European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
115, 120 a) too 120 f) of the Employment Act, 209 of the Labour Code (paragraph 1)
The amendment to the Act no. 435/2004 Coll., on Employment, in force since 1 October 2015, aims at helping employers to retain existing employees in the event of adverse economic developments.
This includes situations in which the employer is unable to provide an employee with work within the scope of weekly working hours either due to a temporary drop in sales of the employer's products or drop in demand for services rendered by the employer ('partial unemployment', also referred to as 'short-time working' or 'temporary layoffs'; in Czech 'částečná nezaměstnanost') , or due to adverse weather conditions or natural disasters.
The Employment Act establishes that if the company is unable to provide work for employees for more than 20% of the weekly working time, it should give employees a wage compensation amounting to at least 70% of their original monthly wage according to the employment contract. The employer is entitled to ask for so the called 'Contribution at time of partial unemployment' (in Czech: 'Příspěvek v době částečné nezaměstnanosti'). The above-mentioned wage compensation is also determined by agreement with the trade union or, in case a trade union does not operate, the agreement may be replaced by internal regulation. Compensation can be provided for a maximum period of six months with the possibility of extension for the same duration.
The employer and the labour office agree on the amount of the contribution, which has to be later approved by the government. The amount of the contribution according to the act is 20% of the average salary per employee, but not more than 0.125 times the average wage in the national economy in the first to third quarters of the calendar year which was preceding the year of contract conclusion.
In conclusion, this means that an employer should pay his employees at least 70% of their average monthly earning, of which 50% is paid by employer himself and 20% by the labour office. An employee cannot be dismissed while receiving the allowance.
The above-described section 115, the Act no. 435/2004 Coll., on Employment, according to which the so-called allowance was provided during the period of partial unemployment, was canceled from 1.7.2021 and replaced by sections 120 a) to 120 f), according to which the allowance was provided during the period of partial work, the so-called Kurzarbeit. The condition is that the employees of the employer applying for the allowance must work at least 20% of their working hours in total. The amount of the contribution is 80% of the paid wage compensation, including mandatory contributions. The maximum amount of the allowance is newly capped at 1.5 times the average wage in the national economy for the first to third quarter of the calendar year preceding the calendar year. The contribution is provided to the employer by the Labor Office on the basis of an application. The provision of the contribution is determined by the government after a tripartite discussion in the event that the economy of the Czech Republic or its sector is seriously threatened for economic reasons, or due to the occurrence of a natural event or epidemic, cyber attack or other extraordinary situation that is an intervention of force majeure.
Response to COVID-19
In the framework of the 'Antivirus employment retention programme' (Antivirus - podpora zaměstnanosti) the government compensates employers' wage costs from 12 March to 31 August 2020:
Since January 2011, the Labour Office of the Czech Republic has not updated statistics on applications for the previous years because of the improving conditions of the economy, which entailed a decreasing need for this measure. The Labour Office of the Czech Republic started to collect these statistics for the years 2009 and 2010 only. According to labour office of the Czech Republic and Ministry of Labour and Social Affairs (MoLSa) data, in 2010 the number of applications was 850, and 36,999 employees received reduced wages. However, in 2009 a total of 2,733 applications were sent by employers to the labour office and 149,275 employees received reduced wage.
Prior to 2009, the use of this measure was minimal (no mention can be found in ministerial reports for 2007 and 2008). Since December 2008, however, there has been a high level of interest in partial unemployment schemes.
Eurofound (2015), Czechia: Working time flexibility, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/working-time-flexibility/czechia
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