Czech Republic: The Introduction of Kurzarbeit in the Czech Republic.

Czech Republic

The Introduction of Kurzarbeit in the Czech Republic.

The embargo on imports from the European Union to the Russian Federation and the resulting sales problems for some companies and businesses in the Czech Republic has revived the discussion on the introduction of Kurzarbeit (short work) as an important tool to protect employment in times of economic crisis.
The theme of Kurzarbeit (the German term adopted in the Czech language is being used routinely in written and spoken language) was examined a few years ago in the context of the global recession, which significantly affected the Czech Republic. At that time, the governing right-wing parties did not see this area as one of their priorities so Kurzarbeit did not gain wider spread approval, the other reason being because it was perceived as too complicated to implement in practice.
Currently there is eminent interest in the legislation being passed as soon as possible and being simpler, easier to apply in practice, and to take effect already as of 1 January 2015.
The institute of Kurzarbeit will supplement the options that employers already have in the Czech Labour Code available for occasions when they have to limit production and the provision of services. According to Section 209 of the Labour Code, in such a case an employer may reduce wages, but only to a maximum of 60%. If an employer’s workers are unionised, an agreement is necessary in order to implement a reduction. In times of crisis, one can also consider the introduction of working time accounts. There are other options, which may be exercised upon reaching agreement with the parties concerned (e.g. reduction in working hours with a proportionate wage reduction, provision of unpaid leave for a time). An extreme solution is redundancy. Such measures have adverse financial consequences for employers, however, as they require the employer to pay financial compensation – severance pay.

What are the concepts of Kurzarbeit in the Czech Republic and its current characteristics?

According to the original version produced by the Ministry of Labour and Social Affairs, employees should receive 90% of their wage, 60% being paid by the employer and 30% by the state. This measure would apply in a period during which the employer would not be able to assign work to the employees. The state should provide a maximum contribution amounting to 1.4 times the minimum wage, which is currently about 450 euros, for a period of six months, with a possible extension for a further six months. The compulsory portion of the contribution should be the employer's obligation that for a certain predetermined number of working hours the employer should assure the employees’ professional development.
This option, however, did not secure general support in this form, so it is now on the table for further negotiation and modifications, without the obligation for employers to provide employees with continuous professional development. According to this proposal, the employer would pay 40% of the employees’ wages and the state would pay only 20%. The percentages are not final, however, and they will be further examined, which also applies to the first variant of the obligation associated with employee training, where a ‘45 + 45’ model is under consideration, i.e. 45% would be paid by the employer and 45% by the state, on the understanding that for the state the upper limit would amount to the average wage (currently about 900 euros).
It seems that the adoption of Kurzarbeit should be beneficial for all stakeholders (more accurate calculations are still in progress).Of course, it will be necessary to elaborate tools to prevent any misuse of this institution, with which many people have serious concerns.