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Amendment to Labour Code effective: what are the changes?

Except for some provisions, the long-discussed amendment to the Labour Code entered into effect on 1 October 2023. The most significant changes concern workers under agreements to perform work and agreements to complete a job (agreements on work outside employment) as well as home office work. Apart from labour law, the amendment also changes some tax regulations.

Major changes for workers under agreements outside employment

The amendment makes the status of workers under agreements outside employment closer to that of workers in a standard employment. For example, it will now be necessary to schedule workers’ working hours in advance and inform them of their scheduled hours at least three days before the start of the shift or scheduled period; a different period of time may be mutually agreed upon. It will still be possible to terminate the agreement on any grounds, but workers will have the right to demand a written statement stating the grounds for termination. Employees whose relationships established by the agreements lasted at least 180 days in the previous 12 months in aggregate with the same employer may ask the employer for standard employment, and the employer must provide them with a written response stating their reasons, within one month.

The most discussed change in this area is undoubtedly the vacation entitlement. Effective from 1 January 2024, workers under agreements whose relationship with the employer has lasted at least 4 weeks (i.e., 28 calendar days) in the relevant calendar year and who have worked at least 80 hours will be entitled to vacation under the same conditions as employees in a standard employment.

Changes in work from home

It is now necessary to conclude a written agreement with employees working from home or another location, even for one-off cases. Some employees, such as parents with children under the age of nine or pregnant employees, now have the option to request to be allowed to work from home; the employer then must state the reasons for their refusal in writing. Employers may also order employees to work from home, but only if so stipulated by measures adopted by a public authority under the Emergency Act or the Public Health Protection Act. This can be done only for the time strictly necessary if the nature of the work performed allows it and provided that the place of remote work is suitable for the performance of the employee’s work.

While many of us had expected that the amendment would bring a comprehensive regulation of work from home, the law unfortunately remains silent on some of its aspects: in particular the issue of occupational health and safety, which is significantly more complicated for employers to ensure outside their workplace. This means that employers have the same obligations and responsibilities in this area as if the employee were at their workplace; this may even discourage some employers from allowing home office.

A much-debated aspect of work from home was the reimbursement of employees’ costs. In the end, the issue can be addressed in three ways:

  1. compensation for costs incurred and proven
  2. lump sum payment for each hour worked remotely
  3. written agreement that the employee is not entitled to any home-office compensation.

The amendment to the Income Tax Act also responds to the new legislation: benefits provided by the employer as a lump-sum compensation for costs associated with the performance of work from home will not be subject to income tax on the part of the employee, up to the amount of the lump sum that can be provided to employees remunerated by salary, i.e., CZK 4.60 per 1 hour.

Furthermore, up to the amount stipulated by law, this lump-sum compensation will not be subject to social security and health insurance payments. Should an employer provide a higher lump-sum compensation for working from home, the difference will be considered the employee's taxable income and will be subject to social security and health insurance payments.

On the employer’s part, the costs (expenses) of lump-sum compensation for working from home will be tax deductible, in full amount, i.e., even above the statutory limit of CZK 4.60 per 1 hour.

Other changes

The information obligation in connection with the establishment of an employment relationship has been extended, and workers under agreements outside employment also have to be informed to a similar extent. The amendment also defines a catalogue of information to be provided to employees posted to the territory of another state. The service of important labour-law documents has also seen significant changes, mainly as regards electronic service, which has been much simplified and hopefully will finally become more used in practice. A controversial innovation is the regulation of overtime for employees in healthcare: introducing more agreed-upon overtime above the maximum permitted scope is a rather unconventional solution to long-term unsatisfactory practice. This solution will at least temporarily legalise it.

What's next?

The Labour Code has undergone major changes that will have to be reflected in employment contracts, agreements on work performed outside employment, internal policies and other labour-law documents. It will now also be necessary to prepare and conclude agreements on the performance of work from home. Turn to us, we will be happy to help you with the preparation of new documents or the revision of existing ones.