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Should employers lose sleep over the new Civil Code?

Should employers lose sleep over the new Civil Code?

19.9.2012 13:37

Employers and employees can relax for the time being as the new Civil Code will not bring about a revolution in labour law. Although the number of changes is few, some are worth noting.

For example, while today the relationship between the Labour and Civil Codes is defined in the Labour Code (§ 4), the authors of the new Civil Code felt it important to emphasize the private law aspects of employment contracts and the nature of rights and obligations between employees and employers. As such, the authors added to the Civil Code, which defines the relationship between the two key codes.

According to the new § 2401, “employment relationships, as well as the rights and obligations of the employee and employer arising from such relationship, are stipulated by a different act. This also applies, in the same extent as the other act, to agreements on work under an employment relationship where a similar obligation between an employee and employer arises”. This, in other words, only confirms the current law. Even after 1 January 2014, the Labour Code will still be considered a special law based upon and supported by the Civil Code.

The provision cited also stipulates an important rule: the Civil Code’s consumer protection provisions will not affect the rights and duties of employees and employers. Although this only confirms the current view, it is nonetheless useful. Anyone familiar with the complicated regulations surrounding consumer protection can certainly imagine the difficulties that would arise if someone sought to apply these to employment relationships as well.

Acting on behalf of employers

Changes to provisions concerning employees acting on behalf of employers will be crucial in terms of practice. Pursuant to the new Civil Code, legal entities may be represented by their employees provided such representation is not unusual for their position. This is very important in terms of how things appear to the public. In evaluating an authorized representative’s competence, it will be important to take into account what the public would reasonably expect under the given circumstances and not simply the actual nature of the authorization.

An employer’s internal rules restricting the authority of employees to act for it will be valid vis-a-vis a third party only if the thirty party must have been aware of such rules. In this respect, there is no departure from the current Civil Code.

Parental Rights

When the new Civil Code becomes effective, employers will still be able to hire minors who are at least 15 years of age and have completed compulsory education. Minors may also perform artistic, cultural, advertising or sporting activities under certain conditions set forth by a special regulation. So no changes there.

But, in a departure from the current Labour Code, parents of minors under 16 years of age will have a new legal right to terminate their child’s employment (or other agreement establishing a similar employment relationship) if the minor’s education, personal development or health so require. Although this right has not yet been established in the Labour Code, we can expect such an amendment soon. In the meantime, all we have to go on is the new Civil Code’s parliamentary report, which states that parents should have the right to terminate their child’s employment immediately (or, where applicable, with court approval).

Other News

Employers and employees will also be affected by other subtle changes to the new Civil Code. For example, employers who have both a collective statutory body and employees should appoint one of the body’s members to take responsibility for dealing with employee-related legal matters. If no one is appointed, the body’s chairman will automatically assume the role (§ 164).

The topic of trusts (§ 1449) is an interesting new feature to be introduced into Czech civil law. With regard to labour law, assets that should be invested to generate profit can be allocated for distribution among employees beginning in 2014.

Inheritance law is another area that is expected to undergo major changes in the new Civil Code. Although it may not be obvious, there is a link to labour law here, too. A person may choose to leave a particular item to someone who is not their heir. The new Civil Code also makes it possible for certain items or minor bonuses to be left, for example, to employees (§ 1624). Other issues include agreements on payroll deductions or other deductions (§ 2045), rentals of a business apartments (§ 2297) and rules applicable to incapacity insurance (§ 2825).

Amendments on the Horizon

Several amendments to the Labour Code are also currently pending. While some draft bills have already been sent to Parliament, we will have to wait for news on the others. The amendments are expected principally to remove overlapping provisions (i.e. labour-related provisions that will be part of the new Civil Code) as well as certain ill-conceived exceptions. Certain issues, such as rules on compensation for damages, are also expected to see a considerable shift.

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