Navrhované změny zákona o zaměstnanosti

Proposed amendments to the Act on Employment

On 9 November 2022, the Ministry of Labour and Social Affairs submitted a long-awaited amendment to the Act on Employment. The purpose of the proposal is mainly to abolish the compulsory insurance of employment agencies and to increase the mandatory deposit. 

The proposed amendment is quite extensive. It includes, for example, the introduction of administrative discretion in the case of minor breaches of the Act on Employment, which in the pastcould lead to the revocation of an employment agency licence. 

The most significant part of the proposed amendment of the Act on Employment is the abolition of the obligation to insure employment agencies and the increase of the statutory deposit. 

Currently, one of the obligations of employment agencies is to take out bankruptcy insurance, which entitles a temporarily assigned employee to financial compensation if the employment agency fails to pay his or her salary due to the bankruptcy of the employment agency. However, the protection of the employment agency employee under this insurance was not sufficient compared to the protection of employees in the event of the employer's insolvency. The employee of the employment agency received his or her financial means later, even with a delay of several months. On the other hand, the payment of salary entitlements under the Act on the Protection of Employees in the Event of Employer Insolvency (Act No 118/2000 Coll.) is prompt and also gives rise (as the salary) to participation in the pension insurance. The abolition of the employment agency insurance shall ensure the agency employees with the same conditions as granted to other employees whose employer becomes insolvent. The employment agencies will now fall under the scope of the Act on the Protection of Employees in the Event of Employer Insolvency and their employees will no longer have to wait for the insurance company to pay their entitlements to them.

In accordance with the Act on Employment, the employment agency is obliged to provide the Labour Office with a deposit of CZK 500,000 (approx. EUR 20,505) after obtaining the agency employment licence. In view of the amount of the deposit in neighbouring EU countries, where for example in the Kingdom of Belgium the deposit is EUR 75,000 or in France at least EUR 127,079, the decision was taken to increase the deposit to CZK 750,000 (approx. EUR 30,750).

We are monitoring further developments in the legislative process on this matter and will keep you informed. If you would like further information, please contact the authors of this article or other members of the EY team with whom you work. 

Authors:

Ondřej Havránek

Hana Gutova