Termination of Employment

This article is valid only for the Czech Republic.

Ways to Terminate an Employment Relationship

An employment relationship can be terminated in several ways, each of which entails rights and obligations for both the employer and the employee.

Methods of Termination:

Termination by mutual agreement
Termination by notice from either the employee or the employer
Immediate termination of employment
Termination during the probationary period
Expiry of a fixed-term contract: The employer must notify the employee about the termination before the contract expires, usually at least three days in advance.

Termination by Mutual Agreement

A mutual termination agreement is an agreement between the employer and the employee to end the employment relationship under the conditions set out in Section 49 of the Labor Code. The employment relationship ends on the date specified in the agreement. The agreement must be in writing, and each party must receive a copy.

This method of termination is possible even if the employee is on sick leave.

Termination by Notice

Termination by notice is a legal act that ends the employment relationship. It must be in writing and delivered to the other party; otherwise, it is invalid. The rules governing termination by notice are specified in the Labor Code (Sections 48–73) and differ depending on whether the notice is given by the employee or the employer.

Termination by Employee:

The employee may resign for any reason or without stating a reason.
The notice must be in writing and delivered to the employer personally, by post, or by another verifiable method.
The notice period begins on the first day of the month following the delivery of the notice and lasts for at least two months.
The employee may resign even during sick leave.

Termination by Employer:

The employer may dismiss an employee only for legally defined reasons:

Organizational changes (elimination of the position or redundancy).
Long-term medical incapacity, confirmed by a medical report.
Serious breach of work duties.

The reason for dismissal must be clearly and specifically stated in the written notice.

Protection Period:
The employer may not dismiss an employee during sick leave, pregnancy, or parental leave, except in exceptional cases, such as the dissolution of the employer.

Termination Due to Health Reasons

Immediate termination by the employee: An employee may immediately terminate employment if their health condition prevents them from performing their job in the long term, as confirmed by a medical report.
Dismissal by the employer: If an employee is unable to work due to health reasons and cannot be transferred to a suitable position, the employer may terminate the employment relationship.
Work ability with third-degree disability pension: An employee receiving a third-degree disability pension may continue working according to their capabilities. This level corresponds to a 70% reduction in earning capacity. It is recommended to limit working hours to less than three hours per day if the employee’s work potential is below 30%.

Unused Leave at Termination

If an employee has not used all their vacation before termination, they are entitled to compensation.

Calculation of leave compensation:
Compensation for unused leave is calculated based on the employee’s average hourly earnings for the last quarter.

Termination and Starting a New Job

Immediate start: After termination, the employee may immediately start a new job. There are no legal barriers to this step.
New employment contract with the same employer: If the employee signs a new employment contract with the same employer, a new legal relationship is established. This new relationship is separate from the previous employment and follows the newly agreed terms.

Immediate Termination of Employment

Employment can be terminated immediately only in exceptional cases regulated by the Labor Code:

Immediate Termination of Employment by the Employer

An employer may proceed with immediate termination of employment if:

The employee has been legally convicted of an intentional criminal offense and sentenced to:
– Unconditional imprisonment for more than 1 year, or
– At least 6 months if the crime was committed while performing work duties or in direct connection with them.
(§ 55, paragraph 1, letter a) of the Labor Code)
The employee has grossly violated obligations arising from legal regulations related to their work.
(§ 55, paragraph 1, letter b) of the Labor Code)

Immediate Termination of Employment by the Employee

An employee may immediately terminate their employment if:

According to a medical assessment, they are no longer able to continue working without serious health risks, and the employer has not offered them another suitable job within 15 days that aligns with their health condition.
The employer has not paid the employee’s salary, wages, or their compensation within 15 days after the due date.

If the employee terminates the employment immediately for any of the above reasons, they are entitled to:

Compensation for wages or salary in the amount of their average earnings for a period corresponding to the notice period.

Termination of Employment During the Probationary Period

Termination of employment during the probationary period is a specific way to end employment, regulated by § 66 of the Labor Code. The probationary period typically lasts 3 months (up to 6 months for managerial positions) and serves as a trial period during which both the employee and employer assess whether the cooperation is suitable. Either party may terminate the employment during this period.

Termination of Employment During the Probationary Period by the Employer

No reason required: The employer is not obligated to provide a reason for termination, but best practices suggest giving feedback to the employee.
Protection period: The employer may not terminate employment during the first 14 calendar days of the employee’s incapacity for work.
Written form: The termination must be in writing; otherwise, it is invalid.
Termination date: The employment ends on the day the written termination is delivered to the employee or on the date specified as the termination date.

Termination of Employment During the Probationary Period by the Employee

No reason required: The employee is also not required to provide a reason for termination.
Written form: The termination must be delivered to the employer in writing; otherwise, it is invalid.
Content of the document: A termination template may be used, which should include:
- Employer’s name
- Employee’s name
- Reference to § 66 of Act No. 262/2006 Coll.
- Job title
- Date of employment contract signature
- Employment termination date
- Date of document preparation
Termination date: The employment ends on the day the written termination is delivered to the employer or on the specified termination date.

What About Mass Layoffs?

Mass layoffs occur when an employer terminates the employment of at least the following number of employees within 30 calendar days:

10 employees if the employer has between 20 and 100 employees
10% of employees if the employer has between 101 and 300 employees
30 employees if the employer has more than 300 employees

The employer is required to notify the trade union and the employee council in writing and in a timely manner—at least 30 days in advance. Additionally, they must provide reasons and other necessary details as specified in § 62 of the Labor Code.

Severance Pay for Employees

The Labor Code defines the criteria for severance pay entitlement. Specifically, an employee is entitled to severance pay amounting to at least:

One month’s average earnings if the employment lasted less than 1 year
Twice the average earnings if the employment lasted at least 1 year but less than 2 years
Three times the average earnings if the employment lasted at least 2 years
The sum of three times the average earnings plus additional amounts listed in points 1-3, if the employment is terminated while the employee is subject to the work-time account system under § 86, paragraph 4

Employer’s Obligations After Employment Termination

If an employer proceeds with layoffs, they must fulfill various obligations. Among other things, they must issue the employee:

Certificate of Employment
Confirmation of taxable income
Confirmation of unemployment benefit entitlement
Work performance assessment
Pension insurance record

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