Czech Republic: changes to unemployment compensation
From 1 January 2011, lower amounts of compensation will be payable on termination of employment.
When employment is terminated either by the employee or by mutual consent for no important reason, employees will now only receive 45% of their annual salary (up to a maximum of 58% of the national average earnings).
When employment is terminated by the employer, employees will continue to receive 65% of their salary for the first two months, 50% for the third and fourth months and 45% for the fifth month of unemployment. As before, the compensation is capped at 58% of the national average earnings.
No compensation is payable for any period already covered by severance pay or when the employee is receiving income from another source (previously, monthly earnings of up to CZK 4,000 were allowed).
According to reports from the Labour Offices, there have been numerous attempts by employees to terminate their employment before the changes come into force.
The new rules may make employees more reluctant to agree to terminate their employment by mutual consent. There may also be an increased risk of employees bringing court proceedings claiming that the termination of their employment was invalid.
The new regulations also introduce more certainty to employment relationships by requiring that they always be in writing, including special part-time agreements for performance of a work task over a limited period.
This may not be the only change to part-time agreements as they, along with other employment issues such as severance payments and fixed-term agreements, are to be the subject of more thorough reform in 2011.
