Every employment relationship comes to an end. And, whether it’s because the employee has resigned, their employer has terminated the employment contract, or because they have been transferred to another business following a transfer of undertaking, there are certain rules that apply to the end of the employment relationship. In the Czech Republic, these rules are set out in the Labour Code and other important pieces of legislation.
In this section, we’ll take you through everything you need to know about ending an employment contract in the Czech Republic, including valid reasons for dismissing an employee and how to give the correct notice of termination. We’ll also discuss the post-termination restraints it’s possible to impose on employees after the end of an employment relationship, and what happens to employees after a transfer of undertaking.
The rules concerning notice periods and severance pay in the Czech Republic are set out in the Czech Labour Code, which provides the minimum standards employers must meet. Employers can choose to include more favourable conditions in their individual employment contracts.
The statutory notice period in the Czech Republic is two months for both employers and employees. Employers and employees can agree in writing to a longer notice period, but it can’t be less than the statutory minimum. The notice period for employees must always be the same as the notice period for employers.
To dismiss an employee in the Czech Republic, employers must give written notice of at least two months. They must also have a valid reason for the dismissal, which must be clearly stated in the written notice. This reason can’t be changed later.
In the Czech Republic, notice periods start on the first day of the calendar month following the month when notice was given. For example, if an employee or an employer gives notice on 22 March, the notice period would begin on 1 April. The employee’s last day of employment would be 31 May.
Employers in the Czech Republic must pay severance pay to employees when they are dismissed. The amount they have to pay depends on how long the employee has been employed:
If an employee is dismissed because they are no longer allowed to perform their work due to an industrial injury, occupational disease, or threat of occupational disease, they are due severance pay amounting to 12× their average monthly earnings.
The process for termination of employment in the Czech Republic is set out in the Labour Code. Employers can only terminate employment if they have a justifiable reason. They usually need to give the employee the appropriate notice, though employees can be dismissed without notice in certain circumstances.
Termination of an employment contract in the Czech Republic is only allowed if one of the following applies:
To dismiss an employee for a reason related to their performance or behaviour, employers in the Czech Republic first need to give the employee a written warning and a fair chance to improve. They must be able to show that they gave this warning within 12 months of the dismissal and that the employee has not improved since. This does not apply in cases of serious misconduct.
In certain circumstances, employers can dismiss an employee without notice. This may be known as a summary dismissal. This is only allowed in the Czech Republic in the case of gross negligence or misconduct, or when the employee has been sentenced for a criminal offence and will serve a prison sentence of over one year.
There are certain situations when termination of employment in the Czech Republic is not possible. For example, an employer usually can’t dismiss an employee if:
Post-termination restraints are restrictions that employers can impose on their former employees’ actions after termination. They are sometimes referred to as restrictive covenants or post-termination restrictions. In the Czech Republic, there are certain restrictions on the types of post-termination restraints that employers can enforce.
Generally speaking, there are three types of post-termination restraints that employers can impose on their former employees:
Of these, only non-compete clauses are regulated by Czech legislation.
In the Czech Republic, these clauses can have a maximum duration of one year. Employers must also compensate employees during the restriction period, with the compensation set at no less than 50% of their average earnings per month prior to termination. A non-compete clause must be agreed in writing and must be justifiable based on the employee’s former position.
Other types of post-termination restrictions, including customer non-solicits and employee non-solicits, are not regulated by any specific legislation in the Czech Republic. Employers can choose to include these clauses in their contracts, but it is uncertain whether they would be enforceable. However, they are typically permissible as long as they are reasonable, proportionate, and tailored to the position of the individual employee.
In some countries, employees can waive their statutory rights as part of a settlement agreement. In this situation, the employer usually compensates the employer financially for waiving their rights. However, waivers of rights granted under employment law are legally ineffective in the Czech Republic.
A transfer of undertakings is when one business buys or acquires all or part of another business. In this situation, the employees of the original employer (the transferer) have certain rights under Czech employment law. The rules are set by the Transfer of Undertakings Directive and the Czech Labour Code.
Employees of a transferred entity must be transferred automatically to the new employer. They retain the same rights and obligations after the transfer. If a collective bargaining agreement applies to the employees, it must continue to apply until it expires or until the end of the next calendar year at the latest.
A transfer of undertaking is not a valid justification for dismissing an employee in the Czech Republic. Employees are also protected against significant deterioration of their working conditions. If they do see their working conditions worsen, they could be due severance pay.
Before a transfer of undertaking, both the transferor and the transferee must inform the relevant trade union organisation and the works council about the planned transfer. They must also consult with them to reach agreement on:
If there is no trade union or works council within the organisation, the employer must inform employees directly.
There are many different ways an employment contract can come to an end. But whatever the situation, you need to understand the rules that cover the end of employment in the Czech Republic — or you could end up facing legal issues.
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