End of Employment in Czech Republic

End of Employment Procedures & Guidelines in Czech Republic

Termination procedure

At-will termination is not recognized in the Czech Republic. Instead, employers must have a valid and recognized reason to terminate an employee, which must be stated in writing, signed by the employer, delivered in person (preferably at the workplace), and respect the appropriate notice period. If it is not possible to deliver the notice in person at the workplace, the employer may deliver the notice wherever the employer finds the employee, or through a postal service provider, or by electronic means, if the employee has agreed to it (email, data box). The following are recognized termination reasons:

• Notice of termination by the employer
  • unilateral termination by the employer requires valid legal grounds as stipulated in the Labour Code, and a notice period of two months to be effective, as follows:
    • company dissolution
    • company relocation
    • re-organisational changes, such as the replacement of staff by more effective technical equipment or restructuring of the company, redundancy, and layoff
    • work accident, occupational disease or threat of an occupational disease that prevents the employee from performing work, or unsatisfactory medical fitness results
    • employee’s failing to fulfil the performance requirements, providing unsatisfactory results
• Mutual agreement between the employee and the employee in writing
• Gross misconduct, which leads to immediate termination
  • Employers may terminate employees, based on the legal grounds recognised by the Labour Code as long as
  • 1) the termination occurs within two months of the date the employer has found out about the gross misconduct, and
  • 2) the misconduct happens within a year.
  • The gross misconduct is defined as follows: if an employee has been sentenced, under a final verdict, for a wilful criminal offence to a term of unconditional imprisonment of over one year or if an employee has been sentenced, under a final verdict, for a wilful criminal offence committed during performance of his/her working tasks, or in direct connection therewith, to an unconditional imprisonment of no less than six months; if an employee has breached some obligation that arises from the statutory provisions and relates to his/her work performance in an especially gross manner.
  • If the employee is on maternity or paternity leave or pregnant, the employer cannot terminate the contract.
• During the probationary period
  • Employers and employees do not require a valid reason to terminate the employment during the probationary period. However, the employer must still present the employee with a notice of termination without listing the reason. The contract is terminated on the day the notice is delivered, but it can also be set out for a future date within the probationary period.
• Employee resignation
  • Unilateral termination by the employee, which does not require to specify the reason for resignation, but it still requires to be done in writing and to respect the two-month notice period
• Death of the employee
• Expiration of the fixed-term contract
  • The natural end of the course of the employment, as specified in the contract, once the contract time has elapsed

Employment termination doesn’t require any special approval, except in cases involving members of a trade union, which requires the approval of the trade union first. Terminations that don’t follow the correct procedure are considered invalid. Employers may withdraw the termination with the employee’s consent, which must be done in writing (the consent to withdraw the notice must also be in writing).

Upon termination, employers must de-register employees with the Social Security Administration and the Health Insurance company within eight days. Employees must receive their final pay on the nearest agreed payment date following the end of employment. Companies that do not follow the correct termination procedure may be brought to court by the dismissed employee within two months of the last day of work. If the courts rule that a company is guilty of wrongful termination, the termination may be overturned and the employee reinstated, with compensation for salary.

In the event that the court finds that the employment relationship has been terminated invalidly, the employer would have to pay the employee compensation for the period from the date of invalid termination of employment until the court’s decision on invalidity. In addition, following the decision on the invalidity of the dismissal, the employer would be obliged to reassign the employee and integrate them back into the workforce, in which case the employment relationship could be terminated again only under the same conditions as at present. Further, the employer would also pay the costs of the civil proceedings.

Disciplinary procedure

If a company wants to terminate an employee who underperforms, they must first notify the employee about their unsatisfactory work result and give them a chance to improve their performance. If the employee underperforms again within 12 months of the disciplinary notice, the employer has a valid ground to terminate the employment.

Disciplinary procedure can also be applied by companies in case of systematic misconducts that do not give rise to immediate termination because they are not extremely serious. In such situations, companies can notify the employee in writing of the possibility of having their contract terminated if the employee breaches their work duty at least three times within six months.

Resignation

Employees can unilaterally terminate their employment for any reason, which does not need to be disclosed to their employer. The resignation must still be in writing and respect the appropriate notice period in order to be valid.

Notice period

In case of employment termination or resignation, employers and employees must respect the notice period of two months, which can be extended if agreed to in writing by both parties. Notice periods start on the first day of the month following the delivery of the notice and end on the last day of the relevant calendar month. The notice period must be the same for both employers and employees.

Pay in lieu of serving the notice period is not allowed, but garden leave is a common alternative.

Dismissal without notice is applicable only in situations involving a gross misconduct or criminal offence by the employee. On the other hand, employees do not have to give notice in case of health restrictions (which requires having a medical certificate stating that work poses a serious threat to the employee’s health), or if the employer has outstanding wage payments that are more than 15 days overdue.

Redundancy

Redundancy is applicable when one or more employees are terminated because the company is being liquidated, relocated or because the employee’s role becomes redundant as a result of the company’s restructuring or re-organisation.

Employees made redundant are entitled to severance pay based on the length of employment:

• less than one year of employment: one month’s average salary
• between one to two years of employment: two months’ average salary
• more than two months of employment: three months’ average salary

Employees who suffer a work accident, an occupational disease, or the threat of an occupational disease can also be dismissed based on redundancy, but such employees are entitled to a statutory redundancy pay of at least 12 times the employee’s average monthly salary. Severance pay is paid out by the employer on the nearest agreed payment date and is free of social and health insurance contributions. (Contributions are paid only if the severance pay was agreed on for a reason other than stipulated by the Labour Code.)

Before serving the notice of termination due to redundancy, the employer must adopt a decision on organisational changes and consult employee representatives on the notice. The notice must then be served so that the notice period ends on the effective date of the organisational changes. If the organisational changes take effect before the notice period ends, employees affected by the changes must be sent on garden leave and paid average earnings until the end of the notice period.

In the case of collective redundancies, employers must inform and consult employee representatives (or individual employees if there are no representatives) of the proposed collective dismissals at the latest 30 days before any notices of termination are given. Employers must also notify the Labour Office in writing of the collective redundancy, both 30 days before giving notices (initial report) and after a final decision on collective redundancies has been made (final report). Employment may be terminated by notice not earlier than 30 days after the final report has been delivered to the Labour Office.

Employee termination protection

Employees are protected from having their employment contract terminated during the following periods:

• pregnant or on maternity leave
• on paternity or parental leave
• temporarily medically unfit for work (sick leave)
• released to perform a public office or a military exercise duty
• working-at-night employee temporarily unfit for night work
• caring for a child under the age of 10 or an ill member of the household

If an employee has been given notice before the start of the protection period so that the notice period should expire within the protection period, this protection period shall not be included in the notice period; the employment relationship shall terminate only upon the expiry of the remaining part of the notice period after the end of the protection period except when the employee informs their employer that they will not insist upon prolongation of their employment relationship.

The only exception is in situations where the company is shutting down, relocating, or transferring the employee, or the employee commits a gross misconduct, unless it concerns a pregnant female employee, a female employee on maternity leave, or a male or female employee on parental leave.

Unemployment funds

Individuals who are dismissed from work and are seeking a new job are entitled to unemployment benefits from the social security authorities if they have made Social Security contributions for the last two years. Regardless of the reason for the employment termination, individuals younger than 50 years of age are entitled to up to five months of unemployment benefits.

The unemployment benefits pay schedule is as follows:

• 1st two months: 65% of the previous average monthly salary, with a cap at 58% of the average national monthly salary
• Following two months: 50% of the national average monthly salary, with a cap at 58%
• Rest of the period: 45% of the national average monthly salary, with a cap at 58%

The benefits amount is set at 45% for the entire period if the individual voluntarily and without a serious reason leaves their job, or if the termination is mutually agreed on by both the employer and the employee.The benefit is extended to individuals older than 50 years of age. Those aged 50 to 55 are entitled to 8 months of unemployment benefits, and those over the age of 55 are entitled to 11 months.