At the end of this April, an amendment to the act on the protection of employees in situations, where their employer is unable to pay their wages due to insolvency, underwent a thrilling turn of events As such, the Act provides resources to workers affected by the insolvency of their employer and regulates processes that allow for easy application of outstanding wage claims through the Labour Office of the Czech Republic.

The amendment to the Act is partly an adapting regulation responding to European regulations and adapts the legislation to current changes in the field of insolvency law, both domestically and internationally. A different start of the reference period, in which for employees to apply for payment of uncollectable wage claims, is newly established. This period starts only when an insolvency proceeding opens and not when the insolvency petition itself is filed. As it is not clear at the time of filing an insolvency petition, if the conditions for declaring an employer bankrupt will be met, this clarification strengthens the legal certainty of employees and unifies the regulation for multinational employers at European level as well. In addition, the issue of the due date of a wage claim, which in the past caused inconsistency in the decision-making of the competent authorities, is being clarified.

Employees will have 5 months and 15 days from the commencement of the insolvency proceedings to apply. Furthermore, the amendment indirectly extends its scope to so-called agency workers, who were explicitly excluded in the previous legal regulation.

The proponents of the amendment hope that the recoverability of employees’ wage claims will not deteriorate and that, on the contrary, legal certainty and legitimate expectations will be strengthened. Only the future will tell if this will actually happen.

Author: Veronika Odrobinová, Jan Nešpor