EXPLAINED: Why it might become easier for Czech companies to fire employees

A new draft law aims to give companies more leeway to control their workforce by cutting notice periods and dealing with underperforming employees.

Thomas Smith

Written by Thomas Smith Published on 08.04.2024 15:04:00 (updated on 12.04.2024) Reading time: 3 minutes

An upcoming change to the country’s Labor Code may shorten the notice period companies can give for dismissing an employee under traditional work contracts and sets about to make it easier for firms to dismiss so-called “problem employees.”

How do notice periods currently work?

If working under a classic work contract in Czechia – the hlavní pracovní poměr (HPP) – the notice period for terminating a contract is at least two months. The exception is if the employee is in their probationary (or trial) period, which can last a maximum of three months from the start of their employment. Then, an employee or employer can terminate the contract the day after they give notice.

One major factor in delivering a notice of employment termination is that it only takes effect on the first day of the calendar month after an employee or employer presents it. For example, if a company hands down a two-month notice period on March 10, it takes effect from April 1, and the employee will then work for a final two months – finishing their employment at the end of May.

How could notice periods change?

The Ministry of Labor wants to change the Labor Code to allow notice periods under HPP contracts to take effect from the day after they are delivered (either by employee or employer) rather than waiting until the first day of the following month. 

The government says it wants to give companies more control over their workforce and give employees more freedom in their job searches when leaving a company.

"This is a key adjustment for creating a modern, flexible, and sustainable labor market that integrates the interests and needs of employees and employers about the specifics of the changing labor market.”

Jakub Augusta, Labor Ministry spokesperson

Firing underperforming or ‘problem’ employees

According to the National Economic Council of the Government, “problem employees” – or employees with consistently poor performance – are “almost impossible” to fire in the Czech Republic unless they grossly violate work discipline.

To counter this, the Labor Ministry is discussing a plan to let companies dismiss employees with a one-month notice period due to “deficiencies in the employee's work or a breach of duty.”

Employers may not need a reason to fire you

Another way the Labor Ministry may give companies more power is by removing the need to provide a reason for an employee’s dismissal.

At present, employers must, by law, give a reason for the dismissal of an employee – this could be due to gross work performance issues, health-related problems, a company’s restructuring, and so on. This obligation can slow down and complicate the process of letting an employee go.

Under proposed new changes, an employer could fire an employee without providing grounds for the dismissal. 

Changes to severance pay

Although firms may have fewer barriers to dismissing employees by not needing to provide a reason to fire them, they would need to pay a price.

Under the new proposed rules, employees fired for no reason would be entitled to double the country’s current severance pay system. 

This means that fired employees working at a company for less than a year would get two average monthly salaries, employees working for between one and two years would get four monthly salaries, and those who had worked over two years would get six monthly payments. As is currently the case, dismissed employees would not be able to draw unemployment benefits from the government while receiving the severance payments. 

When could changes happen?

Minister of Labor Marian Jurečka pointed out earlier this year that expert working groups are currently discussing the draft amendment – the government has not yet set a date for when the Chamber of Deputies may vote on it, although this will likely happen in 2024. If passed, the amendment would be one of the biggest changes to the country’s Labor Code in recent history that would give more power to employers.

Expert comment

  • “If you think of the current employer-employee relationship in terms of balance scales, more weight has [in recent years] been added to the employee-protection side, but this has shifted the balance of flexibility.” - Vice president of the Union of Industry and Transport, Bohdan Wojnar
  • “Dismissal without providing a reason is allowed nowhere in the EU," Jana Maláčová, adviser to the Confederation of Trade Unions and former Minister of Labor for the Social Democrats in Novinky.cz
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