At the end of last year, several important amendments were approved in the area of labour law – the Employment Act[1], the Labour Code[2], the Act on the Protection of Employees in the Event of Employer Insolvency and the Labour Inspection Act. In force for the most part since 1 January 2024, these amendments brought several major changes in the affected areas, i.e. not only in the field of employment and agency employment, but also in the field of labour inspection controls (the “Amendment”), which you can read more about in our overview article here.
We have now prepared a series of more detailed articles in which we will deal in turn with three main areas of change, namely (i) the conditions of agency employment, (ii) the definition of illegal work and (iii) liability for wage claims of a subcontractor in the construction industry.
In the first article, we focus on the area of agency employment, which has been given deliberately increased attention by the Amendment. As there have been frequent violations by employment agents in recent times, the Amendment addresses, for example, the process of granting and withdrawing a permit, the definition of professional practice and/or the information obligation. These changes should primarily streamline the current functioning of employment agencies, but also provide greater protection for agency workers than has been the case to date[3].
Changes to authorisation conditions
The Amendment has significantly tightened the conditions for issuing a permit to operate an employment agency. Applicants are now required to prove, for example, that they are debt‑free, more broadly that they have no criminal record or professional competence, and in some cases even to pay a higher deposit.
Debt-free status
The new condition of being debt-free must be met not only when applying for an employment agency permit, but also and above all throughout its existence. The Ministry of Labour and Social Affairs (MoLSA) should verify debt-free status both at the time of application and on an ongoing basis, at least once every 6 months. However, only practice will show at what intervals these checks will actually be carried out.
However, there is an exception for which applicants are not obliged to prove that they are debt-free, provided that they have given their consent to prove their debt-free status to the Directorate General of the Labour Office and, for this purpose, has released the relevant tax office, customs office, social security administration and the relevant health insurance company from the obligation of confidentiality towards the Directorate General of the Labour Office.
Clean criminal record
Although the requirement of good character and integrity was already required, it has been extended to other persons. In addition to the fact that it is still required that the employment agency must not have been convicted of a deliberate crime or a crime against property, a person who is a member of a statutory body or a representative of a legal person in such a body (e.g. a managing director) must now also fulfil this condition.
Professional competence
Another key point is the modification of the requirements for the employment agency responsible representative qualification or the demonstration of their professional competence.
The amendment changes the definition of professional experience, which now consists in the continuous personal performance of activities in the field of employment agency or in the field for which the employment agency is to be authorised.
The scope of that activity is set at a minimum of 20 hours per week. However, this is not the only limit in this respect – the professional experience must have been acquired by the natural person in the 10 years immediately preceding the application for the employment mediation permit. The application must always be accompanied by proof of the employment relationship with the natural person.
Deposit for employment intermediaries
Until now, applicants have had to lodge a deposit of CZK 500,000. However, this has now been increased to CZK 1,000,000, i.e. doubled. Moreover, the increase also applies to existing employment agencies that were issued a permit to provide employment pursuant to § 14(1b) of the Employment Act before the effective date of the Amendment, i.e. before 1 January 2024.
Employment agencies that have already paid the deposit are obliged to increase it within 3 months from the date of the Amendment’s entry into force, i.e. by the end of March 2024. If the additional payment is not made to the special account of the MoLSA by that date, the employment agency permit will automatically expire without further delay.
In view of the amount of the additional payment, which is not negligible, employment agencies are advised to consider whether they actually use this type of permit in practice. If not, they can apply for its withdrawal and retain their existing permits only for the remaining types of permits, i.e. under (a) or (c), if they have them.
Designation of registered office
The amendment further specifies how the registered office of an employment agency must be compulsorily marked, whereby such marking must (i) be visible at all times, and (ii) include the name and the assigned identification number of the personm, or the company name, if they are an entrepreneur.
New grounds for withdrawal of authorisation
The conditions for withdrawing a permit to operate an employment agency (which will now be withdrawn by the MoLSA as set out below) have also been clarified, particularly in response to case law.
First of all, the Amendment adds additional grounds for which the withdrawal of the permit by the MoLSA will always be mandatory. These now include cases in which the employment agency (i) facilitates the performance of illegal work, (ii) covertly arranges employment or facilitates the same, (iii) violates the prohibition of discrimination or fails to ensure equal treatment, or (iv) repeatedly fails to provide the labour inspection authorities with assistance during an inspection.
Conversely, situations where an employment agency arranges employment in breach of good morals or otherwise violates its obligations under the Employment Act have been excluded from the mandatory withdrawal regime. As a consequence of their transfer to the lighter regime, the withdrawal of a permit on these grounds is now left to the discretion of the MoLSA, which will decide whether or not to withdraw the permit after assessing the seriousness of the breach.
Shifting the agenda
As already indicated above, another important change is the shift of the agenda related to employment intermediation (i.e. issuing and withdrawing permits) and the management of employment agencies. This area, previously handled by the Directorate General of the Labour Office, is now under the competence of the MoLSA.
Therefore, from the new year, if employment agencies will be dealing with any issues and addressing them to the administrative authority, it is necessary to bear this change in mind in order to ensure successful processing.
Information obligation
In addition to the above measures, there is also an extension of the information that employment agencies are obliged to communicate regularly by 31 January of the current year for statistical purposes, now to the MoLSA.
In the obligatory report, employment agencies must now include the identification of the user to whom the employment agency’s employees have been temporarily assigned and the number of employees by Employment Classification Group (CZ-ISCO) published by the Czech Statistical Office assigned to each user.
The way in which employers fulfil their information obligation when employing workers from abroad is also changed. This obligation will now be fulfilled by delivering the information only to the data box designated by the Labour Office or by using the information system according to the communication specification and in the format, content and structure determined by the Ministry. Currently, employers can fulfil this obligation through forms published on the websites of the Ministry of Labour and Social Affairs or the Labour Office, both in printed and electronic form.
Conditions for termination of temporary assignment
The amendment does not forget about the protection of temporarily assigned employees. If the user decides to terminate the secondment unilaterally, it is no longer possible to do so from one day to the next, as the previous legislation allowed. The new temporary assignment will end no earlier than the 14th day after the receipt of the user’s unilateral declaration.
How to do it in practice?
The tightening of the conditions for employment agencies requires a timely response, not only from prospective applicants but also from existing employment agencies. In this context, we would advise employment agencies not to underestimate this and to comply with the deadline, i.e. 31 March 2024, by:
- providing evidence of debt‑free status or verify that consent has been given for the authorities to communicate with each other;
- paying the deposit up to the newly set amount (applies to existing employment agencies that will continue to be interested in providing employment under 14(1b) of the Employment Act).
At the same time, we recommend that employment agencies subject the performance of their existing activities to a thorough inspection and ensure that there are no violations of conditions leading to the risk of withdrawal of the permit, in particular, in the context of the Amendment, that they do not violate the legal conditions in the field of employment.
Conclusion
The Amendment has brought significant changes to the employment and job placement landscape to which employment agencies will need to respond in due course. In particular existing agencies should check whether they meet the new conditions for carrying out their existing activities. On the other hand, future applicants are already required to provide a wider range of mandatory documents and information when submitting their application.
Although most of the changes, whether in terms of the way in which employment agency permits are issued and withdrawn, the extension of the information obligation or the shifting of the existing agenda, introduce stricter criteria for employment agencies, they should in practice make them more efficient, but also increase the protection of temporary agency workers. Only time will tell whether these changes will be positive in the long run and will help to make the work of employment agencies in the area of employment intermediation better.
Should you have any questions about agency employment or need assistance in any other area of employment law, please do not hesitate to contact us at any time.
[1] Employment Act No. 435/2004 Coll., as amended
[2] Act No. 262/2006 Coll., Labour Code, as amended
[3] It should be noted that the proposed amendment to Sections 307b and 307c of the Labour Code, which was intended to stipulate that the temporary assignment of an employee to work for the same user may not exceed three years in a period of five consecutive years, thereby preventing an unregulated chain of temporary assignments of employees, was eventually completely deleted in the legislative process.
Mgr. Kateřina Lansdorfová, advokátní koncipientka – lansdorfova@plegal.cz
Ráchel Kouklíková, právní asistentka – kouklikova@plegal.cz
Mgr. Jakub Málek, managing partner – malek@plegal.cz
1. 3. 2024