Barely a few months have passed since the last part of the significant amendment to the Labour Code came into force and the government has come up with further proposals affecting the labour law sphere.
Therefore, we have prepared article, in which se we will focus on the recently passed transposition amendment, which will come into force in its majority on 1 August 2024. Certain provisions concerning the employee’s self-designation of shifts will take effect on 1 January 2025.
Introduction
As the name of the amendment itself implies, it also responds to the requirements arising from the EU. Its content is therefore not only based on the Government’s programme declaration, but also transposes Directive (EU) 2022/2041 of the European Parliament and of the Council of 19 October 2022 on adequate minimum wages in the European Union.
The Directive thus imposes an obligation on Member States to establish the necessary procedures and criteria to set the legal minimum wage and to update it regularly and in a timely manner in the future. Although the specific method for implementation is left to the discretion of the States themselves, the Directive obliges States to take into account mandatory criteria such as the purchasing power of minimum wages taking into account the cost of living, the general level of wages including their distribution, the rate of wage growth, as well as the long-term national productivity rate and its evolution.
In order to transpose the content of this Directive, Member States should adopt appropriate measures by 15 November 2024 at the latest, and therefore this deadline will be duly met by the Czech Republic this time.
Specific changes
Valorisation mechanism, guaranteed wage or collective bargaining – the main areas that will be affected by the transposition amendment. Beyond these, however, the amendment was supplemented during the legislative process by some other approved amendments, and we will therefore briefly focus on these as well.
Valorisation mechanism
One of the main objectives of the transposition amendment is to enshrine in Czech legislation an effective mechanism for transparent and predictable minimum wage increases. This should also avoid any confusion and misunderstanding that arise in the context of the minimum wage during annual negotiations. In particular, any haphazard changes, which unfortunately were often not based on reviewable socio-economic indicators, should be eliminated.
The amount of the minimum wage is set as the product of the forecast of the average gross monthly wage for the following calendar year and the coefficient for calculating the minimum wage. The forecast of the average gross monthly wage will be determined by the Ministry of Finance by 31 August of the year preceding the calendar year for which the minimum wage is to be set. In practice, this means that the first such forecast for the following year 2025 will be issued by the end of the following month, i.e. by 31 August 2024.
On the other hand, the value of the coefficient should be set periodically by government decree after discussion in the Economic and Social Agreement Council, always for the coming two-year period. The first coefficient so determined should thus be set for 2025 and 2026, which will be used to multiply the current forecast of average gross wages for the year.
On the basis of the aforementioned mechanism, the Ministry of Labour and Social Affairs will announce the specific amount of the minimum wage for the following calendar year each year by means of a communication in the Collection of Laws and International Treaties made by 30 September preceding such calendar year.
Assuming that the indexation mechanism is successfully put into practice, the minimum wage should reach at least 47% of the average wage within the next 5 years.
In addition to the above, the amendment establishes a so-called indicative reference value set at 47% of the average wage in the national economy. This will act as a kind of indicator for assessing the adequacy of the current minimum wage level and will therefore not be a target for achieving the percentage.
Guaranteed Wage
The transposition amendment introduces significant changes in relation to the guaranteed wage, which in practice serves to set the lowest wage for work that takes into account its complexity, responsibility and strenuousness. In the private sector, this institute is abolished completely without replacement, while the protection of employees against unreasonably low remuneration of work will be ensured through a valorisation mechanism and collective bargaining, which should also be strengthened by the measures introduced by the amendment.
On the other hand, a so-called guaranteed salary should be introduced in the public sector, the levels of which would be set in four job groups, ranging from the minimum wage up to 1.6 times the minimum wage. The exact division of work will be determined by a government decree, primarily according to required education.
Pluralism in collective bargaining
The change in collective bargaining rules is also based on a requirement of European legislation, which aims to strengthen it, particularly in the area of wages, both at sectoral and inter-sectoral level.
Specifically, the amendment addresses the situation where an employer has more than one trade union, which was often problematic in current practice. These arose in particular when the trade unions do not agree on the content of the collective agreement during negotiations on the conclusion of the agreement, in which case the employer should not conclude such an agreement with any of them.
The current legislation thus allowed any trade union, regardless of its size in terms of the number of employees it represents, to block negotiations on a collective agreement. However, this changes, as the amendment provides that if the trade unions fail to reach an agreement within 30 days of the start of negotiations, the employer will be able to conclude a collective agreement with the trade union with the highest number of members employed by the employer, subject to compliance with the legal conditions.
The method of collective bargaining within companies is significantly expanded and, above all, should become a more effective means for many employers to achieve their demands in practice. Collective bargaining can be expected to be more constructive and meaningful in the future and to contribute more to improving working conditions for employees.
Taking leave without a written timetable
The transposition amendment also addresses the issue of administrative burden, and in order to reduce it, the obligation to have a written leave schedule is abolished. Again, this is a requirement arising from practice, as employers find this obligation unnecessarily burdensome and therefore often only formally comply with it.
However, employers remain obliged to give at least 14 days’ notice to employees in relation to leave, unless a shorter period has been agreed with the employee. The same applies to the other statutory principles for taking leave, which also remains unchanged.
Self-scheduling of shifts from 1 January 2025
The amendment, based on an amendment read in the Chamber of Deputies, provides for the possibility for employees to schedule their working hours at their own discretion as of 1 January 2025, but as has been possible so far in the case of so-called domestic employees (their arrangements are replaced by this new amendment).
However, this is only subject to a written agreement with the employer. It will also be possible to conclude an agreement with an employee working under one of the agreements on work outside the employment relationship. This commitment can also be subsequently terminated by agreement or by giving 15 days’ notice, even without giving any reason.
The self-scheduling of shifts has a major impact on the provisions and rules for the scheduling of working time, as well as on the regime and effects of certain obstacles to work.
Self-scheduling of shifts was originally proposed only in the so-called flexible amendment, which is now in the legislative process.
Please note that allowing or tolerating self-scheduling of shifts without a written agreement will be an employer offence under the Labour Inspection Act.
Other changes adopted as part of the amendments
Furthermore, the amendment increases the maximum personal allowance of an employee from the current 50 per cent to 100 per cent of the relevant salary tariff, which employees will receive from the beginning of the employment relationship.
Last but not least, the amendments affecting health care facilities with continuous operation, such as ambulance services, which introduces shifts for employees of up to 24 hours. The purpose of this amendment is primarily to eliminate the undesirable application of the Labour Code, which currently occurs in practice, when employers in the healthcare sector scheduled overtime work along with the normal shift. However, such a practice was fundamentally contrary to the basic concept of overtime work, since overtime work is supposed to be exceptional and random and cannot be scheduled in advance (see Article 93(1) of the Labour Code).
Conclusion
The transposition amendment can be assessed as positive with regard to the nature of these changes, both for employees and employers, as the application of these changes in practice should help both sides.
Particularly in the area of wages and collective bargaining, the amendment brings clearly defined and fair rules that will make these institutions more predictable. However, the extent to which, for example, such a valorisation mechanism will actually be beneficial will only become clear over time, as its setting will depend mainly on the active participation of the ministry and the government.
Employers will also undoubtedly appreciate the efforts to reduce the bureaucratic burden, which will be reflected in the abolition of the obligation to issue a written leave schedule or the abolition of guaranteed wages in the private sector, and in the case of self-scheduling shift.
Should you have any questions about the content of the amendment or need assistance in any other employment law matter, please do not hesitate to contact our PEYTON legal team at any time.
Mgr. Kateřina Lansdorfová, Attorney – lansdorfova@plegal.cz
Mgr. Jakub Málek, Managing Partner – malek@plegal.cz
31. 7. 2024