Czech Republic: Changes for employers in the context of the coronavirus crisis

In connection with on-going spread of the novel coronavirus COVID-19, most employers must decide what to do when they do not have enough work for their employees or cannot assign enough work due to official acts adopted to deal with the crisis. In this newsletter, we provide a brief overview of changes introduced by emergency legislation related to employment. The government concurrently passed two orders which are to provide the basis of an ”antivirus” employment protection programme to help companies deal with a loss of income and avoid dismissing their employees.

Any employer that is unable to assign its employees work equivalent to the number of contractually agreed working hours due to the current situation may exercise the following options:

1. Childcare benefit

The time period for payment of the childcare benefit has been prolonged for the entire duration of the emergency measure that closed schools. The age of the child for whom parents are entitled to the childcare benefit has been increased from the current threshold of younger than ten years of age to younger than 13 years of age. Parents are also now entitled to take more turns caring for their children while enjoying the childcare benefit.

2. Quarantine

An employee who is under an official quarantine order is entitled to wage compensation of 60% of his/her average income. Now, however, the employer is to be reimbursed by a state subsidy.

3. Working from home

Working from home is a suitable alternative for employees who are able to work remotely due to the nature of their contractual work. However, it is not permissible to unilaterally order an employee to work from home; an agreement signed by both parties is required. Such an agreement must include other conditions of the remote work, such as working hours, reporting of the work results and occupational health and safety. Employees who work from home are still entitled to their current salary.

4. Agreement to amend the employment contract

As a means of responding to the current situation, an employer may enter into an agreement with an employee to amend the employee’s current employment contract. The parties may temporarily agree on another job description for the employee or a reduction of his/her working hours. However, such agreement must be in writing (in the form of an amendment to the employment contract).

5. Failure to assign work due to impediments affecting the employer

If it is not possible to exercise any of the abovementioned options, an employer may classify the lack of work as an impediment to work on its part and pay the employee wage compensation in the amount set by law (see an overview below). The good news for employers is that, due to legislative developments in recent days, many employers will be entitled to a state subsidy which will substantially decrease their financial burden. Specifically, the following claims can be asserted:

• Employees of employers that have been ordered to close their business premises are entitled to wage compensation of 100% of their average income, and the state will reimburse the employers for 80% of the wage compensation paid;
• If an employer’s business operations are suspended due to a mandatory quarantine affecting at least 30% of its employees which, in turn, renders the other 70% of its employees incapable of continuing to work, such employees are entitled to wage compensations of 100% of their average income, and the state will reimburse the employer for 80% of the wage compensation paid;
• If an employer’s production is discontinued or decreased due to an interruption of the supply chain (idle time), its employees are entitled to wage compensation of 80% of their average income, and the state will reimburse the employer for 50% of the wage compensation paid;
• If employees do not have a full workload due to a temporary decrease in demand for goods and services, their employer may reduce the wage compensation in certain cases to as low as 60% (This requires an agreement with a labour union or - if there is no labour union - an internal regulation). In such case, the state will reimburse the employer for 50% of the wage compensation paid.