Labour Code

What it means

The Labour Code, No. 311/2001 Coll., governs the employment relationship and the agreements outside it: working time, holiday, wage premiums, obstacles at work and termination of employment. The civil service and the public service have their own acts.

You may depart from it only in the employee’s favour unless the Act allows otherwise. A clause that gives less than the statute is void in that part and the statutory wording applies, even though both sides signed the contract willingly.

The Labour Code does not govern everything connected with work. Levies come from the social and health insurance acts, payroll tax from the Income Tax Act. A director working under a contract of office is governed by the Commercial Code, and the Labour Code applies to them only where the contract expressly refers to it.

How it works in practice

In practice it is supplemented by a collective agreement and by works rules, which improve or refine the terms. The works rules are issued by the employer with the prior consent of the employee representatives where any exist.

The Code also defines dependent work: work in a relationship of subordination to the employer, carried out in person, on the employer’s instructions and in the employer’s name. Such work cannot be done on a trade licence or a works contract, whatever the parties signed.

For short-term help, companies reach for agreements outside employment. Before the work starts we check that the agreement to perform work or other agreement is in writing, defines the work and the pay, and stays within the annual or weekly hour limit the Code sets for it. An agreement signed only after the work was done counts as illegal work at an inspection.

What to watch out for

Invoicing through a trade licence for work that carries the marks of dependent work is reclassified as employment once the labour inspectorate or the tax office looks at it. The company then pays levies and payroll tax advances for the whole period of the arrangement, plus interest and a fine.

An employer must keep records of working time, including overtime and on-call time. One that keeps none, or only notional ones, is fined at a labour inspection and has nothing to rebut the employee’s account in a dispute over unpaid overtime. Proper attendance records cost less than a single lost court case.