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News 6/2017

EMPLOYMENT RELATIONS NEWS

Late last year and early this year saw the adoption of  amendments to various legal regulations closely related to employment law and its associated relationships. Some of the amendments govern the obligations of corporations towards employees and state authorities. Some such points from recent months’ news are described below. In closing, we cite a Supreme Court judgment relating to the transfers of rights and obligations in employment relationships.

Employees’ participation in supervisory boards

On 30 December 2016 the first amendment to be passed to Act No. 90/2012 Coll., on Business Corporations (the “BCA”) was published in the Collection of Laws under No. 458/2016 Coll.  Effective since 14 January 2017, this amendment introduces mandatory employee representation in the supervisory boards of joint-stock companies with more than 500 employees.

In these companies, employees elect from amongst themselves one third of the members of the supervisory board, the remaining two thirds being elected by the general meeting. Therefore, the number of members of the supervisory board must be divisible by three. Under previous legislation, the general meeting elected all supervisory board members.

According to the transitional provision, the joint-stock companies concerned are obliged to bring their documents into line with the adopted amendment within 2 years of the date on which this amendment came into effect, i.e. no later than 14 January 2019.

If a company fails to do so, the registration court will call upon it to take remedial action. If the company fails to fulfil this obligation even within the additional period set by the court, it faces the risk of being dissolved and liquidated.

No application of special way of acting in employment relationships

Until recently, 27 February 2017, legal entities with a collective statutory body were required to authorize one member of the statutory body to conduct legal procedures regarding employees according to Sec. 164 (3) of the Act No. 89/2012 Coll., the Civil Code (the “NCC”). If no member of the statutory body was authorized, the chairman of the statutory body exercised this competence. This provision generally applied to the boards of directors of joint-stock companies and the executive directors of limited liability companies that constituted a collective body.

The amendment to the NCC published in the Collection of Laws under No. 460/2016 Coll. abolished this provision. Since 28 February 2017 the general rules applicable to the representation of a legal entity (the employer) apply to actions regarding employees taken by legal entities with a collective statutory body.

Posting of workers within the EU

On 1 April 2017 the amendment to Act No. 435/2007 Coll., on Employment, was promulgated under No. 93/2017 Coll.

The amendment implemented Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 that was adopted in order to prevent the circumvention of rules regarding the posting of workers.

The above amendment introduces, among other things, the obligation of an employer from the EU that posts workers to have copies of documents proving the existence of the employment relationship, including a Czech version, at the workplace of a worker who has been posted from the EU to the Czech Republic. Failure to fulfil this obligation constitutes an administrative offence.

Furthermore, the amendment also reduces the administrative burden involved in keeping records on employees posted from EU Member States. Henceforth, registering information on, for example, the highest educational achievement, education required for the profession or the period of time for which the posted worker was granted a work permit, the employee card or the blue card based on which the worker was granted a residence permit are no longer required.

Act No. 93/2017 Coll. also amended the Labour Code in relation to the posting of workers from other EU countries to the Czech Republic. According to the amendment, an entity in which foreign workers were posted to perform work assignments guarantees, under certain conditions, that the worker’s employer pays wages to the worker.

Judgment of the Supreme Court concerning the transfer of rights and obligations arising from employment relations to a new tenant

In mid-2016, the Supreme Court of the Czech Republic issued a judgment concerning the transfer of the rights and obligations arising from employment relations in connection with the termination of the lease of premises intended to carry out business (non-residential premises). The judgment applied to a dispute between an employee and an employer that ran a café in leased premises. The tenant (the employer) running the café in a shopping centre terminated the lease of the non-residential premises. Following the termination of the lease, a lease agreement was concluded with a new tenant who continued to run the café. After termination of the lease, the employer (the previous tenant) referred the employee to the new tenant to whom it believed all rights and obligations arising from the employment relationship with this employee should have been transferred according to Section 338 of Act No. 262/2006 Coll., the Labour Code (the “LC”).

The Supreme Court of the Czech Republic upheld this interpretation of the cited provision. According to the decision of the Supreme Court of the Czech Republic, the employer’s activities or a part thereof or the employer’s assignments or a part thereof are also transferred to another employer resulting in a transfer of rights and obligations arising from employment relations to the transferee if a lease of non-residential premises in which the previous employer has conducted its business  is terminated and the landlord and a new tenant enter into a lease agreement concerning these premises where the new tenant continues to perform the previous employer’s tasks or activities or a similar activity; whether or not the equipment used to perform the activity in such non-residential premises is part of the lease of these premises is irrelevant.

If the new tenant continues to perform the previous employer’s tasks or activities or a similar activity, it enters into all the employment relations with the previous employer’s employees in place of the previous employer. This is also the case if no contractual or other relationship existed between the previous and new tenants. It is also irrelevant whether or not the previous tenant has left the equipment used to perform the activity concerned in the leased premises.