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Paid leave for self-employed workers

Are you self-employed but work for a company for a commission or fee every month? Are you “employed” through a shvarcsystem? You might be interested to know that you are entitled to paid leave in this case as well.

cesta na dovolenou, OSVČ
4 minutes of reading

When are you entitled to paid leave?

If you have worked for a company for a long time, you are entitled to paid leave or to compensation for untaken leave when your employment ends, either by notice from your employer or by agreement. The case of a certain Mr King from the UK was a breakthrough. He claimed compensation for untaken holiday from Sash Window Workshop Ltd. The company laughed him off, arguing that as a self-employed worker he was not entitled to paid holiday. However, Mr King, who had left his job because of his retirement age, was not deterred and took his case first to the British courts, which found in his favour and then upheld by the European Court of Justice.

The courts have thus sent a clear message to the European states thatemployees who disguise themselves as self-employed to save companies money on levies are entitled to four weeks paid leave per year under EU law. Indeed, the European directive includes these people under the term ‘worker’.

The case of King v. The Sash Window Workshop Ltd was an illustrative case of the substitution of a form of business collaboration for an employment contract. This may be legitimate. A sole trader is flexible and can work for multiple clients with administrative savings. But in some cases it is just about reducing the tax burden. Under our law, this is usually a so-called “shvarcsystem”, i.e. an illegal circumvention of labour law norms. The consequence can be, among other things, the purposeful loss of holiday entitlement.

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Tip: You may work freelance for up to twelve hours a day, but if you or your child fall ill, you are much worse off than your friends with a contract and eight-hour days. Are there ways to improve your situation and get a better position as a self-employed person? What are the options for securing sickness and sick pay or some alternatives? This is the focus of a separate article.

When do I have to file my claim?

Even in such a case of circumvention of the Labour Code, under Czech law it is possible to retrospectively challenge such a relationship in court and the court may declare it to be an employment relationship, with a number of new rights and obligations, including the right to holiday. Attention should be paid to the limitation period for all claims. Here, the general time limit of three years applies for the recovery of claims. The ECJ’s decision therefore confirmed what Czech law already knows.

If you end up working as a self-employed person for a certain company, remember that you may be entitled to compensation for untaken leave, that is, if you have not just been dismissed from your employment during the probationary period, as the entitlement to leave is triggered by working 60 days and the probationary period may not exceed 3 months. For a managerial position only, the probationary period could be up to 6 months. If you are not sure whether you are entitled to leave, consult the experts.

Beware of the scam system!

If you want to avoid disguised illegal activities, beware of the following elements of your cooperation:

  • The remuneration is determined by the employer’s rate, not by the contractor’s price list,
  • thecontractor has a single customer,
  • the contractor uses the customer’s tools (business phone, computer),
  • the customer requires the supplier to perform the work personally,
  • the supplier appears to third parties as an employee ,
  • the work is typically performed in an employment relationship,
  • it is a continuous relationship, not a casual one,
  • the pay periods of employees and self-employed workers coincide,
  • The self-employed person does not put any resources into his/her activity except for the work itself,
  • Self-employed workers are provided with similar benefits as employees.

However, the existence of only individual elements does not automatically imply a quasi-cyst. Typically, there is an accumulation of several points.

Tip: How to set up a relationship with a service provider? Does signing a non-disclosure agreement (NDA) imply a lack of trust towards the other party? And what form of cooperation with a freelancer should be chosen so that it does not constitute a “shvarcsystem”? In our video, we focus on these and other aspects of the relationship between entrepreneurs and suppliers in the form of freelancers or smaller companies.

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Author of the article

JUDr. Ondřej Preuss, Ph.D.

Ondřej is the attorney who came up with the idea of providing legal services online. He's been earning his living through legal services for more than 10 years. He especially likes to help clients who may have given up hope in solving their legal issues at work, for example with real estate transfers or copyright licenses.

Education
  • Law, Ph.D, Pf UK in Prague
  • Law, L’université Nancy-II, Nancy
  • Law, Master’s degree (Mgr.), Pf UK in Prague
  • International Territorial Studies (Bc.), FSV UK in Prague

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