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Novelization of the Czech Employment Act 2017 – part one

Novelization of the Czech Employment Act 2017 – part one

This article is devoted to the novelization of the Czech Employment Act, i.e. the Act No. 206/2017 Coll., by which the Act No. 435/2004 Coll., the Employment Act („the EA“), is amended, and which became effective in the Czech Republic as of 29th July 2017.

The most important changes, introduced by the new law, relate especially to following areas:

  1. regulation of conditions of so-called agency employment by employment agencies;
  2. mandatory employment of disabled persons via so-called substitute performance;
  3. performance of so-called non-conflicting employment;
  4. protection of employee‘s privacy.

In part one of this article, we focus on changes in the area of so-called agency employment.

I. AGENCY EMPLOYMENT

Aims of the new legislation:

  • a stricter regulation of the agency employment market with the aim to reinforce the position of the employment agencies that perform their activities in compliance with the law, and on the contrary to eliminate activities of those employment agencies that violate the legal regulation, as well as the limitation of agency employment without any valid authorisation (so-called covered agency employment);
  • tightening of conditions for obtaining an agency employment licence pursuant to Section 14 (1) (b) EA, i.e. licence to employ individuals for further employment by another legal entity or an individual (employer), who then assigns the work and supervises its performance, and implementation of new sanctions in case of a breach of the statutory duties;
  • reinforcement of the position of the temporarily assigned employees with the aim to secure that the working and salary conditions of such employees may not be worse than those of similar level employees of the employer to whom they are temporarily assigned.

Stricter rules for granting an agency employment licence

Each applicant who applies for the agency employment licence under the Section 14 (1) (b) EA is newly obliged to prove its financial capacity by paying a statutory security deposit in the amount of CZK 500,000.

The existing licenced employment agencies are obliged to pay the above mentioned security deposit within the period of 3 months from the effective date of the novelization, i.e. by 29.10.2017, otherwise their licence will expire.

The licence will be still granted by the General Directorate of the Labour Office (the „GDLO“) on the basis of an application. Nevertheless, the new legislation does not any more distinguish among (i) the permit to agency employment within the territory of the Czech Republic, (ii) the permit to agency employment for foreign nationals within the territory of the Czech Republic, or (iii) the permit to agency employment abroad. As of now only one type of licence will be granted. However, it does not automatically mean that the employment agencies with the existing licences that do not include a permission to employ foreigners, will be newly entitled to do so.

In relation to foreign nationals, the new legislation reacts to the current demand for some professions on the Czech labour market and cancels the existing prohibition by which the employment agencies were not allowed to assign the work to an employee with an employee’s card, blue card or with a work permit (these employees should be primarily employed directly by the employers). However, as stated above, according to the GDLO only the employment agencies with the explicit permission to employ foreign nationals will be allowed to do so.

The agency employment licence pursuant to Section 14 (1) (b) EA will be issued for the term of 3 years. After the elapse of the initial period, and based on next application, the new law expressly enables to issue the new licence for an indefinite period of time.

The administrative fee for the licence pursuant to Section 14 (1) (b) EA is increased to the amount of CZK 25,000. The administrative fee for a repeated licence is set in the amount of CZK 15,000.

The new legislation also establishes new statutory grounds for a licence withdrawal – in case the employment agency does not assign any employee during a period of 2 years, or provided if certain obligations set by the Labour Code (the Act No. 262/2006 Coll.) are violated (e.g. Section 307b LC – see below).

The novelization also modifies the function of the responsible proxy of a legal entity applying for the licence. Newly this position must be performed only on the basis of an employment relationship with minimum weekly 20 working hours. The above requirement does not need to be met if the responsible proxy is also a statutory body of the applicant.

The existing licence holders or applicants must adapt its relationship with the responsible proxy according to the new legislation within the period of 3 months from the effective date of the novelization, i.e. by 29.10.2017.

Implementation of new and unambiguous sanctions

The novelization embodies two new offences into the Czech Employment Act:

  • so-called covered agency employment, which is defined as lease of work force to another employer without respecting the conditions for the agency employment pursuant to the Section 14 (1) (b) EA (i.e. without valid licence or in breach of it). In this case the Labour Office is entitled to impose a fine up to CZK 5,000,000 (on a natural person) or up to CZK 10,000,000 (on a legal entity or a natural person – entrepreneur);
  • breach of the obligation to document the arranged insurance to GDLO within the term of 2 months from the licence issuance effective date.

The fine for this offence is set down in the amount up to CZK 20,000.The novelization embeds the co-responsibility of an employer (client). According to the new provision of the Labour Code (Section 307b LC) not only the employment agency, but also its client should secure that an employee of the employment agency will not be temporarily assigned to the client (i) with whom she/he is concurrently employed on the basis of the basic employment relation; or (ii) for whom she/he has performed work in the same calendar month on the basis of the temporarily assignment realized by another employment agency.

A breach of the obligation pursuant to Section 307b LC is an offence or an administrative tort in the field of the agency employment according to the new Labour Inspection Act (the Act No. 251/2005 Coll.), for which can be imposed a fine up to CZK 1,000,000. The violation of the provision under the Section 307b LC may also result in the mandatory licence withdrawal (see above).

The employer (client) will also commit an offence or an administrative tort, if he does not secure that the agreement on the temporarily assignment does not contain information about working and wage conditions of a similar level employee of the client or if he does not provide correct data in this respect. The relevant fine may be imposed up to the amount of CZK 1,000,000.

By Michaela Fuchsová & Magda Stárková

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