22nd February 2022

HN: The Labor Code is lagging behind the requirements of the labor market

The legislative framework regulating flexible forms of work, especially work from home, is missing, and employers fill this gap by adjusting internal policies. Without a concise regulatory framework, it is impossible to overcome some related practical problems, for example, the question of compensation of cost incurred during employee’s work from home. Employees are usually not able to prove the real cost of their work from home, which makes it difficult for employers to apply related tax deductions. Therefore, companies sometimes opt for lump sum compensation for costs. By doing this, however, they risk tax controls and sanctions in case they are not able to provide the calculation of real cost of the employee’s work from home.

The employer’s obligation to secure health and safety standards for employees working outside workplace is equally problematic to meet. A company is liable for damage regardless of fault. As a consequence, companies view work outside the workplace as riskier than work performed at workplace, whereas nowadays, employees would prefer flexibility over protection provided by the Labor Code. 

Let us remind readers that past attempts advocating Labor Code changes regulating remote work have always failed so far. In 2016, draft amendment to the Labor Code introducing work from home, among others, has not made it through the legislative pipeline. Last year, the Government rejected a legislative proposal on work from home submitted by a group of Christian Democratic MPs, including the current Minister of Labor and Social Affairs Marián Jurečka. The discussion on the proposal was limited to politically sensitive issues such as the question whether the employer would have the right to order the employee to work from home. Nevertheless, the above-mentioned practical issues were not addressed.

The new Government has promised a more flexible Labor Code. If the discussion is limited to controversial topics again, the legislation will not catch up with the reality in the foreseeable future. The expert community has been calling for regulation of “work from anywhere” and is ready to help the Government with this uneasy task. The American Chamber of Commerce in the Czech Republic (AmCham), an association of employers who consider flexibility of work to be the key element, has been advocating one of these initiatives. “Technology reduces the reliance of companies to organize by buildings. Covid crashed through the conservative management practices that were resisting this new possibility for a more creative way of work. Now the challenge is that labor codes drafted for factories will fail to allow countries to compete in a new work from anywhere environment. Those countries that react first to the desire of their citizens to have more choice, and responsibility, for where they work will have a competitive advantage,”  said Weston Stacey, Executive Director of AmCham.
Having mentioned flexible forms of work, the phenomenon of gig economy - and related rise of hybrid jobs - cannot be ignored. This is a combination of regular employment relationship and freelance entrepreneurship, especially in delivery services. According to the current legislation, however, these hybrid settings come with a risk of high sanctions for illegal employment or hidden agency work. In order to permanently increase competitiveness of Czech employers, changes must be introduced also in these - so far overlooked - areas.


Veronika Kinclová, Tomáš Procházka, Clifford Chance Prague LLP


Translated from the Czech original published in Hospodářské noviny

Members of the American Chamber of Commerce in the Czech Republic