Compulsory compensation of wage from the first day of illness

On 31 October 2018, the Chamber of Deputies passed in the third reading a bill of amendment to the Labour Code^[1], which is to abolish the so-called "retention period".

The "retention period" is to understand the period of the first three days of temporary disability to work (however such period cannot exceed first 24 working hours of the scheduled shift not attended by the employee) during which the employees are yet, pursuant to the current legislation, not entitled to wage or salary compensation.^[2] If the above mentioned bill is adopted, employers will be required to pay employees compensation for wage or salary from the first day of their temporary disability to work. The amount of this compensation is set by law at 60% of the average earnings of the employee.^[3]

Currently, the employees are entitled to wage compensation from the employer only for the period of the first 14 days of temporary disability to work (except for the abovementioned retention period). Should the temporary disability to work be longer than the above mentioned period, the employee is entitled only to sickness allowance on the basis of the employee’s participation in the sickness insurance scheme.^[4]

The above mentioned proposed amendment would not only apply to employees in accordance with Act No. 262/2006 Coll., The Labour Code, but also to members of the municipal and regional councils, members of the state security services, soldiers or civil servants, within the meaning of the Act on Civil Service^[5].

As a compensation for the increased costs of the employers, the bill proposes also a reduction in the rate of social security contribution paid for by the employer^[6] from the current rate of 25% of the assessment basis to 24.8 % of the assessment basis (that includes decrease in the rate of sickness insurance from current 2,3 % to 2,1 %).

In case the bill is approved in the current wording, it shall come into effect on July 1, 2019.

We will continue to monitor the legislative process as the bill has been recently referred to the Senate of the Parliament of the Czech Republic.

[1] Act No. 262/2006 Coll., The Labour Code, as amended

[2] Section 192 Paragraph 1 of Act No. 262/2006 Coll., Labour Code, as amended.

[3] Section 192 Paragraph 2 of Act No. 262/2006 Coll., Labour Code, as amended.

[4] Section 26 Paragraph 1 of Act No. 187/2007 Coll., On Sickness Insurance, as amended.

[5] Act No. 234/2014 Coll., On Civil Service, as amended

[6] Section 7 Paragraph 1 Point a) of Act No. 589/1992 Coll., on Social Security Contributions and Contribution to the State Employment Policy, as amended.