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Veronika Odrobinová | March 11, 2024

GT verdict: Termination without giving a reason? A step in the right direction, says Veronika Odrobinová

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The government’s National Economic Council (NERV) has published a plan to help the economy. According to the advisory body, one of the main pillars of such assistance should be to get the labour market moving. NERV economists recommend that this be achieved by introducing the possibility of termination without giving a reason. According to them, the current set-up of relations between employers and employees leads to a stiffening of the market, which is then unable to respond dynamically to current developments.

For my part, I could not agree more. Our legal community has been calling for termination without giving a reason for a long time. The current setup is really not well-chosen. Simplification of the process could certainly lead to a significant decrease in litigation over the invalidity of termination of employment, which, as everyone probably intuitively suspects, also costs the state a considerable amount of money.

An invalid termination of employment has truly draconian consequences for the employer. In the current setting, if the employer gives notice “in a wrong way” and the employee attains a declaration that the termination was invalid, this means that the employee’s employment did not end and the employer is thus obliged to pay the employee wage compensation for the entire duration of the dispute – and possibly deal with termination of the employment again. Although the court can reduce the compensation, in practice this hardly ever happens.

Very often the reason for the invalidity of the termination is a wrongly chosen reason for termination. Therefore, as attorneys, we appeal to our employer clients that the best way to terminate the employment relationship is by agreement. Within this framework, there is very little possibility for the employee to challenge the method of termination.

The employer is obliged to compensate the employee not only for lost wages but also for other benefits. Moreover, a recent decision of the CJEU  extended these claims further. The Court of Justice of the European Union has also granted a woman, who succeeded in a case for nullity of her dismissal, the right to compensation for untaken leave for the years when she was (wrongfully) dismissed. Thus, the employer had to pay her her wages for the 4 years, when she did not work for him, and still allow her to “take” her paid leave for the said 4 years.

In practice, I have also encountered other extreme situations, where the court ruled that the termination of the employment relationship was invalid, even though it was obvious from my point of view that the employer’s reasons for terminating the employment relationship with the employee were entirely legitimate. As an example, I would cite the actions of an employee who was also a proxy in the company. She arbitrarily transferred to her own account a sum of money that she believed was simply her due. When the surprised (and probably angry) employer learned of her actions, even greater surprise (and probably anger) awaited him still. He could not terminate the employment relationship with the person in question for breach of duty, because in the case described she was not acting as an employee but as a proxy.   

But in order not to make it look like I side with the “team employer”, we need to add the all-important “B” side. If, then, we are to increase flexibility on the employer side, we must also increase compensation on the employee side. A compensation payment of six times average monthly earnings, which has been speculated about in the press, seems reasonable to me. At the same time, I would argue for the amount of compensation pay to be increased based on the length of the employment relationship. I think it is logical that the amount of compensation should be different for a six-month employment relationship than for a 20-year employment relationship.

I am optimistic regarding the worries that the potential change might be reflected negatively in the state budget through a higher burden on the welfare system. I do not think there will be such a change. Given the state of the labour market, I believe that employers would have no reason to overuse this option, especially if it is compensated by higher compensation pay.

“People would be fired due to displeasing some boss or having a different skin color than his,” warned Josef Středula, chair of the Czech-Moravian Trade Union Confederation. In my opinion, the fears that this institute will allow termination for discriminatory reasons, for example, are also not in place. Although excesses cannot of course be ruled out, it will also be the case that if the termination is motivated by a discriminatory reason, it can be declared null and void.

Moreover, in these cases, the burden of proof is reversed – the employee only needs to prove the basic facts indicating discrimination and then the employer must prove that there was no discrimination. If the employer does not sustain this burden of proof, the court will find against the employer.

So, from my perspective, this is definitely a step in the right direction. But I wonder if the government will be able to get it through.