Dismissals and Termination of Employment in the Czech Republic

An employee may give notice of termination without providing cause. An employer, on the other hand, is only permitted to give notice of termination for one of the reasons explicitly stated in the Labour Code, which are as follows:

1. organisational reasons – the employer’s enterprise shuts down or relocates, or the employee is made redundant;
2. health reasons − the employee can no longer carry out their present work due to loss of medical capacity, occupational disease, or work accident; the occupational medical services provider must confirm the occurrence of such reasons in a medical certificate; 
3. an employee no longer meets the requirements outlined for the work they are carrying out;
4. there are reasons for immediate termination of the employment relationship − the employee committed a gross breach of duty or was lawfully sentenced to prison for a crime;
5. the employee has seriously, or less seriously but repeatedly, breached a statutory duty relating to their work performance; or
6. the employee breaches their obligation to observe the prescribed regime of an insured person being temporarily unfit for work in the first 14 calendar days of temporary incapacity for work due to sickness in an especially gross manner.

Both employer and employee may terminate the employment relationship by notice of termination. The written form is necessary. They must dully deliver it to the other party. Under certain circumstances, a fiction of delivery applies (e.g. if the employee refuses to accept the notice delivered to them personally or by a postman). Under specific and strict conditions, it is also possible to deliver the termination documents electronically.

The statutory minimum notice period is two months. This period starts on the first day of the calendar month following the delivery of the termination notice. The parties of an employment contract can agree on a longer notice period. However, the period must be the same for both the employer and the employee.

It is possible to agree upon a probationary period of a maximum of three months (six months for managerial employees) during which no statutory notice period applies to the termination. Therefore, the employment relationship ends at the moment of delivery of the termination notice unless stated otherwise.

No notice period applies in cases of immediate termination of the employment relationship (i.e. if an employee commits a gross breach of duty or has been lawfully sentenced to prison for a crime).

There should be no involvement of works councils in the termination process except for collective redundancies.

Employers must discuss in advance any notices of termination and any immediate termination of the employment relationship with the trade union. Trade union approval is only required where the employee is a trade union officer. If the trade union refuses to grant the approval, the employer can proceed with the termination only if the continued employment of the trade union officer cannot be justifiably required.

Approval of state authorities is not required. The employer must only notify the Labour Office of a collective redundancy or the dismissal of a disabled person or an employee who is not a Czech citizen.

The Labour Code defines the collective redundancies as dismissals within 30 days of:

1. more than ten employees in an establishment of 20 − 100 employees;
2. 10% or more of the employees in an establishment of 101 − 300 employees; or
3. at least 30 employees in an establishment of 300 or more employees.

If at least five employees received the notice of termination, the total number of employees must also include those who entered with the employer into termination agreements based on the same grounds for dismissal.

The employer must inform the works council and trade union (or directly affected employees if there is no works council or trade union) of its intentions at least 30 days before giving notices of termination, and must enter into negotiations to reach a compromise or reduce the number of affected employees, etc.

The employer must simultaneously inform the Labour Office in writing:

1. that it has discussed the collective redundancies and its implications (i.e. the later results of these discussions) with the trade union, works council or affected employees;
2. of the actions it has taken in cooperation with the trade union/works council concerning collective redundancies; 
3. of the number, characteristics, professional qualification, etc of the employees to be made redundant.

Immediate termination (without notice period) of employment by the employer is possible only: 

1. if the employee breached a statutory duty in an especially gross manner, or 
2. for a lawful conviction of the employee, following the employee intentionally committing a crime, which leads to unconditional imprisonment for at least one year (or six months for crimes committed in connection with their job).

The employer may immediately (with effect upon delivery to the employee) terminate an individual's employment within a period of two months of learning the reason for immediate termination, but not later than one year from the date of occurrence of the respective reason for termination.

An employer cannot immediately dismiss any employee who is pregnant, or during the employee's maternity or parental leave.

The employer must draw up the immediate termination in writing, specify its reasons precisely to prevent confusion with any other reasons for termination, and deliver it duly to the employee.

The employee can file a claim to the court no later than two months after the date of the purported termination of the employment relationship. The court may hold the termination invalid and the employment relationship reinstated.

Minimum statutory severance pay depends on the reason for dismissal and / or the length of employment. It could range from one average monthly salary for any dismissals for organisational reasons (including collective redundancies) if the employment lasted less than one year, to three average monthly salaries if the employment lasted at least two years. The employee must receive a maximum of 12 times the average monthly salary for dismissal for health reasons. The parties may negotiate higher severance pay or severance pay for other termination reasons.

A post-contractual non-competition clause may be agreed upon between the employer and the employee only if it can be reasonably required from the employee taking into account the nature of the know-how and information that the employee acquires during employment. If the non-competition clause is agreed upon, it must be in written form and must not last for more than one year. The parties may also include the clause in the employment agreement. Monetary compensation from the employer must be equal to at least half the employee’s average monthly salary (i.e. the wage/salary that the employee had before the termination of the employment relationship) for each month the employee meets the obligation not to compete as stated in the clause. If the clause sets out a financial penalty for breach of the clause by the employee, the employee’s payment of the penalty sum discharges their obligation not to compete. An employee can terminate the agreement if the employer is at least 15 days delayed with due payment of the monetary compensation. An employer may only withdraw from the non-competition clause during the term of employment. It is very problematic for the employer to validly withdraw from the non-competition clause since case-law is still developing. Generally, employers must be able to justify their withdrawal from the non- competition by proper legitimate reasons and must not abuse their right to do so. Therefore, employers should duly evaluate all cases of non-compete terminations before doing so, taking into account the relevant circumstance of each case. 

The employer may not give notice of termination during a ‘protection period’ (i.e. where an employee is temporarily unfit for work, a night-shift employee is temporarily unfit to perform night work, an employee is conscripted or released from work to exercise a public office, or during pregnancy, maternity or parental leave), unless the termination is for organisational reasons due to the closure or relocation of the enterprise. There are several exceptions to this rule.

In the Czech Republic, managing directors as statutory bodies (executive directors or board members) are not considered employees. Therefore, labour law protection does not apply to them. The relationship between the managing director and the company is of a commercial nature, not an employment one. The general meeting may recall the managing director (as a statutory body or a member of a statutory body of an entity, i.e. not as an employee) with immediate effect and without stating any reason.

A valid shareholder resolution at a general meeting is required. A simple majority of shareholders must be present, and a simple majority thereof must decide unless stated otherwise in the relevant company’s foundation deed. Apart from cases when entities have a sole shareholder, the invitation to the general meeting must include the revocation of the managing director as a programme point. If not, the general meeting can revoke the managing director if all shareholders are present and agree to change the programme to include the revocation.

Not applicable.

There is no involvement.

There is no involvement.

Not required.

However, revocation of a managing director from their office must be filed in the Commercial Register without undue delay. The appropriate court maintaining the Commercial Register may review the revocation to verify whether the company carried out the revocation in accordance with applicable laws and the relevant statutory documents.

Not applicable.

Not applicable.

The consequences are invalidity of revocation.

There is no statutory severance pay.

Such clauses may be agreed upon in a performance agreement usually concluded with a member of a statutory body. The requirements set out in the Labour Code do not apply to managing directors unless this is explicitly agreed. Non-competition clauses agreed upon with managing directors are under civil law. Thus the rules are less strict than in the case of employees.

Managing directors shall not enter into employment contracts with companies unless the type of work performed under the employment contract is materially different from the role of a managing director. Instead, they should enter into an agreement on the performance of the managing director’s office. The Czech Labour Code will not govern such an agreement.