizens of the European Economic Area (EEA) and Switzerland and their relatives. This means that citizens of these countries can live and work in the Czech Republic without the need to obtain work permits. The only condition is the possession of a valid travel document or identity card.

Third-country nationals

For third-country nationals (i.e. non-EU/EEA countries) who do not have permanent residence in the Czech Republic, a work card is required. Exceptions may apply for certain categories of workers (e.g. highly qualified specialists), which may speed up the application process.

Worksheet

A work card is a long-term residence permit for the purpose of work that is valid for more than three months. It combines a residence permit and a work permit in one document. A work card is issued to a foreign national who intends to work in a specific position and grants the following rights:

Accommodation in the Czech Republic.
Employment in the position for which the work card was issued.
Possibility to change employer or place of work with the permission of the Ministry of Interior.

The work card is issued for the duration of the employment relationship, but for a maximum of two years, with the possibility of extension.

Submission process and deadlines

The process begins with a mandatory labour market test, which determines whether there are suitable candidates for the position among Czech citizens or residents.
The processing time for a labour card application is up to 60 days (or 90 days in complex cases). The whole process, including labour market testing, usually takes about five months.

Termination and redundancy

For companies with more than 500 employees, employees may appoint one-third of the members of the supervisory board in joint stock companies (JSCs). This right does not exist in smaller joint stock companies and limited liability companies (LLCs).

In all companies, employees have the right to participate in counselling sessions on issues:

Employer Economic Development.
Structural changes and measures affecting employment (e.g. mass redundancies).
Working conditions and their changes.

If the company has a trade union, the employer must consult with the union before dismissing an employee, especially in the case of disciplinary dismissal.

Peculiarities of obtaining permits for third-country nationals

The procedure for obtaining a work card may require considerable administrative effort, including preparation of documents and liaising with Czech authorities.

Dismissal of an employee in the Czech Republic

In the Czech Republic, the dismissal of an employee is governed by the Labour Code and other regulations that provide a certain degree of protection for employees. The main provisions relating to dismissal include strict grounds for termination of employment, minimum notice periods and severance pay requirements.

Grounds for dismissal

An employer may only dismiss an employee for the following reasons:

Closure of a business or part of a business.
Relocation of the company (or part of it).
Organisational change (e.g. reorganisation, change in technology, downsizing to improve efficiency).
Inability to perform labour duties due to health reasons (occupational disease or industrial injury).
Failure to meet the requirements of the job, or failure to comply with established statutory or internal employer requirements.
Violation of labour discipline (gross or repeated less gross violation).
Breach of duty during illness (e.g. breach of hospital conditions).

Dismissal procedure

Notice period: The minimum notice period is two months. This period starts to run from the first day of the next calendar month after delivery of the written notice. The notice period may be extended by agreement of the parties.
Dismissal without notice: Possible in cases of gross misconduct (e.g. theft, embezzlement, alcohol abuse at work, physical abuse). In such cases, dismissal may take place immediately without two months’ notice.
Severance Pay: Depending on the reason for dismissal, employees may be entitled to severance pay:
- In the event of redundancy or closure of a company, the allowance is paid up to three average monthly salaries depending on the length of service.
- If the dismissal is due to a medical condition (e.g. occupational illness), the employee is entitled to severance pay in the amount of 12 monthly salaries.

Protective periods

Dismissal cannot be carried out during so-called protective periods, for example:

During an employee’s illness.
During pregnancy or maternity leave.

Mass layoffs

Mass dismissals are regulated by both national laws and the EU Collective Dismissals Directive (98/59/EC). The definition of mass dismissal depends on the size of the company:

In companies with 20-100 employees, a mass layoff of 10 or more employees is considered a mass layoff.
In companies with 101-300 employees, a mass layoff of 10 per cent of the workforce is a mass layoff.
In companies with more than 301 employees, a mass layoff is the termination of 30 or more employees.

Procedural requirements for mass redundancies

The employer must inform the employees’ representatives (trade union or employees’ council) and hold consultations at least 30 days before notifying the employees. If there is no representative, the employees must be consulted directly.
The employer is also required to notify the labour bureau (a government agency) of a planned mass layoff 30 days before the first notice is issued to employees.

It should be noted that neither employee representatives nor public authorities can block a dismissal, but they must be informed and can offer advice.

The dismissal procedure in the Czech Republic is strictly regulated and aims to protect the interests of employees by providing them with guarantees of a fair and transparent process.