The action taken by the executive authorities to deal with the crisis caused by the spread of the COVID-19 pandemic on 23 March 2020 was presented in the media as an expected official extension and modest amendment of the Government measures already in place. It was easy to overlook the fact that some of the above measures (restrictions on retail sales and free movement of persons in the Czech Republic) were given a completely different form and legal basis, even though the content remained virtually unchanged.
In this article we briefly analyse the change of crisis measures and draw attention to the relatively serious legal consequences.
What happened?
The Government of the Czech Republic has issued several resolutions in recent weeks introducing various crisis measures restricting certain rights of natural and legal persons, inter alia restricting the free movement of persons by resolution of 15 March 2020, No. 85/2020 Coll., effective until 24 March 2020, 6:00 AM, when according to the resolution of the Government of 23 March 2020, No. 126/2020 Coll., should be, at least according to its presentation to the public, extended in the same form.
Such media interpretation is not accurate. By this resolution of 23 March 2020, the Government of the Czech Republic explicitly annulled the previous resolution on the crisis measure and at the same time took note of the emergency measure of the Ministry of Health of the Czech Republic of 23 March 2020, ref. MZDR 12745/2020-1 on restriction of the free movement of persons to practically the same extent, only with a new definition of its period of effectiveness.
The Government´s resolution in the Czech Republic on crisis measure restricting retail sales was “prolonged” in practically the same way, when resolution No. 82/2020 Coll., of 14 March 2020 was annulled by resolution No. 127/2020 Coll., of 23 March 2020 and in fact replaced by the emergency measure of the Ministry of Health of 23 March 2020, ref. MZDR 12746/2020-1.
In our opinion, these two seemingly insignificant events have a significant impact on at least two important situations that many business entities will have to tackle, in particular:
- paying wages to employees unable to work for their employers as a result of the measures takenU and
- claim against the State for compensation of damage caused by the crisis measures.
Wage compensation
Already at the time when the Czech Government resolution on crisis measures has been in effect, there was a controversy over the issue of wage compensation for employees and the form and type of the obstacle to work was subject to question. The current situation makes this discussion even more complicated.
Since the aforementioned crisis measures of the Government of the Czech Republic were issued with reference to the relevant provisions of Act No. 240/2000 Coll., on Crisis Management and on Amendments to Certain Acts (the Crisis Act), they are now replaced by the above emergency measures of the Ministry of Health with reference specifically to Section 69 of Act No. 258/2000 Coll., on Public Health Protection and on Amendments to Certain Acts, where so-called extraordinary emergency measures for the epidemic and the risk of its occurrence are regulated. This term also explicitly appears in the Labour Code (Act No. 262/2006 Coll.), specifically in Section 347 (4), where it states that emergency measures of this type must be interpreted as quarantine for the purposes of the Labour Code.
Quarantine is an obstacle to work under Section 192 of the Labour Code and the employee is therefore entitled to a wage / salary compensation of 60% of the average earnings for the first 14 calendar days if the employee meets the conditions for entitlement to paid sickness leave.
The question is, however, whether the particular emergency measures must necessarily be regarded as quarantine, when footnote no. 99c present in Section 347 (4) of the Labour Code contains a reference specifically to emergency measures pursuant to Section 69(1)(b) and (1)(h) of the Public Health Protection Act and the Ministry of Health of the Czech Republic refers in the above-mentioned emergency measures to § 69(1)(i) of the same regulation. However, the case-law provides that the footnotes set out in legislation are not binding for their interpretation.
On the publication date of this article, the Ministry of Labour and Social Affairs did not expressly comment on this issue, but it can be inferred from the prepared conditions and documents for the Antivirus Programme that the Ministry is likely to interpret that even the measures taken in the current situation under § 69 (1)(i) of the Public Health Protection Act, give a reason, in case of impossibility to allocate work to employees in operations affected due to these measures, to apply § 208 of the Labour Code with wage compensation of 100%.
The Ministry therefore takes the same interpretation as for the first 10 days of the duration of these restrictions (from 14 March 2020 until 23 March 2020) which arise from the decisions of the Government of the Czech Republic under the Crisis Act, when it is anticipated that employers will be required to express their consent to the ministry’s interpretation and commitment to respect it, although this is problematic, in order to benefit from compensation under the Antivirus program.
In principle, this means two possible ways for employers: (a) to consider this new situation as quarantine, which will reduce the pressure on the current cash flow situation, but it will disqualify the employer from the Antivirus program and increase the risk of disputes with employees and social security administration, or (b) accept “safe” though in our opinion not right interpretation of the Ministry, which will increase the requirements for sufficient funds to pay higher employee payments, but will remain able to compensate them from the Antivirus program and decrease the risk of disputes with employees or administrative bodies.
Damage compensation
As far as compensation of damages is concerned, the situation, as discussed in the media, is even more complicated. In recent days, some representatives of the Government of the Czech Republic said that the state will not be able to receive claims for compensation of damage even within the first 10 days of the restriction (from 14 March 2020 until 23 March 2020) which was based on the crisis measures of the Government itself under the Crisis Act, let alone that it will not be possible for any potential damage caused as a result of measures of the Ministry of Health under the Public Health Protection Act, which in their opinion should not fall under the regulation of the Crisis Act.
In case of emergency measures of the Ministry of Health of the Czech Republic, at first sight, compensation of damages is considerably suppressed, if the measure is supposed to be in line with law, because under Section 97 (1) of the Public Health Protection Act, the person to whom the duty has been imposed shall bear the costs arising from the fulfilment of public health duty.
The questions of whether in this case the provision of Section 36 of the Crisis Act is a special legal regulation, which takes precedence over the general rule, and whether the emergency measures of the Ministry of Health of the Czech Republic are in the legal sense crisis measures within the meaning of Section 2(c) of the Crisis Act, are subject to expert discussions.
The discussions of the specialists in the field in various ways conclude (although there are also opposite opinions) that compensation for damage under the Crisis Act can be directly claimed by the persons concerned, both for the first 10 days of the restriction and for the period of the restrictions imposed by the Ministry of Health under the Public Health Protection Act. An interpretation directed in this direction primarily follows the meaning and purpose of the crisis measures taken by the Government of the Czech Republic, respectively by individual ministries for the duration of the emergency state and also the form and content of restrictions imposed by the Ministry of Health, which in fact took over the crisis measures of the Government of the Czech Republic without changing the content of the adopted restrictions.
At the same time, it is appropriate to draw attention to the fact that the Ministry of Health is within its current measures on the edge (if not beyond) of its competence under the Public Health Protection Act. Should an excess of powers be implied of the ministry in the framework of its measures, compensation may also be opened to the entities concerned for the illegality of such measures pursuant to the Act No. 82/1998 Coll., on Liability for Damage Caused In the Exercise of Public Authority.
The above will be certainly subject to further discussion and further assessments with concrete conclusions. Of course, in light of the opinions of the members of the Government of the Czech Republic, it can be expected that claims for compensation under the Crisis Act will not be generally successful and that the whole situation will have to be resolved in subsequent court proceedings and the necessity of final assessment by the Constitutional Court of the Czech Republic cannot be excluded, as it will be necessary to consider all circumstances thoroughly and to consider the legal assessment, including compliance with the constitutional order of the Czech Republic.
Conclusion
In our opinion, the discussed situation has at minimum fundamental impact on legal certainty and trust of citizens and entrepreneurs towards the application of laws.
This is why we recommend to our clients to address any challenges of the present days, especially in terms of optimisation and effective set up of their business management, so that any damage is minimized now and it is possible for them to cope with this crisis situation with little or ideally no negative impacts.
We are aware that some negative impacts and potential damage will not be possible to avoid in certain cases and we are ready to provide our clients with advice even if they will want to and be able to claim such damage from the state.
Do not hesitate to contact us at any time if you have any questions regarding the issue above.
PhDr. Mgr. Jan Ptáčník, attorney – ptacnik@plegal.cz
Mgr. Martin Pospíchal, attorney – pospichal@plegal.cz
Mgr. Jakub Málek, partner – malek@plegal.cz
27. 03. 2020