Amendment to the Employment Act and the Labour Code: changes to the rules for agency employment

We would like to inform you that an amendment to the Employment Act has been approved, which also amends the Labour Code and will come into force on 1 January 2024. This amendment brings a number of changes, some of which have a significant impact on agency employment.

Changes to employment agencies

The mandatory deposit for employment agencies is increased from CZK 500,000 to CZK 1 million. The deadline for payment is the end of March and it must be paid into a special account of the Ministry of Labour and Social Affairs. A condition of financial freedom from debt is also introduced at the time of establishment of the employment agency. Existing agencies must prove this to the Ministry of Labour and Social Affairs by the end of March.

Furthermore, the amendment introduces another change, which prohibits the duration of an employee’s employment relationship with an agency from being defined as the duration of a temporary assignment to a user, as was commonly the case until now. The employee must now be given at least 14 days’ notice of termination, which will give the employee greater protection against immediate loss of employment. On the other hand, this modification will reduce the flexibility of agency employment for the user and increase the cost of agency workers.

The contractor (a construction entrepreneur under the Construction Act) is now liable for the wages of the subcontractor’s employees to the extent that they participated in the contractual performance for the contractor, up to the minimum wage. An employment agency that has temporarily assigned its employees to the contractor as a user for the execution of the construction is also considered a subcontractor.