New changes of Czech Labour Agency Law came into effect in 2024...
On 1.1.2024 the long-awaited amendment of Act No. 435/2004 Coll., the Employment act as amended, came into force, bringing a number of new changes and obligations to labour agencies operating in the Czech Republic. This legislative measure aims to increase transparency and protection of the rights of agency employees, while strengthening the accountability of employment agencies.With regard to the numerous changes that have the potential to significantly affect the daily operations and activities of labour agencies, we present below an overview of the key novelties and obligations that labour agencies are bound by in accordance with the amendment.
Shifting of the agenda to the Ministry of Labour and Social Affairs
One of the fundamental changes contained in the amendment is the transfer of the agenda in the area of labour agencies, in particular the issuance and withdrawal of labour agency licences, from the Directorate General of the Labour Office to the Ministry of Labour and Social Affairs.
Therefore, from the new year onwards, employment agencies must bear this change in mind when dealing with matters and communicating with the administrative authorities to ensure their successful handling. This also applies to the obligation of employment agencies to submit statistical reports to the Ministry by 31 January of each calendar year at the latest. The content of these reports has been expanded by the amendment to include the obligation to inform the Ministry of (i) the identification of the user to which the employment agency's employees have been temporarily assigned and (ii) the number of employees by Employment Classification Groups (CZ-ISCO) published by the Czech Statistical Office assigned to each user.
Definition of professional practice of the responsible representative
The new definition in Section 60(8) of the Employment Act of professional practice to be fulfilled by the responsible representative now means the continuous personal performance of activities in the field of labour agency or in the field for which labour agency is to be permitted by a natural person for at least 20 hours per week. A natural person is obliged to acquire the professional practice in the 10 years preceding the application for the labour agency permit.
Employment relationship with a responsible representative
Now a legal person must attach to the application for the labour agency permit a document proving the establishment of an employment relationship with a responsible representative, unless he or she is a member of the statutory body, if such an employment relationship is established no later than on the date of the legal force of the resolution on the issuance of the labour agency permit, with working hours of at least 20 hours per week.
Debt-free status and deposit increase for the labour agency
Subsections 14 and 15 of Section 60 of the Employment Act, which are newly added include new condition for the labour agency consisting of the issuance of the labour agency permit is that the applicant is debt-free when submitting the application. Person to whom the labour agency permit has been issued must be debt-free for the whole duration of the labour agency permit. The Ministry of Labour and Social Affairs verifies debt-free status at least once every 6 months during the validity period of the labour agency permit.
For the purposes of the agency employment, a person shall be deemed to be debt-free if the person has no arrears recorded, with the exception of arrears in respect of which it is permitted to defer payment or to spread payment into instalments. Specifically, the absence of arrears with the Financial Administration, the Customs Administration, general health insurance premiums and penalties, social security premiums and penalties, and state employment policy contributions is required.
The deposit referred to in Section 60b(2) of the Employment Act is now increased from CZK 500,000 to CZK 1,000,000.
A person who has already been issued the labour agency permit before the force of this amendment must pay deposit up to the new legal amount within 3 months of the effective date (till 1.4.2024) of this amendment and prove to the Ministry that the person is debt-free. The confirmation can be obtained through accountants.
Impeccability (clean criminal records)
The previously required standard of criminal integrity has been extended to other persons operating within the structure of the employment agency. It remains the case that an employment agency must not have been convicted of a deliberate crime or a crime against property. As of 1 January 2024, this restriction also applies to natural persons who are members of its statutory body or representatives of a legal person in such body, as well as to legal persons who are members of either the statutory or any other body of the employment agency.
Designation of the seat of the employment agency
The amendment also introduced in Section 60a(3) of the Employment Act the obligation to visibly mark the registered office and the workplace of the employment agency with its name, personal identification number (if assigned) and, in the case of an entrepreneur registered in the Commercial Register, with its business name. The visible identification of the registered office must be maintained not only at the time of the application for the permit but also throughout the whole duration of the permit.
Extension of grounds for withdrawal of the licence
As part of the amendment, several new grounds have been added for which the Ministry of Labour and Social Affairs will compulsorily revoke the licences of labour agencies. These newly added grounds include situations where the employment agency:
a) facilitates the performance of illegal work
b) provides employment in a disguised manner or facilitates the same
c) violates the prohibition of discrimination or fails to ensure equal treatment; or
d) repeatedly fails to cooperate with the labour inspection authorities in an inspection.
These cases of compulsory withdrawal of permits previously included cases where the employment agency arranged employment in breach of good morals or otherwise violated its obligations under the Employment Act. However, the amendment moved them to non-mandatory revocation cases, where the specific severity and consequences of the breach by the labour agency are left to the discretion of the Ministry.
Termination of temporary assignment
The stricter regime of the conditions of employment placement has not only impacted the provisions of the Employment Act but also, inter alia, Act No. 262/2006 Coll., the Labour Code. Thus, in cases where the temporary assignment of an agency worker is terminated by a unilateral written declaration of the user or the employee, the temporary assignment will not end at the moment of delivery, as the legislation previously allowed, but the assignment will end no earlier than on the 14th day after the delivery of the declaration, thus the legislator again clearly declares its desire to increase the protection of agency workers.
In conclusion, the amendment has substantially tightened the conditions for the performance of the activities of employment agencies in the Czech Republic, which face increasing administrative requirements. As a result, all employment agencies should carefully ensure that they comply with all legal requirements in order to avoid the risk of withdrawal of their employment agency permits or other sanctions, not only by the Ministry of Labour and Social Affairs.
For more information, please do not hesitate to contact us at:
JUDr. Mojmír Ježek, Ph.D.
ECOVIS ježek, advokátní kancelář s.r.o.
Betlémské nám. 6
110 00 Prague 1
e-mail: mojmir.jezek@ecovislegal.cz
www.ecovislegal.cz/en
About ECOVIS ježek advokátní kancelář s.r.o.
The Czech law office in Prague ECOVIS ježek practices mainly in the area of Czech commercial law, Czech real estate law, representation at Czech courts, administrative bodies and arbitration courts, as well as Czech finance and banking law, and provides full-fledged advice in all areas, making it a suitable alternative for clients of international law offices. The international dimension of the Czech legal services provided is ensured through past experience and through co-operation with leading legal offices in most European countries, the US, and other jurisdictions. The Czech lawyers of the ECOVIS ježek team have many years of experience from leading international law offices and tax companies, in providing legal advice to multinational corporations, large Czech companies, but also to medium-sized companies and individual clients. For more information, go to www.ecovislegal.cz/en.
