May 2011 – The changes to come are intended to incentivise companies to hire more employees, by relaxing the rules on dismissal. The period of notice for termination of employment is going to be changed and should vary between one and five months, depending on how long the employee has been with the company. Also, until now an employer who dismissed an employee as part of a reorganisation could not recreate the work position for three months after the dismissal. After the amendment enters into force, employers should be able to recreate the position two months following the dismissal.
Limitation of severance payments
One of the most controversial changes under the amendment is a limitation on the right to receive a severance payment where the employee continues working during the termination period. According to the new rules, a severance payment should essentially be provided to employees who have agreed to cease working rather than to carry on work during termination period.
Non-compete arrangements
Following the proposed amendment, the Labour Code will also contain a more employer-friendly non-compete provision (for the duration of the employment) and will introduce an entirely new possibility allowing parties to agree on a post-employment non-compete arrangement (which is not possible under the current Labour Code).
Other changes
The amendment also introduces a number of other changes. For example, it redefines collective redundancy, it provides for a longer probationary period in the case of managerial employees (six months as opposed to three), and it extends the option to prolong a work contract for a fixed term from twice in two years to three times in three years.
Follow up to come
The amendment is expected to enter into force on 1 September 2011. We continue to monitor the developments in employment and other legislation and will provide you with more information in the upcoming issues of our newsletter.
For further information, please contact Viliam Mysicka, Counsel, at .