The year 2024 is often referred to in professional circles as the year of legislation, and this is especially true for employment law. After several significant amendments to key labour legislation that were passed or came into effect this year, the Senate approved another significant amendment to the Labour Code yesterday that brings several major changes.

Minimum wage

The biggest and most discussed novelty is undoubtedly the automatic increase in the minimum wage. The minimum wage should now be based on the predicted average wage for the following year, which would be announced by the Ministry of Finance by the end of August of the previous year. The government will now always set a coefficient for two years in advance, taking into account economic factors such as purchasing power, the cost of living, the rate of wage growth and productivity developments. The level of the coefficient may be changed before the end of the period, for which it is fixed, only if there is a substantial change in national economic conditions. It will be possible to set different coefficients for each full year within the two-year period. The Ministry of Labour and Social Affairs should then always set the minimum wage for the following year (as the product of the expected average wage and the government coefficient) by the end of September. The amendment assumes that by 2029 the minimum wage will correspond to 47% of the average wage. This requirement is based on the European Fair and Minimum Wage Directive. The current minimum wage is CZK 18,900, which represents 41.1% of the average wage.

Guaranteed wage/salary

Another novelty brought by the amendment is the complete abolition of the guaranteed wage for the private sector. The new guaranteed wage will therefore only apply to employees in the salaried (public) sector. At the same time, the current 8 lowest levels of guaranteed wages in the salary sector will be reduced to 4, and their amount will no longer be determined by the government by decree, but will be derived from the minimum wage.

The criterion for dividing the work into individual groups will be the qualification level of the work performed. The actual distribution will be decided by government decree.

Employee self-scheduling of working time

The Labour Code currently provides that the employer decides on the distribution of working time and determines the start and end of shifts. However, the amendment newly introduces the possibility of scheduling the working time by the employee himself (including workers working based on agreement to perform work or agreements to complete a job). However, the right to schedule working time entirely at one’s own discretion will not be automatic for every employee, as it is subject to a written agreement with the employer. This agreement will be legally terminable with only 15 days’ notice.

Plurality of trade unions

When entering into collective agreements in a situation where the employer has more than one trade union, the employer must negotiate the collective agreement with all the trade unions. All these trade unions must agree to the final text of the collective agreement. The new rule is that if no agreement is reached within 30 days of the start of union negotiations, the employer can launch a simplified procedure whereby it selects one or more of the most representative organisations and subsequently enters into a collective agreement with them.  This does not apply if a majority of the employees in employment disagree with this procedure. Employees can veto the simplified procedure or suggest to the employer another trade union that they consider most representative.

A collective agreement under the simplified procedure must be made within six months of the date, on which the employer notified the employees of its intention to enter into a collective agreement with one or more trade unions, or of the date, on which the employer received the employees’ declaration of their choice.

The proposal was supported by a majority of senators and will now be forwarded to the President for signature. The amendment will probably be effective from 1 August 2024. In practice, this would mean that the new indexing mechanism for calculating the minimum wage would start to apply from the following year.