The five master builders in the much-debated "Svarcsystem" case have been found to be self-employed contractors (not employees) by the Supreme Administrative Court.
This reverses an earlier decision by the Financial Directorate in Prague which ruled that the bricklayers were disguised employees and ordered the firm of builders which hired them to pay additional personal income tax for them of over CZK300,000.
The Supreme Administrative Court ruled that the bricklayers were not employees because:
- construction work is not a continuous activity but is contracted out on a case-by-case basis;
- as a rule, work does not constitute employment if it involves specialised activities carried out on a short-term or occasional basis and if it is conditional upon factors that are, to a large extent, out of the customer's control (for example, seasonal work, weather dependant work, work based on one-off contracts, etc.);
- these factors should apply to tax regulations otherwise it would place an unacceptable burden would be placed on the private sector;
- the bricklayers themselves insisted on working with the company as self-employed contractors;
- the state should not impose an employment relationship if both parties, i.e. both the employee and the employer, wish to enter into another type of relationship;
- the ban included in the Employment Act should primarily protect employees, rather than increase public income.
For more information on this or any other employment law issue, please contact Richard Bacek at richard.bacek@cms-cmck.com or on +420 296 798 834 or Patrik Przyhoda at patrik.przyhoda@cms-cmck.com or on +420 296 798 858.
