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  • Private Law Recast and the Labor Code

    11. 02. 2014

    The New Civil Code and related legislation, which came into force as of January 1, 2014, has brought about a number of novelties as well as gave rise to numerous questions. Given the revolutionary overhaul of the Czech legal system which has caused a certain degree of uncertainty, questions have arisen over the continuing effect of the Labor Code, i.e. Act No. 262/2006 Coll. (hereafter „LC“) as well.

    In short, the Labor Code remains in effect and is to be applied to employment and labor issues. However, the private law recodification has its impact on this Act, as well as on employment relations in general. Its effect is twofold: indirect by way of change of the underlying principles of private law, of the new definition of legal act as legal conduct as well as by way of partial changes in contract negotiations provisions, etc., and a direct one by way of amendment of some provisions of the Labor Code.

    For instance, the Labor Code no longer defines the terms capacity of the employee and capacity of the employer. It now limits itself to general form of words to cover the meaning of the two terms.

    Provisions concerning legal capacity (legal personality and legal competence) of the employee and the employer are left to the New Civil Code (hereafter „NCC“). There is a slight shift concerning employees whereby gaining legal capacity to be employed (by way of employment contract, contract for job, and contract for work) coincides with the possible beginning of the work itself. Provisions of Section 35 (1) of the NCC expressly stipulates that „a minor who is at least fifteen years of age and has completed compulsory schooling may undertake employment pursuant to other legislation.“

    In addition, a legal guardian of a minor between 15 and 16 years of age has the right to terminate instantly the minor´s employment contract, contract for job or contract for work provided there exist legal grounds to do so and subject to a consent of the court (Section 35 (2) NCC and Section 56a and Section 77 LC).

    Similarly, there is a change when it comes to defining capacity of the employer as a physical person where the 18-year age limit is no longer the only moment for gaining legal capacity in as much as general provisions of the New Civil Code apply including gaining legal capacity by way of entering into matrimony or by way of emancipation (Section 37 NCC).

    Furthermore and by way of an example, the provisions of the New Civil Code concerning legal conduct and its nullity (Section 545 et seq. NCC) are notable as they fully apply to employment and labor relations (the Labor Code is just complementary here), as are definitions of mandatory and directory nature in Section 1 (2) of NCC, provisions concerning pre-contractual liability, i.e. culpa in cotrahendo (Section 1728 et seq. NCC), or the notion of substantial chance of circumstances (Section 1765 et seq. NCC) which all need to be honored in employment and labor relations.

    Simply speaking, even though the 2008 subsidiarity principle remains unchanged with respect to the relation between the Labor Code and the Civil Code, when addressing employment and labor issues, as of January 1, 2014, one cannot limit oneself to the Labor Code only. As a minimum, the recitals of the New Civil Code and the principles contained in them have to be taken into account.

    However, civil law provisions apply to employment and labor law relations (Section 4 LC) in keeping with their fundamental principles listed in Section 1a of LC. Furthermore, Section 346d lists situations to which certain notions of civil law, namely NCC, do not apply.

    With a similar intent as Section 346d of LC, the new Section 144a of LC primarily addresses the issue of no assignment of the right to wage, salary, remuneration or other form of compensation along with the issue of securing debts.

    Using the example of Section 144a LC, the necessity of being familiar with the new civil law in order to duly apply the Labor Code becomes obvious.

    Provision of Section 144a (4) stipulates, somewhat oddly with respect to the other provisions in the same Section, that „a claim may be set-off against wages, salary, remuneration or other compensation only under conditions specified in the provisions of the Civil Procedure Code concerning enforcement through deductions withheld from wages “. The provision is a result of a parliamentary initiative to reflect the Supreme Court decision of February 19, 2013, under ref. no. 21 Cdo 3330/2011, in which the Supreme Court held, simply speaking, that given the subsidiary application of civil law provisions on employment and labor relation and given the fact that the possibility is not expressly rules out, nothing stands in the way of set-offs (with some limitations) in labor and employment relations.

    Provisions of Section 144a (4) LC must not be read in isolation. It is a special provision with respect to Section § 1988 (2) of NCC, a Section which develops the general provisions on set-offs introduced by Sections § 1982 through § 1991 of NCC. When applying those on employment and labor relations, namely Section 346c of the LC has to be taken into account (whereby the agreement on set-offs may be precluded in certain cases) along with the fundamental principles contained in Section 1a of the LC. It needs to be noted that in keeping with provisions of Section 1987 (2) of NCC, uncertain and unspecific claims are not eligible. As a consequence, unilateral set-off by an employer of damage caused to his/her property may be carried out only subject to a final ruling of the court granting the right to damages or subject to acknowledgement of such damage by the employee.

    The linkage between Section 144a (4) of the LC and Section 1988 (2) of the NCC needs to be construed in such a fashion that if the employer wishes to unilaterally withhold a deduction from the employee´s wages, he/she needs to first deduct the unseizable portion plus one-third of the remainder of the wage to be paid. The withholding can be applied only with respect to the balance. If the balance is more that 50% of the wage, the employer may withhold as a set-off only the said 50% of the wage. This same interpretation is given by Petr Bezouška in Bezouška, P. Vliv nového občanského zákoníku na pracovní právo. Právní rozhledy, Praha: C. H. Beck, 2014, pol. 1, p. 4).

    In the area of employment and labor law, private-law recast brought about many changes and gave rise to many questions which we are prepared to answer for you.

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