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Czech Republic

Termination and Severance Policies

Learn about the legal processes for employee termination and severance in Czech Republic

Notice period

In the Czech Republic, the Labor Code Act No. 262/2006 Coll. (Labor Code) sets out the minimum notice periods required when an employer wishes to terminate an employment contract. The length of the notice period depends on factors such as the employee's length of service and any collective bargaining agreements in place.

Labor Code's Minimum Notice Periods

The Labor Code stipulates the minimum notice periods for employers, although longer notice periods can be agreed upon in employment contracts or collective bargaining agreements. The minimum notice periods are as follows:

  • For the Employee: If an employee wishes to resign, they must give two months' notice.
  • For the Employer:
    • If the employee has been in service for up to 1 year: One month's notice is required.
    • If the employee has been in service for over 1 year: Two months' notice is required.
    • If the employee has been in service for over 5 years: Three months' notice is required.

For instance, an employer must give at least three months' notice to terminate the employment of an employee who has been in service for over five years.

Collective Bargaining Agreements

Collective bargaining agreements, negotiated by trade unions, can override the minimum notice periods specified in the Labor Code. These agreements can sometimes set longer notice periods for certain industries or job categories.

Severance pay

In the Czech Republic, employees may be entitled to severance pay under certain circumstances upon termination of their employment contract. The Labor Code Act No. 262/2006 Coll. serves as the primary legal source governing severance pay.

Eligibility for Severance Pay

An employee's eligibility for severance pay depends on the reason for termination and their length of service. Here's a breakdown of the scenarios:

Termination by Employer Due to Redundancy or Restructuring

Employees are entitled to severance pay if the employer terminates their contract due to reasons not related to the employee's performance or misconduct. This includes situations like company restructuring, redundancy, or relocation. The amount of severance pay depends on the employee's length of service:

  • Up to 1 year of service: One month's average earnings.
  • Over 1 year but less than 2 years of service: Two months' average earnings.
  • Over 2 years of service: Three months' average earnings.

Termination Due to Employee's Reasons (Resignation)

In general, employees who resign from their positions are not entitled to severance pay.

Termination Due to Employer Breach

If the employer terminates the contract due to a breach on their part, the employee may be entitled to severance pay equivalent to up to three months' average earnings, subject to specific circumstances.

Important Exceptions

Employers are not required to pay severance pay if the termination is due to the employee's serious work-related misconduct.

Termination Due to Work Accident/Occupational Illness

If an employee is dismissed due to a work accident or occupational illness, they are entitled to a significantly higher severance pay – 12 times their average monthly earnings.

The legal framework surrounding severance pay in the Czech Republic can be intricate. For a thorough understanding of your specific situation and its relation to severance pay, it's advisable to consult with a legal professional.

Termination process

The termination of employment contracts in the Czech Republic adheres to regulations outlined in the Labor Code Act No. 262/2006 Coll. (hereafter referred to as the Labor Code). There are various methods and procedures involved in employee termination.

Methods of Termination

  • Termination with Notice: This is the most common method. Both the employer and employee have a legal obligation to provide written notice as per the Labor Code.
  • Termination by Mutual Consent: In this scenario, both parties agree to end the employment relationship amicably, with terms freely negotiated. No legal notice periods apply.
  • Termination Without Notice (Dismissal): This is applicable for severe breaches of contract by either party. The Labor Code specifies justifications for dismissal, such as gross misconduct by the employee or employer breach of contract. Notice periods are not required in cases of dismissal with cause.
  • Termination Due to Redundancy: This occurs when the employer needs to reduce workforce due to economic, technical, or organizational reasons.

Procedures for Termination with Notice

  1. Notice of Termination: A written notice needs to be provided by the party initiating termination. The notice should clearly state the termination date and adhere to the minimum notice period as mandated by the Labor Code.
  2. Right to be Heard: The employee has the right to be heard before a final termination decision, allowing them to present their case.

Additional Considerations

  • Employment Contracts and Collective Bargaining Agreements: These documents may establish specific termination procedures that could supersede or build upon the Labor Code's regulations. It's crucial to review these documents for any additional requirements.
  • Obligation to Pay Out Remaining Salary and Accrued Vacation: The employer is legally obligated to pay the employee their remaining salary and any accrued vacation days upon termination.

Employment law in the Czech Republic can be complex. This text provides a general overview. For a comprehensive understanding of the termination process in your specific situation, it's advisable to seek professional advice.

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