Czech Republic: Obstacles to work on the part of the employer in connection with the coronavirus

24 March 2020 | newsletters

Many employers currently find themselves in a precarious position, faced with deciding how to deal with the obstacles to work arising from the coronavirus crisis, irrespective of whether these obstacles are the result of government measures (total or partial restrictions on operations) or due to real operational reasons (difficulties in the supply of materials for production, drop in sales). The Labour Code does not take into account obstacles to work caused by the pandemic, and employers are thus faced with issues in the interpretation of the relevant provisions of the Labour Code. In the text below we will attempt to clarify the issue of obstacles on the part of the employer, at least in part.

Note: This post does not take into account businesses with working hours accounts. 

OBSTACLES TO WORK ON THE PART OF THE EMPLOYER

Downtime (Section 207 (a) of the Labour Code)

If employees are temporarily unable to work due to a reduction in the supply of raw materials or power, or for other operational reasons, this is known as downtime.

In such a case, the employer may transfer the employee to another task, and if the wage is lower for that task, the employer will be obliged to provide the employee with a wage supplement up to the amount of his/her average earnings.

If the employer does not transfer the employee to another task, the employee will be entitled to wage compensation to the amount of at least 80 % of their average earnings.

Downtime provisions will most often be applied by employers whose production requires the importing of a large number of component parts, e.g. from abroad.

Natural disaster (Section 207 (b) of the Labour Code)

Opinions are now also being voiced amongst the professional community that a coronavirus pandemic could be considered a natural event, even if this does not reflect the traditional understanding of its meaning.

If this interpretation were upheld by state administration bodies (or in courts), the employer would have the option to reduce wage compensation due to this obstacle to up to 60 % of average earnings if it did not transfer the employee to another task.

Other obstacles to work (Section 208 of the Labour Code)

In general, if an employer is unable to allocate work to an employee (and there is no reason for this to be defined as downtime or interruption of work due to adverse weather conditions or natural disaster), this is a so-called other obstacle to work on the part of the employer, for the duration of which the employee is entitled to wage compensation of 100 % of their average earnings.

On 12 March 2020, the Ministry of Labour and Social Affairs published an opinion on its website, from which it can be inferred that employers who have closed down or restricted a workplace for some time in connection with government measures should, in the current situation, proceed as if it were an obstacle on their part under Section 208 of the Labour Code and provide employees with wage compensation of 100 % of their average earnings (unless they are able to utilise their employees in other ways). It can be anticipated that, for many employers, such a procedure would be unacceptable after a certain period of time and could lead to even less desirable redundancies. 

On 18 March 2020, the State Labour Inspection Office issued an opinion confirming the aforementioned opinion of the Ministry of Labour and Social Affairs. At the same time, however, it admitted the application of the Labour Code on partial unemployment (see below) for other cases, i.e. if it is not an obstacle that has occurred as the result of government measures ordering them to close premises to the public, or restrict their operations, but nevertheless resulted in a fall in sales of their products or services, and a fall in sales and production, as a result of the situation that has occurred with these employers.

It should be noted that these opinions are not legally binding.

Partial unemployment (Section 209 of the Labour Code)

The wording of the Labour Code implies that so-called partial unemployment occurs when the employer is not able to allocate work to the employee within the weekly working hours due to a temporary restriction of sales of its products or a reduction in demand for services provided by it.

In such a case, wage compensation may be reduced to 60 % of the average earnings by agreement with the trade union and, if no trade union is active with the employer, on the basis of the employer's internal regulations.

There is considerable uncertainty around the interpretation of the term partial unemployment. According to an unofficial statement of an employee of the Ministry of Labour and Social Affairs, it is necessary for the employee to work at least a certain number of hours per week (e.g. instead of 40 hours per week, the employee works for only 10 hours per week). According to other opinions, the requirements for partial unemployment are met by working at least some weeks of the month. According to others, it is sufficient that at least one of the employees does "some" work. The ambiguous wording of the provision in question contributes to the inconsistent interpretation.

However, if the intention and purpose of this regulation is to seek to preserve as many jobs as possible, i.e. in order to avoid full unemployment for the workers concerned, the above views cannot be justified.

It remains to be hoped that in the near future another (although still legally non-binding) opinion of the Ministry of Labour and Social Affairs, one that offers a more comprehensive interpretation of the concept, i.e. that can also apply, for example, to cases in which the employer closes entire premises for a period in excess of a week, will be issued. We will have to wait for a legally binding interpretation – either in the framework of an amendment to the Labour Code, which would clarify the vague wording, or in the case law of the Supreme Court.

STATE AID

Contribution at a time of partial unemployment

Based on an agreement with the employer, the Labour Office may provide the employer with a contribution during a period of partial unemployment (pursuant to Section 115 of the Employment Act) in the event of both partial unemployment and natural disasters (here, though, natural disaster is defined as a natural phenomenon under the directly applicable EU regulation, which does not provide for a pandemic), provided that the following conditions are met for the conclusion of a contribution agreement:

 a) The employer may not allocate work equal to at least 20 % of the set weekly period;
 b) It will provide wage compensation in accordance with the Labour Code and, at the same time, will provide wage compensation of at least 70 % of average earnings since the conclusion of the contribution agreement with the Labour Office;
 c) In the contribution agreement, the employer undertakes not to terminate employment due to organisational changes during the period agreed with the employer for the provision of a contribution.

The amount of the contribution is 20 % of the employee's average earnings, but not more than 0.125 times the average wage in the national economy in the first to third quarters of the previous calendar year, i.e. CZK 4,178 (0.125 x CZK 33,429). The contribution agreement is subject to the prior consent of the government.

FLASH NEWS:

Upcoming antivirus employment protection programme

In the evening of 19 March 2020, the Ministry of Labour and Social Affairs introduced the Antivirus Employment Protection Programme, under which the state is to compensate employers through the Labour Office in the form of a contribution for full or partial wage compensation in the event of an obstacle on the part of the employee (quarantine order) or the employer (obstacle – closure of premises due to a government order to close) if it is shown that the obstacle at work was due to infection by COVID-19.

According to a press release, this contribution will be paid

 (i) in the case of the quarantining of employees, to the full amount of wage compensation (i.e. 60 % of the average assessment base), and
 (ii) in the event of impossibility to assign work to employees due to government emergency measures requiring the closure of premises, and the employer will pay compensation to the employee of 100 % of wages, the employer will receive a contribution equal to 80 % of paid (replacement) wages. It follows from the text of the press release that it appears to not deal with cases in which operation is merely restricted due to government regulation, for example.

The Programme is expected to cost CZK 1.2bln.

Changes to care benefit

At the same time, the Ministry of Labour and Social Affairs issued a press release according to which people will be able to receive care benefits (for further information on the care benefit, please see our newsletter of 16 March 2020) for the whole period of school closure, whereby the parents of children up to the age of 13 years (rather than the current 10 years) will now also be eligible to receive the benefit. However, the amendments must still be approved by Parliament in emergency proceedings and, after approval, the care benefits will be paid retroactively.

This article is part of our coronavirus-focused legal updates – visit our coronavirus infocorner to get more info!

Marie Gremillot

Attorney at Law

T: +42 225 996 529
m.gremillot@schoenherr.eu

Lenka Kubická

Associate

T: +420 225 996 500
l.kubicka@schoenherr.eu

legal service:

labour & employment

country:

czech republic