European Trade Union Institute, ETUI.

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Labour market reforms in Czechia: background summary

An amendment of the Labour Code was adopted by the right-leaning government headed by Civic Democrats in the context of economic crisis. The flexibility of the labour market has been considerably increased but the changes did not take into consideration the views of trade unions. The present social-democratic government aims at introducing new amendments to the labour-related legislation based on a consensus of the social partners.

Main reforms

  • A new Labour Code was adopted by the social-democratic government in 2006 as Act No. 262/2006 Coll., which came into effect in 2007. Its objective was to increase the level of flexibility and simultaneously to maintain elements of employee protection. It brought about several conceptual changes (Bělina et al. 2014; Šubrt 2006; Bukovjan and Chládková 2006):
  • The new Labour Code was based on a different principle than the previous one. Whereas the previous version allowed only what was explicitly stipulated by law, the new Labour Code has been based on the principle that what is not explicitly forbidden is allowed. Hence, it introduced a higher level of freedom in employment relations, although derogations from the rules should be always in favour of employees.
  • In the area of industrial relations it increased the power of trade unions (ETUI).
  • The negotiations concerning the new Labour Code were difficult due to a high level of politicisation. Employers refused to participate in negotiations as they opposed the amendment as a whole and it was thus prepared only in collaboration with the trade unions.
  • In 2008 the Constitutional Court cancelled several measures concerning the competences of trade unions as they were evaluated by experts as inappropriate. At same time, it enabled different kinds of employee representatives to operate simultaneously in an establishment (Bělina et al. 2014; ETUI).

Shortcomings of the new Labour Code called for a profound amendment only few years after its introduction. An important amendment to the Labour Code, called ‘conceptual’ was adopted in 2011. This amendment was motivated partly by austerity measures resulting from the economic crisis but also by the governmental programme declaration of the then right-leaning government, which aimed in particular at increasing the flexibility in employment relations (Bělina et al. 2014; Pravdová 2012; Chlada and Randlová 2012a; Chlada and Randlová 2012b; Šubrt 2011; Hůrka 2011):

  • Fixed-term employment has been facilitated by the possibility to conclude fixed-term contracts for a longer period and to renew them twice;
  • The scope of work under out-of-employment contracts has been extended. On the other hand, the obligation to pay social and health insurance has been introduced also for this type of contract starting from a certain level of pay;
  • The maximum trial period has been prolonged for executives for up to 6 months. On the other hand, the trial period for short-term fixed-term employees has been limited to one half of the duration of their employment contract.
  • The amount of severance pay now differs according to the length of employment with the employer;
  • Employee sharing was introduced between two employers (this does not involve employment agencies);
  • The employers have the possibility to give notice to an employee based on his/her infringement of the regime related to the temporary sickness leave;
  • Employers are enabled to agree higher wages with employees that include potential overtimes of up to 150 hours per year. The employee is then not entitled to supplementary overtime or time-off.
  • Bogus self-employment has been specified more exactly and identified as illegal work that is penalised.
  • The maximum daily working hours have been set for workers with regularly or unregularly scheduled working time and the compensatory period for flexible working hours has been prolonged from 4 to 26 weeks (in collective agreements it may be prolonged to 52 weeks).

The changes brought about by the amendment were generally welcomed by employers but in some cases it raised new legislative issues and problems (Pravdová 2012; Chlada and Randlová 2012b).

The new Civil Code that came into effect on 1 January 2014 resulted in several changes in the labour-related legislation. Among other things it introduced the following changes (Vysokajová 2013; Šubrt 2013; Bělina et al. 2014; Dandová 2013; MoLSA 2013):

  • Minors aged 15 years and over lost the possibility to sign an employment contract before completing the compulsory education. Moreover, the legal representative of a worker aged under 16 may cancel his/her employment relationship if it is necessary for his/her education, development or health.
  • In case that contractual provisions differ significantly from standard provisions in favour of the stronger party (usually the employer) or are illegible or incomprehensible for an average recipient, they  become invalid, unless there are special reasons for the existence of such a contractual provision and/or the contents of the provision are duly explained to the weaker party.

Recent reforms

The actual government headed by the Social Democrats has prepared several legislative amendments that are being negotiated:

  • A further extensive amendment of the Labour Code, which is supported by trade unions, is being prepared by the Ministry of Labour and Social Affairs. Its objective is to increase the level of flexibility of employment relationships but also the level of protection of employees in these relationships. The main proposed changes include establishing a body of top managers and chief executives with working-time autonomy, strengthening of democratic principles in cases of plurality of trade union organisations, improving rules for collective redundancies, increasing the level of protection of so called “out-of-employment workers” (contract of services), modifying the right to annual leave, more precise conditions for home-working, prevention of stress and harassment, etc. (see MoLSA 2016). Some of the issues have raised controversies among social partners. The proposal will be the subject of negotiations in the government and the parliament in 2016.
  • A so-called small amendment’ to the Civil Code should – among other things – remove the limits on employing 15 years old workers that were introduced by the new Civil Code in 2014. The proposal is being negotiated by the parliament and is supposed to come into effect in 2016.
  • The government aims at introducing stricter rules for agency employment. However, the initial proposal initiated by trade unions has already been revised due to strong criticism from employers, temporary-work agencies and several state bodies. It should be negotiated by the government and forwarded to the parliament in 2016.