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Employment conditions in Czech Republic

Terms & Conditions of Employment in Czech Republic

Non-competition clause

Non-competition clauses are valid and regulated by the Labour Code in the Czech Republic only if adherence to them can be justly required from the employee with regard to the nature of information, knowledge, and operational and technological know-how that the employee acquired during the employment relationship — i.e., this applies to managerial and key employees only. Employers can impose in writing a non-competition clause that prevents employees from engaging in a gainful activity in a similar industry for a certain period after termination of employment. Non-competition clauses are valid for a maximum of one year from the end of employment, and employees are entitled to employer-provided compensation of at least half of the employee’s average monthly salary for each month of adhering to the clause.

Employees may engage in a gainful activity similar to the business activities of the employer during employment only with the company’s prior written approval. The employer may withdraw from a non-compete agreement only during the existence of the employment relationship. The employee may terminate the non-compete agreement if the employer fails them with compensation within 15 days of its due date. In that case, the agreement ceases to be valid on the first day of the calendar month following the delivery of the notice.

A penalty can be applied in case an employee breaches the non-competition clause. The amount of the contractual penalty must be reasonable in connection with the conditions of the non-competition clause. Generally, the penalty will be considered reasonable where it equals a maximum of the amount of the total remuneration paid for not competing multiplied by two.

Severance pay

Employees are entitled to severance pay in situations where the company is being liquidated or relocated, or because the employee’s role becomes redundant as a result of the company’s re-organisation.

Severance pay is based on the length of employment. Employees with less than one year of employment are entitled to one month’s average salary; those with one to two years of employment are entitled to two months; those with more than two years of employment are entitled to three months.

Employees who suffer a work accident, get an occupational disease, or are exposed to the threat of an occupational disease are also entitled to severance pay. The pay must be at least 12 times the employee’s average month salary. Severance pay is paid out by the employer on the nearest agreed payment date and doesn’t include any social and health insurance contribution.

Intellectual Property

While companies have the economic rights to their employees’ work created during employment, employees retain personal rights to their creations. It is, however, presumed that the employee has given their consent to the work being altered, made public, or marketed under the employer’s name. It is recommended to include consent in the employment contract so that it cannot be challenged by the employee.

Employees are entitled to additional remuneration in situations where the salary paid to the employee responsible for the creation is obviously disproportionate to the profit gained from using rights to the employee’s work.

In the case of inventions, if an inventor has made an invention as part of their work deriving from an employment relationship, the right to the patent passes to the employer. The employee must notify the employer and hand over the relevant documents to the employer, and the employer then has three months to exercise their right to the patent. Where the employer does not claim the right to the patent, the right reverts to the inventor. Any inventor who has made an invention under an employment relationship is entitled, where the employer claims the right to the patent, to appropriate remuneration from the employer for that patent right.

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