In the framework of legislative changes concerning labour law, the amendment to Act No. 435/2004 Coll., on Employment, which brings substantial changes, is currently in the legislative process in the shadow of the amendment to the Labour Code. In the following text you will find out what the proposed amendment concerns, at what stage of the legislative process it is and when it might be adopted.
What does the change in the law concern?
The main changes that may be relevant for some employers include:
- tightening the conditions for agency brokers,
- Increased protection for agency workers,
- changing the definition of illegal work.
The Employment Act regulates the provision of state employment policy in the Czech Republic, which includes the regulation of employment agencies. The amendment under discussion was first submitted by the Ministry of Labour and Social Affairs in November 2022, was subsequently returned for reworking (precisely because of the need for further changes in the area of agency employment) and was submitted a second time by the Ministry in April 2023 in the wording subsequently approved by the Government and submitted as a government bill to the Chamber of Deputies.
Regulation of agency employment
Current legislation requires employment agencies to have insurance in case they go bankrupt. The purpose of this obligation is the legislator’s attempt to strengthen the position of agency workers whose wages would be jeopardised by the bankruptcy of the employment agency. In practice, this obligation has proved ineffective in relation to its purpose, which is why the amendment includes a proposal to abolish it altogether.
On the other hand, the amount of the deposit that an employment agency is required to pay in order to obtain the necessary licence is changing significantly. The current amount of this deposit is CZK 500,000, but it is now doubled to CZK 1,000,000.
A further tightening of the process for obtaining a job placement permit is the special condition of good character and debt-free status. The applicant, his/her representative or a member of the statutory body must not have been fined for an offence within the last three years that would constitute grounds for withdrawal of the employment mediation permit.
At the same time, the employment agency must be debt-free, not only for the purposes of obtaining the licence but also for the duration of its validity. A person is considered debt-free if he/she has no arrears with the tax or customs authorities or public health insurance. Debt-free status will be verified by the Ministry of Labour and Social Affairs at least once every 6 months.
Another change is the increased protection of agency workers in that it will no longer be possible to terminate the employment relationship with them from one day to the next, but the termination of the temporary assignment can be made no earlier than 14 days after the employee is notified.
The Chamber of Deputies, on the other hand, rejected part of the government’s proposal that would have set a maximum duration for agency employment. The original proposal contained a provision that the employee’s work for the same user could not exceed three years within a five-year period. However, the Social Committee considered that such a limitation could easily be circumvented, so the proposal was not adopted.
Modification of the concept of “illegal work”
The amendment also includes a change in the definition of illegal work so that its prohibition is easier to enforce. At present, according to the Ministry of Labour and Social Affairs, illegal work is considered to be mainly long-term or continuous activity. The purpose of the amendment in this respect is to explicitly state that ‘consistency’ is not and should not be one of the criteria for assessing illegal work and that only the following facts should be relevant: the employer’s superiority and the employee’s subordination, the performance of work on behalf of the employer and under the employer’s instructions, the employee’s personal performance of work and the absence of an employment relationship.
Effectiveness of the amendment
The amendment to the Employment Act was approved by the Chamber of Deputies on 3.11.2023. The original intention was for it to come into force on 1.1.2024. If this part of the legislative process goes smoothly, the amendment will probably come into force as originally intended, and there will therefore not be much time to get acquainted with the new legislation.
This article is for informational purposes only and does not constitute legal advice or guidance for any particular case.
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