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TOP 10 case law decisions of 2021

  • Czech Republic

    14-01-2022

    Also in 2021, Constitutional Court rulings and the case law of the higher courts have significantly affected the interpretation of disputed situations regulating the mutual rights and obligations of employers and employees or have completely reversed the positions previously held by the courts.

    The employment law team at Eversheds Sutherland has selected the TOP 10 case law decisions of 2021 that your HR department should be aware of.

    1. The Constitutional Court has confirmed the inadmissibility of regional pay differences.

    The Constitutional Court has rejected the constitutional complaint of Czech Post and confirmed that employees with the same job across the Czech Republic must, in principle, also have the same pay. The Labour Code does not allow for socio-economic conditions and differences in cost of living among regions to be taken into account when setting the wage.

    Last year, the Supreme Court found that Czech Post had committed unequal treatment and acted contrary to the principle of fair remuneration and equal treatment when its employees in the same position performing work in Prague and Olomouc were paid differently, as according to the Labour Code all employees are entitled to the same wage for the same work for the same employer. The Labour Code exhaustively establishes as a comparative criterion for the concepts of "equal work" and "work of equal value" the complexity, responsibility and exertion of the work, the difficulty of the working conditions, the work performance and the results achieved. The law does not allow for external conditions and differences in the cost of living among regions to be considered. The Constitutional Court stated that it was not competent to make any changes to the law and that the aspects in question could be reflected in the Labour Code by means of an amendment. However, this is not currently planned, but the Constitutional Court has also indicated some possible solutions in the current legal situation.

    (According to the decision of the Constitutional Court ref. I. ÚS 2820/20 dated 1 August 2021)

    2. Can an external accountant act for an employer without a power of attorney in the matter of immediate termination of employment?

    In this decision, the Supreme Court addressed the issue of whether a payroll accountant was authorised to sign an immediate termination of employment without a power of attorney on behalf of the employer based on the statutory authorisation under Section 440 of the Civil Code.

    Under Section 440 of the Civil Code, an employer may be represented by persons who have been entrusted by the undertaking with a particular activity in the operation of its establishment, in all matters arising in the course of that activity. Here, however, the Supreme Court concluded that the personnel agenda was not part of the usual activities of a payroll accountant (as opposed to, say, an HR manager), much less the conclusion or termination of employment, and thus the payroll accountant was not authorised to sign the immediate termination at all. However, even in this case, the employer could still have preserved the validity of the immediate termination had it proceeded to approve it without undue delay after becoming aware of it.

    (According to the decision of the Supreme Court ref. 21 Cdo 2114/2019 dated 19 March 2021)

    3. The Constitutional Court's ground-breaking decision on the employer's withdrawal from a non-compete clause without cause.

    In this decision, the Constitutional Court addressed the question of whether an employer may still withdraw from a non-compete clause agreed with an employee during the employment without giving any reason, if it has agreed on such a course of action with the employee. In principle, it allowed this possibility, thus overcoming the Supreme Court's previous decisions.

    Under Section 310(4) of the Labour Code, the employer may only withdraw from a non-compete clause for the duration of the employee's employment. According to the previously settled case law of the Supreme Court, it was not possible to agree with the employee that the employer could withdraw from the non-compete clause during the term of the employment without giving any reason and it was always necessary to agree on very specific as well as fair reasons for such withdrawal. Such an interpretation, of course, often led to the conclusion that the withdrawal was invalid and the associated negative financial consequences for the employer. This practice has now been challenged by the Constitutional Court, according to which, in principle, it is possible to agree that the employer may resign even without stating a reason. However, in each individual case, the courts must determine (and the employee must prove) whether the withdrawal from the non-compete clause does not constitute arbitrariness or abuse of the right on the part of the employer. For example, the period during which the employer withdrew or whether the employer was aware of the field in which the employee had already found further employment will be relevant.

    (According to the decision of the Constitutional Court ref. II.ÚS 1889/19 dated 21 May 2021)

    4. The right to severance pay of 12 times average earnings in the event of termination of employment during the probationary period.

    The Supreme Court rejected a claim for severance pay of 12 times average earnings under Section 67(2) of the Labour Code for an employee whose employment was terminated during the probationary period because of an industrial accident. However, such a termination was discriminatory and therefore invalid, and such an employee could also have obtained statutory severance pay had they challenged the validity of the termination during the probationary period in time and the employer had subsequently had to terminate their employment by notice.

    The Labour Code ties the obligation to provide severance pay of (at least) 12 times average earnings to the termination of the employment by notice pursuant to Section 52(d) of the Labour Code or by agreement for the same reasons. An employee whose employment has been terminated by the employer during the probationary period for reasons for which the employment would have to be terminated by notice pursuant to Section 52(d) of the Labour Code or by agreement for the same reasons will not be entitled to severance payment of 12 times average earnings pursuant to Section 67(2) of the Labour Code.

    Where the employer purposely terminates an employee's employment during the probationary period solely because of the employee's health condition, the employee is protected by the institute of the prohibition of discrimination in employment, which is expressed in Section 16 of the Labour Code, breach of which is grounds for declaring the termination null and void. Thus, the employee has an effective tool to protect their interests in this situation as well. Through this tool, they can also obtain claims under Section 67(2) of the Labour Code, meaning there is no need for direct protection by adopting a "drastic" interpretation of that provision.

    (According to the decision of the Supreme Court ref. 21 Cdo 504/2021 dated 8 April 2021)

    5. Even a meal and rest break may be paid rest time in certain cases.

    The Constitutional Court found a violation of the fundamental right to fair remuneration for work in the case of the complainant, an airport employee, who was not awarded any remuneration by the ordinary courts for their constant and immediate readiness to work even during meal and rest breaks.

    The complainant's work as a firefighter-engineer required him to be constantly ready to work, i.e. to be present within three minutes even at the most remote point of the airport. The complainant was also required to perform this duty during scheduled meal and rest breaks, for which he was not paid. This practice of the employer was upheld by the general courts, on the grounds that the complainant was never actually called upon to work during the meal and rest breaks and that there was therefore no reason to reward the complainant for his constant readiness. The Constitutional Court found this approach to be a violation of the fundamental right to fair remuneration for work and justified its position in particular on the grounds that readiness to work, whether or not the work occurs, is performance of work consisting in "being alert" or being ready to work, for which the employee is entitled to fair remuneration. This also follows from the very nature of the right to fair remuneration, which is always due to the employee for the performance of dependent work in any employment relationship, and in the present case it is not remuneration for the work itself but for the readiness to work, as stated earlier. At the same time, the Constitutional Court held that unpaid rest periods can only be periods in which the employee can engage in discretionary activities and need not be at the employer's disposal. After all, the same view appears in the relevant case law of the CJEU, and if the Supreme Court wished to depart from that case law, it was obliged to refer a preliminary question to the Court, which it did not do.

    (According to the decision of the Constitutional Court ref. II. ÚS 1854/20 dated 18 October 2021)

    6. An employee may not be disadvantaged in the compensation of a work-related injury as a result of the application of special employment law.

    An employee suffered an injury in a car accident while on a business trip, which resulted in impairment of his social life. He proved before the ordinary courts that, if the injury had been assessed under general civil law, he would have been entitled to higher compensation than that awarded by the insurance company (and subsequently by the courts), which was based on the calculation of compensation for work injuries under Government Decree No. 276/2015 Coll.

    The employee found representation only before the Constitutional Court. According to the Court, the principles of equality and full compensation for interference with the integrity of a person in the event of injury to health require an interpretation of the Labour Code such that the employee receives at least the compensation that another victim would receive under civil law in similar circumstances. Thus, the general courts are not to apply the government regulation rigidly and are to determine the specific amount of compensation taking into account all the individual circumstances of the case in a manner similar to that in civil law. To do otherwise would, of course, also be contrary to the special protection expressly afforded to employees by the Labour Code.

    (According to the decision of the Constitutional Court ref. II.ÚS 2925/20 dated 15 November 2021)

    7. Termination of a pregnant employee's employment during the probationary period: is it possible and what to watch out for?

    It is also possible to terminate employment during the probationary period with a pregnant employee. However, the reason for termination must not be the pregnancy itself, but another genuine reason.

    If an employer terminates a probationary employment relationship solely on the grounds of the employee's pregnancy (whether explicitly or by disguising it with a different reason), this constitutes impermissible discrimination against her. The consequence of the discrimination is both the nullity of the termination and the possibility for the employee concerned to seek protection against such discrimination under the Anti-Discrimination Act.

    (According to the decision of the Supreme Court ref. 21 Cdo 2410/2020 dated 16 March 2021)

    8. The right to wage compensation for an obstacle to work on the part of the employer is, in principle, only granted to an employee who is medically fit for work.

    If, according to a medical opinion, the employee has lost the long-term ability to continue to perform their existing work without a change in the agreed type of work or without the employee being transferred to another job, they will not be entitled to wage compensation for an obstacle to work on the part of the employer.

    An obstacle to work on the part of the employer pursuant to Section 208 of the Labour Code, during which the employee is entitled to wage compensation, will occur only if the employer fails or is unable to fulfil the obligation to assign work to the employee pursuant to the employment contract, provided the employee is able and prepared to perform that work. However, if the employee has lost the medical capacity to perform the work, they do not meet that condition and will not be entitled to wage compensation.

    (According to the decision of the Supreme Court ref. 21 Cdo 1645/2020 dated 17 December 2020)

    9. Entitlement to holiday pay in the event of invalid termination of employment while litigation is pending.

    In this decision, the Constitutional Court, referring to European law, essentially "opened the door" to the employees' entitlement to leave also during the period when their employment was in litigation over the validity of their employment relationship and the employer therefore did not assign them any work.

    However, since the Supreme Court did not deal with this European case law and legislation at all and did not even refer the preliminary question to the Court of Justice of the EU (CJEU), the Constitutional Court annulled its decision (and the previous decisions of the general courts). It will now be up to the ordinary courts to properly revisit the Working Time Directive and the relevant CJEU case law on Article 7 thereof and, in accordance with their obligations to apply EU law, to correctly reflect it in the present case when considering this particular claim. Thus, although the Constitutional Court did not expressly uphold the entitlement to leave in this case, it did refer to the CJEU's case law on the European Working Time Directive, from which, in our view, such an entitlement can be inferred.

    (According to the decision of the Constitutional Court ref. II. ÚS 2522/19 dated 17 December 2020 in connecton with decisions of the CJEU dated 25 June 2020 ref. C-762/18 and C-37/19)

    10. Direct liability of the employee for damage caused to a third party is still normally excluded.

    In its decision, the Supreme Court addressed the question of whether an employee can be held directly personally liable for damage caused to a third party in the performance of their duties jointly with their employer, in light of the wording of Section 2914 of the Civil Code.

    In the context of the appeal proceedings, the court had to address the unclear wording of Section 2914 of the Civil Code, which deals with the obligation of an "auxiliary" person to compensate for damages used by another "principal" person for the performance of an activity. In contrast to the previous regulation (Section 420(2) of Act No. 40/1964 Coll., Civil Code), the new regulation does not contain wording that would expressly exclude the direct liability of such an auxiliary. Although the new regulation was inspired by a foreign concept aimed at strengthening the protection of the injured party, whereby they are able to claim compensation directly from both the principal and the auxiliary, this inspiration cannot prevail over the linguistic interpretation and the specifics of Czech law. The primary consideration must always be the degree of autonomy of the will of the auxiliary vis-à-vis the principal (the auxiliary may be considered an employee, but also a statutory body or an agent). In the present case, the basis is Section 2(2) of the Labour Code, which describes the relationship between the employee and the employer as one of subordination and superiority, where the work is performed on behalf of the employer and according to its instructions. If the employee does not deviate from the above-described relationship in the event of an injury, the first sentence of Section 2914 of the Civil Code must be interpreted as meaning that the employer is solely liable for the injury caused by the employee as if it had been caused by the employer, even if it was caused by the personal action of the employee whom it used to do so.

    (According to the decision of the Supreme Court ref. 25 Cdo 1029/2021-359 dated 26 October 2021)

    If you wish to contact our employment law specialists directly, please write to: radek.matous@eversheds-sutherland.cz

     

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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