Of interest.

Closure of operations or demand reduction – labour law impacts (COVID-19)

The government has on 12 March 2020 declared an emergency status for the Czech Republic for 30 days by Resolution No. 69/2020 Coll., due to health threat associated with coronavirus (COVID-19). Subsequently, the government adopted a number of crisis measures that that have caused among other things complete or partial closure of selected operations, office or businesses. This was caused mainly by crisis measures with a view to limiting concentrations of large numbers of people and a crisis measures relating to restrictions on transportation, retail and provision of services in certain establishments and the presence of the public in catering establishments, accommodation etc.

This has a significant impact on employment and there are generally two situations of impacts that may occur:

  1. the operation had to be completely shut down (e.g. in restaurants or in stores located in shopping centres); or
  2. limited operation is in progress (e.g. for suppliers or service providers to establishments that must be closed).

Complete closure of operation

The case of operations that must be completely shut down is in our opinion an obstacle to work on the part of the employer. The government decision regarding the adopted measures is in our opinion neither an idle time, nor an interruption of work as a result of weather conditions or a natural disaster, it cannot be governed by the provision of Section 207 of the Act No. 262/2006 Coll., the Labour Code (hereinafter “Labour Code”), which allows reducing the compensation for salary.

The complete closure of operation due to the government decision is in our opinion another obstacle to work on the part of the employer pursuant to Section 208 of the Labour Code. The employees that are not assigned any work due to this situation are entitled to wage compensation equal to their average earnings (100 %).

It is necessary to mention, that such employees may be ordered to work any time an employer has an appropriate work for them and instructs them accordingly (even to do e-learning etc.). Such work must comply with their employment contract. Different works, that do no comply with the employment contract, may be done upon the consent of the employee.

You may come across opinions that this situation may be assessed in accordance with the provisions on so-called partial unemployment (more below) or in accordance with the procedure for anti-epidemiological measures.

The procedure for anti-epidemiological measures is applied in case that the employer’s establishment is closed for example by a decision of Ministry of Health or hygienist to limit the spread of disease, but usually it is applied according to the Public Health Protection Act. In this case, the situation is assessed as in the case of a quarantine order (the employer pays to the employees the first 14 days of sick leave and the state pays the employees from the 15th day). However, in the current case the establishments were closed because of the government’s decision in the emergency status.

We expect in this situation further development of interpretation and possibly correction or specification of the opinion of Ministry of Labour and Social Affairs. An unambiguous opinion will have to be taken at the latest when processing the wages for March. However, we are of the opinion that extensive interpretations that would reduce employee salaries are against fundamental labour law principles.

Limited operation

Establishments with limited operations due to temporary reduction in demand for goods or services may be governed in our opinion by Section 209 of the Labour Code, which includes the institute of so-called partial unemployment. This institute provides that work is not assigned in the amount of the weekly work schedule. The partial unemployment can be accepted after an agreement with the trade union organization or by internal bylaw in workplaces with no active trade union organisation. During the part-time unemployment may be the wage compensation for employees reduced. The compensation must amount to at least 60 % of average earnings.

However, reduced wage compensation will be granted only for the period when employees are unable to perform work and they are entitled to their normal wage for performed work.

Other cases of impossibility to allocate work

In addition to the obligation to close the workplace due to the taken crisis measures and the reduction of operation due to the reduction in demand for goods or services, the employer may have difficulty allocating work to employees because of so called idle time. The idle time is one of the obstacles to work on the part of the employer and it is regulated by Section 207(a) of the Labour Code. In this case, the employer cannot allocate work to employees because of lack of inputs (raw materials, components, etc.), for a temporary defect caused by a failure on the machinery, due to faulty work documentation or due to other operational causes. During the idle time are the employees entitled to wage compensation of at least 80 % of average earnings.

If the employer is unable to allocate work to employees due to the weather conditions or a natural disaster, the employees are entitled according to the Section 207(b) of the Labour Code to wage compensation of at least 60% of average earnings.

Other options and conclusion

All of the above-mentioned types of wage compensation belong only to employees who are ready to work. If the employee is incapable of work, has a quarantine order, takes care of a child, or is subject to other quarantine-type measures, he or she will be in sickness regime.

Another option for employers to cope with the limited operations or closure of the operation is to order leave to employees. The employer must notify the leave order to the employees at least 14 days in advance. The employer may also in agreement with the trade union organization and with the consent of the works council (if these organizations are active in the workplace) order collective leave pursuant to Section 220 of the Labour Code. In this case, it cannot be longer than 2 weeks and for art ensembles it cannot be longer than 4 weeks.

The possibility of agreement with employees on alternative solutions such as displacement to another type of work, change of shifts, part-time work, working from home, etc. of course remains open.

It follows from the above that the negative impacts will be borne by employers. However, the Ministry of Labour and Social Affairs is preparing a proposal that should at least partially compensate for their financial losses. The proposal should be presented by the Ministry in the following days. For this reason, we recommend that you record all your losses that were caused by the crisis measures in order to obtain financial compensation.

If you have any questions about this article or labour law in general, we are at your disposal – so please don’t hesitate to contact us.


Mgr. Jakub Málek, partner – malek@plegal.cz

Kateřina Roučková, legal assistant – rouckova@plegal.cz



18. 03. 2020