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Covid-19 coronavirus: Czech Republic measures for employers and employees extended until end of May 2020

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Kubalkova Eva
Eva Kubalkova

Professional Support Lawyer

Prague

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Ondrej Kramolis

Senior Associate

Prague

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27 April 2020

The Covid-19 coronavirus measures approved by the government for employers and employees include short-time working and compensation for wage costs. The support package has been available from 6 April 2020 and covers the period from 12 March 2020. Initially, it had only covered March and April 2020, but has been extended until the end of May 2020. 

By way of background, on 12 March 2020, in connection with the Covid-19 outbreak, the Czech government declared a state of emergency with the intention of protecting the health of the public. During a state of emergency, rights and freedoms may be restricted and the government may impose certain duties and declare prohibitions relating to both individuals and legal entities. The state of emergency has initially been declared for a period of 30 days but subsequently it was extended. It ended on 17 May 2020.

The measures adopted by the authorities have primarily aimed at preventing the spread of the virus among the population of the Czech Republic. Initially, they have included rather strict restrictions regarding free movement of people, closure of state borders and most retail stores, except certain essential facilities including grocery stores, drugstores, pharmacies and gas stations. With the coronavirus epidemic slowing down, the government has now started releasing the restrictions, but the economic measures described below remain in place for employers that meet certain conditions.

In order to mitigate the impact of the above restrictions on businesses, Czech authorities have introduced certain economic measures, including the support of employment in the Czech Republic. The government support includes:

  • compensation of payments to employees in quarantine;
  • compensation of payments to employees of businesses subject to the mandatory closure;
  • support of reduced working hours; and
  • support payable to employees taking care of children during the school closure.

The support is available in two regimes: (i) Regime A, applicable to businesses subject to manadatory closure or to employees in mandatory quarantine; and (ii) Regime B, applicable to employers facing economic difficulties resulting from the spread of the virus.

Compensation of sickness payments payable to employees in quarantine

Employees who were put into quarantine by the competent authority (with respect to Covid-19, this order can be made even by the relevant general practitioner) are entitled to sickness payments in the amount of 60% of their average reduced earnings (the amount is based on the employee's average hourly earnings but discounted according to certain statutory caps). The sickness payments for the first 14 days of the quarantine are payable by the employer. There is no waiting period, employees are entitled to compensation from the first day of their sickness or quarantine. If the quarantine lasts longer, then from the 15th day of the quarantine the employee is entitled to payments of the sickness insurance benefits.

As part of the government support measures adopted in response to the Covid-19 epidemic, the employers are entitled to compensation from the state (payable through the Labour Offices) amounting to 80% of  the sickness payments made to the employees for the first 14 days of the quarantine.

Compensation in case of a mandatory closure

In order to prevent the spread of the virus among the population, the government has ordered the closure of certain types of premises so as to prevent gatherings of large numbers of people. The following businesses have been subject to the shutdown during the state of emergency: (i) retail sale of non-essential products and services in stores (ie online sales have still been possible); (ii) restaurants (other than for takeaway); (iii) hotels (with limited exceptions); (iv) casinos; and (v) other non-essential facilities such as gyms, pools or cinemas.

Employees of the businesses subject to the mandatory closure have been entitled to salary compensation in the amount of 100% of their average earnings. The state then provides a subsidy to the employers in the amount of 80% of such compensation paid to their employees.

In both Regime A cases, ie the mandatory quarantine and the mandatory closure of business, the maximum amount payable by the state to subsidise the salary compensation paid to an individual employee is capped at CZK 39,000 (approx. EUR 1,400).

Compensation in case of absence of a substantial part of the workforce

If the employer is unable to assign work to its employees because a substantial part of its workforce is absent due to mandatory quarantine or childcare obligations (please see below), the remaining employees are entitled to salary compensation in the amount of 100% of their average earnings. The state then provides a subsidy to the employers in the amount of 60% of such compensation paid to their employees.

Government incentives in relation to reduced hours / partial unemployment

If the employer is unable to assign work to its employees for the whole period of their standard working hours due to a temporary decrease in sales of its products/services or demand for its products/services, then the employer may shorten the standard working hours of its employees. Such a situation is known as partial unemployment. The employees are entitled to compensation of at least 60% of their average salary for the period by which the standard working hours were shortened.

The Czech government has decided to provide subsidies to employers affected by the Covid-19 epidemic that apply partial unemployment and undertake not to make any redundancies. The following general conditions of the program apply:

  • employers that are unable to assign work to employees due to unavailability of raw materials, products or services which are needed for their business are obliged to provide to their employees a salary compensation of at least 80% - the state will then provide a subsidy to the employers in the amount of 60% of such compensation paid to their employees;
  • employers that are unable to assign work to employees due to a decrease in demand for their services or products are obliged to provide to their employees a salary compensation of at least 60% - the state will then provide a subsidy to the employers in the amount of 60% of such compensation paid to their employees.

The employers must adopt a specific internal policy describing the conditions of the partial unemployment.

The support payable by the state in Regime B (ie if a substantial part of the workforce is absent or in partial unemployment) may not exceed CZK 29,000 (approx. EUR 1,075) for each individual employee.

In both regimes, in ordert to receive the support, certain conditions must be met, such as complying with the Labour Code or duly paying wages and contributions. In addition, the relevant employee must not be subject to a notice period.

Employee childcare obligations

Employees are entitled to a leave of absence without pay if the employee cannot perform the duties of his or her position because he or she is providing care or support for a child the employee is responsible for. During this period, the employees are provided with sickness insurance benefits from the sickness insurance system in the amount of 60% of their average salary (up to a statutory cap).

This leave of absence is applicable also in a situation when the child is put into a quarantine or the child’s school is closed due to counter-epidemic measures (which is currently the case in the Czech Republic where all schools are closed).

The Czech government has decided to change the default regime with respect to the Covid-19 epidemic and has extended the above rule to all children up to the age of 13 (the default regime is up to 10). Also, the sickness insurance benefits will be provided for the duration of the school closure (the default regime is generally limited to 9 work-days).

Employees who are on a leave of absence cannot be made redundant during their absence (with certain limited exceptions).

As mentioned, the above is a summary of the general conditions of support as announced by the Czech government and is subject to change.

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