TYPES OF EMPLOYMENT CONTRACTS IN THE CZECH REPUBLIC
Employment relationship in the Czech Republic is based on an employment contract. An employment contract must describe the type of work the employee will provide for the employer, place or places where the work will be performed and the date of the day when the employment begins. The contract must be executed in writing. The contract may be cancelled by the employer until the employee starts working in writing. The Czech law recognizes two types of full employment contracts:
Fixed-term employment contracts
The duration of the employment relationship based on fixed-term employment contract between same contracting parties cannot exceed three years from the day that the employment relationship began and can be repeated twice at most. However, if it has been more than three years since the last fixed-term contract has been concluded between the same contracting parties, such employment relationship is not taken into account. The fixed-term employment expires on the agreed date.
Indefinite duration employment contracts
Indefinite duration employment contract is established if the duration of the employment relationship has not been expressly agreed.
For both of the above described contract types a trial period employment is negotiable. The trial period employment cannot exceed a period of three months since the day when the employment relationship began or the period of six months for the position of a supervisor. It cannot be additionally extended, the only exceptions are all day lasting obstacles for which the employee is not able to work and all day lasting leave of absence. The trial period employment also cannot be negotiated for a period longer than half of the time of the employment relationship and has to be executed in writing.
The contract for indefinite period of time can be terminated by an agreement, termination, immediate cancellation or by cancellation in a trial period employment. If the employee and the employer make an agreement, the employment relationship ends on the agreed day. In the case of a termination, the employee may terminate his/hers contract for any reason or without justification, employer may terminate the contract only for reasons expressly set out in § 52 Act. Of the Labor Code.
When the notice of termination of the employment has been given, the employment relationship ends at the end of the notice period, which must be the same for the employee and the employer and must last for the period of at least two months. The notice period can be extended only based on the contract between the employer and the employee and must be executed in writing. (The notice period begins on the first day of the month following the month in which the termination of employment has been filed.) The only other way for the employer to terminate an employee is through so called reorganization when the employee’s position is officially cancelled.
The employer must pay social and health insurance on behalf of the employee. The insurance rates are 31,5 % from the assessment basis (6,5 % paid by the employee and 25 % paid by the employer) for the social insurance and 13,5 % from the assessment basis (4,5 % paid by the employee and 9 % paid by the employer) for the health insurance.
Apart from employment contracts there are also two types of agreements regarding work performed outside of the employment:
Agreement on work activity
Based on the agreement on work activity it is not possible to work for a period of time exceeding half of the weekly working hours. The maximum permissible extent of the working hours is assessed for the entire period that the agreement has been concluded for, however, for a maximum of 52 weeks. The agreement on work activity must contain those types of work and working hours that has been agreed upon and also the duration of the agreement. Employees are social and health insurance payers if their income exceeds 2 500 CZK per month.
Agreement on work performance
The extent of work stated in the agreement on work performance cannot exceed 300 hours per one calendar year. The duration of employment must be stated in the agreement. Employees are social and health insurance payers only if their income exceeds 10 000 CZK per month.
In both of the above described contract types the employer is not obliged to schedule the working hours and the contracts have to be executed in writing.
Unless a way of cancellation of under the above two agreements has been agreed, it is possible to cancel them by a termination given for any reason or without justification with a notice period of 15 days, beginning the day in which the termination has been delivered to the other contracting party or by an immediate cancellation (which is, however, possible only for the same reasons as immediate cancellation of an employment relationship). The cancellation must be executed in writing otherwise it will not be valid.
For more information please contact:
Monika Rutland, partner