Návrh Novely zákona o ručení za mzdy zaměstnanců ve stavebnictví

Proposed amendment to the Act on Salary Guarantee for Employees in the construction industry

Salary guarantee of employees by a person other than the employer is not an unknown concept in the Czech Labour Code - in the current legal regulation it may be encountered  in cases of transnational provision of services. So far, this regulation only applied to the above-mentioned type of relationship, however this shall be changed by the amendment drafted by the Ministry of Labour and Social Affairs (the "MoLSA")  and proposed earlier this month to the government as a response to a reproach sent to the Czech Republic by the European Commission regarding the wrong implementation of the directive that impose an obligation on member states to ensure this protection.

The proposed amendment which applies exclusively to multinational and domestic subcontracting relationships in the construction industry shall provide protection to all employees, including agency workers, who have not been paid by their employer for work performed for a contractor. The employer would be required to properly inform employees of their newly proposed rights and obligations. These rights and obligations include the option to ask for the payment of salary from the guarantor if the employer fails to fulfil such obligation, and information about the identity of the guarantor(s). The provision of the above-mentioned information would be mandatory for employers and would have to be provided to all employees involved in the performance of the contractual obligation.

Should the employer fail to properly pay salary to the employee, the employee, or the trade union of which he or she is a member, is entitled to call upon the guarantor within 3 months of the due date of the salary payment to pay the employee´s salary. The guarantor may only be such an entity for which the employer is acting as a subcontractor - i.e., the entity in the supply chain one level above the employer. In the explanatory memorandum, the MoLSA clarified that the construction investor itself cannot be considered as the guarantor. However, the salary shall not be paid at the amount agreed between the employer and the employee. The MoLSA proposed to set the maximum amount of the guarantee in the amount equivalent to the minimal salary. It should be noted that the guarantee only applies to the salary of employees and not to other obligations related to the payment of salary. The guarantor is not required to make deductions from salary or fulfil any other obligations towards the state. Those shall remain with the employer.

The proposed regulation also considers the frequent situation in which the contractual chain includes a large number of subcontractors. In such case, the contractor who has entered into a legal relationship with the employer, but also the contractor at the highest level of the contractual chain should both guarantee the payment of salary.

Failure to comply with the information obligation and failure to pay salary to employees will be considered an offence under the Labour Inspection Act. In case of failure to comply with the information obligation, the employer will face a fine of up to CZK 200,000. The proposal stipulates a fine in the same amount for situations where the employer fails to meet the obligation to satisfy the claim for salary.

The proposed amendment to the act is currently in the comment procedure and may therefore undergo significant changes. We will monitor its further developments on this matter for you. If you are interested in further information, please contact the authors of this article or other members of EY Law or the EY team whom you work.

Authors:

Jan Turek

Kateřina Suchanová