Types of employment relationship

There are several types of employment relationship. In this article, we’ll look at part-time, fixed-term and fixed-term contracts.

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An increasingly popular way to combine work and lifestyle or family, especially among millennials who are not just chasing a career but rather want to enjoy every moment. But how is this set up from a legal perspective? When is it possible to ask for a shorter workload and when must the employer provide it? Why can it also be beneficial for the employer?

From a legal point of view, we basically have two basic options to give the employee more freedom. It can be a classic employment relationship based on an employment contract, but with shorter working hours, or it can be a so-called “agreement”. Let’s focus first on the shorter working hours. Part-time work can be agreed between any employee and the employer at any time if it suits both of them. This is also the case with so-called job sharing, which we will discuss below.

However, some employees are even entitled to work shorter hours. This means that if they ask their employer to adjust their working hours, they cannot refuse.

These include pregnant women or employees who are caring for a child under 15. The employer must comply – unless serious operational reasons prevent them from doing so. In practice, of course, it is all about the atmosphere in the workplace and is more likely to be enforced in a larger corporation or operation. Employers are not very accommodating in this respect and often get creative in inventing these insurmountable operational reasons. Their explanations, however, would often raise the eyebrows (or the corners of the mouths) of the members of the panel in court. Indeed, the employer must be able to prove the operational reasons; they must objectively exist.

TheLabour Code does not define them in detail, so we have no choice but to rely on court practice. What is important is that the Supreme Court has concluded that there are no serious operational reasons if the employer can solve the problem by hiring another person on a part-time basis or perhaps on a work agreement to cover the rest of the regular working hours of the employee needed. The mere fact that the employer has to take certain measures is therefore not a serious operational reason.

However, a serious operational reason may be the irreplaceability of an employee due to narrow specialisation or economy, i.e. that the work cannot be divided among several people.

Agreements – FTE or SNE

An alternative to a traditional employment contract may be an agreement. Agreements are actually simplified employment contracts. They create an employment relationship but are not so tightly bound by the straitjacket of the Labour Code and compulsory contributions. Specifically, they are agreements for the performance of work (FPA) and agreements for the performance of work (FTE).

The easiest way to distinguish between these two agreements is by the possible hours worked. A work performance agreement is limited to 300 hours per calendar year. On the other hand, an employment contract can exceed this range, but it cannot exceed half of the fixed weekly working time averaged over the entire period for which the FTE was concluded, but not more than 52 weeks. In other words, it cannot exceed 20 hours per week on average. The FTE is therefore more suitable for longer-term temporary work or activities.

On the other hand, a performance contract has the advantage that if you earn less than CZK 10,000 per month, you will only pay withholding tax and will not be charged health or social security.

However, you should be more careful about the taxation of your remuneration in the case of a labour agreement. There are several options here, if you do not sign a tax declaration with your employer and the remuneration is less than CZK 2,500, the employer will deduct a 15% withholding tax from the remuneration. Whereas for remuneration above 2500 CZK, the employer will pay the advance tax as in a regular employment relationship. At the end of the year, your employer will issue you with an income certificate upon request so that you can file your tax return. If you had income from two employers taxed by the advance tax in any month, you must file a tax return. If you pay tax by withholding there is no obligation to file a tax return. Social security and health insurance is payable on remuneration over CZK 2,500 per month, and in the case of multiple agreements, the remuneration is added together.

Tip: Summer and temporary jobs go hand in hand. But what about the contract? Find out in our article.

When entering into both agreements, it is important to specify the agreed work, the agreed scope of work and the period of time for which the agreement is concluded. Other details can of course be negotiated or regulated by internal regulations.

Both agreements must be in writing but are not subject to many of the provisions of the Labour Code. These include, for example, entitlement to severance pay on termination of employment, working and rest periods, with the proviso that the performance of work may not exceed 12 hours in any consecutive 24-hour period, holidays, termination of employment, remuneration other than the minimum wage, etc.

However, this does not mean that these cannot be agreed with the worker or laid down in the employer’s internal regulations. If you do not agree anything else in the performance agreement, it will always be up to the agreement of both parties as to when you work and when you take time off (only some restrictions apply, for example on the length of working hours). However, if you agree to a clause whereby you agree to come to work, for example, every weekday, then this arrangement will of course apply.

Unless something else has been agreed, the agreements can be terminated:

    by agreement of the parties
    by giving 15 days’ notice, which starts on the date of delivery of the notice to the other party.
    • by immediate termination, if agreed, and only for cases where immediate termination is possible

A written form is also required for termination. However, as with any employment contract, take particular care when signing the agreement to look out for various unusual provisions, for example, regarding travel, notice, immediate termination, and so on, similar to any employment contract.

Tip: Looking for flexible short-term work and wondering what legal form is suitable? An easy way to arrange such short-term work is to enter into one of two types of employment agreements. For example, a work performance agreement. What to look out for when entering into one and what are its advantages? We have discussed this in detail in our article.

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Fixed-term employment contract

If you agree to a fixed-term employment contract, you are setting a clear end. This contractual relationship is advantageous to employers in that they can simply terminate an employee who does not perform well at the end of the term. However, it is not possible to enter into this contractual relationship for too long a period. It is a legal requirement that a fixed-term contract can be agreed for a maximum of three years. It must be clearly stated in the contract how long the contract is for. Of course, it can also be for a shorter period – for example, one year is common.

When the contract expires, the employer may decide to terminate the employment relationship, enter into an indefinite-term contract or extend the fixed-term contract. If the contract is extended, it is important to remember that it can again only be for a period not exceeding three years. However, there is a restriction here too, namely that this can be done no more than twice. This means that a fixed-term employment relationship can last no longer than 3 x 3 years.

If the company wants to employ you after it has exhausted its “three attempts” under this rule, it must offer you a permanent contract. According to the Labour Code, another fixed-term employment relationship can only be agreed after a further three years.

However, one exception has been introduced since 1 August 2013. There are employees for whom fixed-term contracts need to be negotiated more frequently. These are mostly seasonal activities that can only be carried out at certain times of the year – for example, ski lift operators, agricultural work and so on. In such justified cases, the employer may deviate from the above rules and set its own. Only if the employer has a trade union must these company rules be agreed with the trade union.

If you are offered a fixed-term job, it is a good idea to check whether your employer has taken any exception to the statutory rules. In practice, there will not be many such companies. If your employer is not one of them, what we have said above applies. If it does, you should familiarise yourself thoroughly with the company’s rules. In addition to these rules, the restriction on the repetition of fixed-term contracts does not apply to agency employment. That is, where you are employed by an employment agency that places you in a specific position with a particular user of their services under a temporary assignment agreement.

Whether your employer has the rules under the Code or has modified them in part, there is one pleasant consequence for you if you exceed the maximum permissible duration of a fixed-term contract (i.e. after a maximum of nine years). If you notify your employer in writing before the expiry of the agreed period that you insist that he continues to employ you, your employment relationship is deemed to be for an indefinite period. You will no longer be at risk of the expiry of the incorrectly agreed period.

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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.

  • 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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