Changes of the labor code as of January 1, 2013

Severance pay

Pursuant to current legal regulation an employee is at termination of his/her employment relationship entitled to decide on whether the employment relationship will be terminated within respective notice period without severance pay or whether it will be terminated without notice period, i.e. immediately with right to severance pay.

A The Amendment introduces (again) to the Labor Code the concurrence of employee´s right to severance pay from the employer´s part at termination of the employment relationship by notice given by the employer on one hand, and respective notice period on the other hand. In order for the right to severance pay to emerge, the notice has to be given by the employer and due to one of the following reasons:

1. he employer or its part is wounded up;
2. the employer or its part is moved and the employee does not consent with change of the agreed place of work;
3. the employee becomes redundant based on a written decision of the employer;
4. according to a medical opinion the employee´s health condition has caused a long-term loss of the employee´s capacity to perform current work.

The amount of severance pay depends on duration of the employment relationship and the right to severance pay arises only if the employment relationship with the current employer lasted at least (2) two years prior its termination.

B The employee is entitled to severance pay also in case of termination of employment relationship by agreement, whilst, as regards the amount of severance pay, termination of the employment relationship by agreement is more convenient for the employee, as the amount of severance pay is higher. Moreover, contrary to termination of the employment relationship by notice, in case of termination by agreement, a term of the employment relationship of at least two (2) years is not required in order to constitute grounds for the employee´s right to severance pay. However, it needs to be noted that the above applies only if the employment relationship is terminated by agreement due to the same reasons which are required for the right to severance pay to arise when terminating employment relationship by notice (i.e. under a), b), c) and d) above).

Employment relationship for a definite period

Currently, an employment relationship for a definite period with the same employee can be prolonged or repeatedly agreed on for a definite period no more than three (3) times within a three (3) years period. The term of employment relationship for a definite period cannot exceed three (3) years.

The Amendment shortens both of the above possibilities: As of January 1, 2013 an employment relationship for a definite period may be concluded only for term of two (2) years and within two (2) year period such employment relationship may be prolonged or repeatedly agreed on only twice.

Night work and remuneration for overtime work

Compared to the current legal regulation the Amendment broadens the extent of night work from the current extent: from 10 p.m. till5 a.m. to new extent: from 10 p.m. till6 a.m. Remuneration for the night work remains unchanged, thus, besides the employee’s regular hourly salary the employee is also entitled to an extra pay amounting to at least 20% of the minimum hourly salary.

The extent of overtime work which can be ordered to the employee remains in the amount 150 hours per calendar year. The overtime work exceeding 150 hours per calendar year can only be agreed on between the employer and the employee, however, the total amount of overtime work may never exceed 400 hours per calendar year. The Amendment modified the term within which the employer is obliged to enable the employee to take the time off for overtime work performed, provided they agreed on time off for overtime work. Instead of the current 12 month period, pursuant to the Amendment the employer is obliged to enable the employee to take the time off within 4 months following the month in which the overtime work was performed. In the event that the parties do not agree on providing the employee with time off for the overtime work performed, the employee is entitled to his/her salary and extra pay amounting to at least 25% of his/her average salary instead.

Another change is brought about by the Amendment with respect to remuneration for overtime work. Pursuant to the current legal regulation a collective agreement may stipulate/define a group of employees with whom it is allowed to agree in their labor contract that remuneration for their prospective overtime work is already included in their salary. The Amendment revokes this option, as a result of which the employer shall be obliged to pay both salary and extra pay to each employee performing overtime work, with the exception of (i) official under direct management of the statutory body or member of the statutory body, (ii) official who is under direct management of such official under (i) above, (iii) employee performing conceptual, systemic, creative, methodical or commercial activities or (iv) employee managing, organizing or coordinating complex activities.

Dependent work

Compared to the current legal regulation the Amendment simplifies the definition of dependent work. Work subject to the Labor Code, together with all rights and obligations relating thereto, shall be any work of an employee performed for his/her employer in a subordinate relationship, according to the employer´s instructions and on behalf of the employer, during working time determined by the employer, for salary or other remuneration. Pursuant to the explanatory memorandum to the Amendment modification of the definition of dependent work purports to decrease the risk of evading employment relationship by compelling the employees to perform the same activities for their employer, which otherwise fall within the term dependent work, as entrepreneurs and not as employees. The Amendment specifies that dependent work cannot be performed in purely civil contractual relationship or commercial contractual relationship. In other words, if the employee´s work meets the criteria of the definition of dependent work, then such work can be performed exclusively in an employment relationship. Otherwise such a relationship may be considered as “veiled” employment relationship, and accordingly, the employee shall be entitled to claim protection of his/her employee´s rights under the Labor Code before a court.

Other changes

The Amendment invalidates right for the employer to incorporate into collective agreement a possibility enabling the employer to agree with the employee, in a labor contract, on a probation period of up to six (6) months or nine (9) months in case of officials. As of January 1, 2013 the probation period shall not exceed three (3) months or six (6) months in case of officials. On the other hand, the Amendment abolishes the current possibility to agree in a collective agreement that the probation period shall not be extended by obstacles to work on the employee´s part. In case that collective agreement includes provisions contrary to the above then such provisions shall as of effectiveness of the Amendment be held null and void.

Among other things the Amendment has also altered one notice ground on basis of which an employer is currently (i.e. prior to the effectiveness of the Amendment) entitled to give notice to an employee. Prior to effectiveness of the Amendment the employer was entitled to give the employee a notice of termination if the employer or its part is moving. However, the above notice ground shall become stricter and the mere fact that the employer is moving shall not suffice as legal ground for the employer´s notice, quite the contrary, the employee´s lack of consent with the above moving shall also be required. If the employee agrees with the change of his/her workplace then the employer may not give the employee a notice of termination merely due to employer´s moving.

Other changes of the Labor Code relate to agreements on work performed outside employment relationship. It is worth brief mentioning that as of January 1, 2013 an agreement on temporary student work may be concluded only with a high school or university student that has not reached 26 years of age. Until the Amendment conclusion of agreements on temporary student work has not been limited by age of the student. Further changes indirectly relating to the Amendment can be found in the amendment (the Act No. 252/20112 Coll.) of the Act No. 461/2003 Coll. on Social Insurance, which introduces new social insurance contribution duties relating to employees employed on basis of agreements on work performed outside employment relationship.