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Labour Market

The Czech Republic has a skilled and educated labour force. The literacy rate is over 98%. Emplyoment law is contained in the Labour Code and numerous government orders. The maximum working week is 40 hours. The normal working week is Monday to Friday from 8:00 to 16:30, altough many companies start earlier.

The average retirement age is generally from 59 to 63 for women, depending on the number of children, and 63 for men.

Employment contracts

All employers are required to conclude an employment contract with their employees. If the employment contract is for longer than one month, it must be in writing. Employers must inform employees about their rights and duties as well as their salary resulting from the contract. The contract must describe the type of work, the day that the employee will start work, and the place where the work will be done. Probationary periods can not be longer than 3 months and must be agreed in writing.

The employment contract is valid for an indefinite period unless the duration is explicitly stated in the contract. A fixed term employment contract can be terminated or extended by up to 2 years by mutual agreement. This applies to any additional fixed term employment contract concluded between the same parties within this period. It does not apply to fixed term employment contracts concluded between employment agencies and their employees for the purpose of work to be carried out for another employer. Such an employment contract with an agency must be in writing.

Employees can be assigned to work for another employer for a maximum period of 12 months. This employer then organizes and controls the employee's work. An employee may have more than one employment relationship at the same time. The rights and duties ensuing from each are considered independently.

An employment contract which does not specify the period for which it is valid may be terminated as follows:

  • by agreement
  • by notice
  • by immediate cancellation
  • by cancellation during the probationary period.

Cancellation by agreement must be documented in writing. Either the company or the employee may cancel a contract by providing written notice. The employee is required to give a minimum of 2 months' notice, but need not state the reason.

When the employer terminates an employment contract, it must be for one of the following reasons:

  • the company (or a part of the company) is being dissolved or is ceasing to carry on business
  • the company (or a part of the company) is relocating
  • organizational changes
  • the employee is not able to work for long-term health reasons
  • the employee is not sufficiently qualified
  • due to serious breaches of discipline by the employee.

The notice period for the first three reasons is 3 months and for the last three reasons mentioned above 2 months.

Where an employment contract is terminated for any of the reasons (a) to (c) and the notice period is not worked, the employer is legally bound to pay the employee two times his average monthly salary in lieu of notice.

During the probationary period, the contract may be cancelled by either the company or by the employee for any reason. Cancellation must be in writing and delivered at least 3 days before the termination date.

Mass redundancy

In the case of mass redundancy, the employment contracts can be terminated by the employer only for the reasons stated above under letters a) to c). The three months' notice period commences on the first day of the month following the date on which the notice was served.

At least 30 days before the termination notices are issued, the employer must inform the union or work council in writing and conduct negotiations with them to mitigate the scope and effects of the redundancies. If there is no union or work council,the employer must take the same steps in relation to every affected employee. At the same time, the Employer must inform the local Labour Authority of the redundancies, in writing.

The Employer must submit to the Labour Authority a report on the final decision on the redundancies, containing the results of negotiations with the union or work council and the final number and structure of redundancies.

Specific termination conditions apply in respect of disabled persons, pregnant women and employees caring for minors, etc. Specific termination conditions, severance pay and other conditions may also be included in a collective agreement if one exists.

Compensation for redundancy is set by law at a minimum of two months' wages. In practise,the amount varies depending on the company, existence of collective agreements, etc.

Trade unions

Trade unions conduct collective bargaining at a national level. Trade unions, with representatives from employers and government officials, comprise the Tripartite Council, which meets annually to discuss labour issues. Work councils started to be formed after 1 January 2001 under new regulations based on EU Directive 94/45/EU.

Employment certification

The company has a duty to provide employment certification to an employee, or his new employer, upon completion of the employment contract. It must contain information regarding the duration of the employment, holiday and social/helath insurance claims, the employee's liabilities to the company, and a schedule of the employee's annual salary for the period of his employment.

Holiday and other absences

An employee is entitled to accrue holidays if the employment contract lasts for at least 60 continuous days during the calendar year. Where the contract lasts for less than a year, 1/12 of the annual holiday is accrued for each calendar month of continuous employment with the same employer.

The minimum holiday period for employees who work for employers carrying on business activities is 4 weeks per annum, if not increased by a collective bargaining agreement or internal regulations. Employees of employers who do not carry on business activities are entitled to 5 weeks per annum. Holiday pay is calculated on the basis of the employee's average monthly remuneration.

Social benefits

There are two major social security schemes to which both the employee and the employer contribute: social insurance and health insurance. Participation in the insurance plans is mandatory for all employees of Czech legal entities, or registered branches of foreign entities. Payments from the social insurance systém typically include:

- pensions
- cash benefits:

  • sick leave
  • benefit for a family member's health treatment
  • parent benefits
  • social benefits
  • pregnancy and maternity benefits.