Changes in the Area of Agency Recruitment

The President of the Czech Republic has recently undersigned an amendment to the Act on Employment (Act no. 435/2004 Sb., as amended), which also amends certain provisions of the Labour Code (Act no. 262/2006 Sb., as amended) and other laws, which introduces certain changes in the area of agency recruitment. The amendment will take effect after its publication in the Collection of Laws.

The amendment meets its legislative aim by tightening the rules for recruitment agencies’ activities. Recruitment agencies will now have to pay a refundable deposit of CZK 500,000 in order to obtain an authorization; existing recruitment agencies are given three months from the amendment becoming effective to pay this deposit. The deposit will be returned when the authorization ceases to be valid. Fee payable for the authorization is also being increased. However, if applied for repeatedly, the authorization may be granted for an indefinite period of time, which will make things easier for renowned recruitment agencies which until now had to re-apply every three years.

The amendment also introduces more strict requirements for authorized representatives of recruitment agencies – these will now have to be employed by the agency under an employment contract for a minimum of 20 hours weekly (unless they are members of the governing body of the agency, in which case this requirement does not apply). Existing recruitment agencies will again have three months to comply with these new requirements.

On the other hand, the amendment removes the restriction on agency recruitment of nationals of third countries, and allows for agency employment of third country nationals with employment cards, blue cards or employment permits. This change will hopefully have a positive effect on the supply of workforce to certain industries.

The amendment introduces a new administrative offence of disguised agency recruitment, which addresses the need to penalize entities circumventing the existing recruitment agency regulation by providing employees on the basis of fake orders for services made under a „service agreement“. This practice is becoming more common due to the desperate lack of employees in certain industries, especially in manufacturing.

A new obligation, which will also apply to companies using agency employees, will require that an agency employee shall not be assigned to the employer by whom they are employed or to whom they have been assigned within the same month by another recruitment agency. If the agreement on temporary assignment fails to include information on the pay and working conditions of a comparable employee of the employer or if such information is incorrect, the employer concerned will be penalized.

In addition to the above changes made in the area of agency recruitment, it will now be prohibited to be employed without an employment contract merely under an agreement to complete work (dohoda o provedení práce) for people officially registered as job seekers, irrespective of the income received under such agreement. The reason for this change is the misuse of this institution especially by the long-term unemployed. Without any connection to the above, the amendment also alters certain provisions of the Labour Code concerning the ban on discrimination, however, making no substantial changes in this area.