Guide to Restructuring a Cross-Border Workforce
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01. Is there a concept of redundancy - based on a shortage of work or other economic reasons - as a justified reason to dismiss employees in your jurisdiction? If so, how is it defined?
01. Is there a concept of redundancy - based on a shortage of work or other economic reasons - as a justified reason to dismiss employees in your jurisdiction? If so, how is it defined?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, there is. An employee is redundant if the following conditions are met:
- the employer adopted a decision on organisational change;
- the change concerns the scope of activities, tasks, technical equipment, number of employees, or otherwise alters the structure of the employer;
- the aim of the change is to increase work efficiency, reduce costs, or otherwise alter the performance of the employer’s enterprise; and
- as a result, the employee’s work is redundant or not needed.
According to case law, the employee’s work is not needed, either at all or at least in part, with the rest being distributed among the current employees or corporate body. Rebranding the position, hiring a new employee to carry out the work of the dismissed employee shortly thereafter, or otherwise fabricating the redundancy with an ulterior motive does not qualify as redundancy.
Czech law provides two other similar reasons based on which an employer is entitled to terminate employment – closing down or relocation of the employer’s undertaking or its part. Together with redundancy, these three reasons are known as “organisational reasons” (in Czech: “organizační důvody”) for termination of employment. However, closing down and relocation of the employer or its part are different reasons than the redundancy itself, and therefore we do not address them further.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Employees in Japan generally have a high degree of legal protection and the standards for redundancy are stringent. Employers can only make employees redundant for compelling reasons (for example, where the employer faces significant economic difficulties and streamlining the workforce becomes unavoidable). The Tokyo High Court has established specific conditions that need to be met. The employer must: be in a poor financial situation, making the need to act imperative; first attempt to cut costs and expenses and reassign employees to other positions within the organization; establish appropriate, objective and rational selection criteria; and follow due process, in particular by providing explanations to employees. Where a company is liquidated, there is more flexibility, regardless of the employer's financial circumstances.
02. In brief, what is the required process for making someone redundant?
02. In brief, what is the required process for making someone redundant?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The employer must take the following steps:
- review underlying documents (including organisational charts), decide what organisational change needs to be made and work out which positions are no longer needed, and plan the timing;
- adopt a decision on organisational change, including its effective date and which redundant positions are cancelled. The decision doesn’t have to be in writing or state reasons for the redundancy. However, both are highly recommended and a market standard, as this serves as evidence;
- if there are unions, consult the unions in advance (see question 4), and if a union representative is supposed to be made redundant, obtain the union’s consent in advance (see question 11);
- execute dismissal either by a termination agreement (recommended) or a termination notice with the redundant employees. In case of termination notice, the redundancy must (based on the decision) take effect on or before the notice period expired, not after; and
- implement the organisational change (including updating organisational charts).
Organisational changes may also be governed by collective agreements, in which case additional rules may apply (this applies to all the questions below).
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Where the Tokyo High Court conditions are met, employers must provide the affected employees with a minimum of 30 days' notice or payment in lieu. Although no specific statutory provision makes severance pay mandatory, this is customary to smooth the process and minimise legal risks.
When these conditions are not met, employers can try alternative approaches such as obtaining the employee’s resignation at the employer's request together with a financial package. For redundancies affecting a large number of employees, early retirement plans allow employers to offer financial packages to employees to encourage them to leave. In one type of plan, employees are offered a financial package to encourage them to resign within a short period (for example, a couple of weeks). The key to success is to determine a proper package, target employees without discrimination and get the timing right. This can be a costly process. Packages vary depending on the industry, and the employees' rank, age and length of service. Individual resignations at the employer's request with a financial package are simpler where the number of redundancies is limited.
03. Does this process change where there is a “collective redundancy”? If so, what is the employee number threshold that triggers a collective redundancy?
03. Does this process change where there is a “collective redundancy”? If so, what is the employee number threshold that triggers a collective redundancy?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, Czech law provides a special procedure for “collective dismissal” in all three cases of organisational changes (see question 1).
The threshold is:
- ten employees if the employer has 20 to 100 employees;
- 10% of employees if the employer has 101 to 300 employees; and
- 30 employees if the employer has more than 300 employees.
The respective number of employees must be dismissed due to redundancy within a period of 30 days. If at least five employees are dismissed within 30 days by termination notice due to redundancy, then employees dismissed in the same period by termination agreement are included in these thresholds.
In addition to the process above, collective dismissal must be:
- consulted with unions 30 days in advance, or notified to each affected employee if there are no active unions at the employer; and
- notified to the local Labour Office: (i) in advance, including information on commencement of the consultation process with unions; and (ii) on its result once it’s completed, in the form of a written report that must be delivered in copy to unions, which then have the right to comment on it – employment relationships can terminate only after the lapse of 30 days following this.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
The process does not change. However, if 30 employees or more are to be made redundant at a given workplace within one month, a re-employment assistance plan must be prepared, listing the employees and detailing the measures taken or to be taken by the employer to facilitate job searches. The employer must notify the competent Employment Service Center (known as Hello Work) of the proposed redundancies and submit the plan for approval before implementation.
04. Do employers need to consult with unions or employee representatives at any stage of the redundancy process? If there is a requirement to consult, does agreement need to be reached with the union/employee representatives at the end of the consultation?
04. Do employers need to consult with unions or employee representatives at any stage of the redundancy process? If there is a requirement to consult, does agreement need to be reached with the union/employee representatives at the end of the consultation?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, the employer must consult any termination notice in advance. Agreement doesn’t have to be reached (with the exception of employees with enhanced protection; see question 11). In practice, the consultation is more of an announcement.
In case of collective dismissal, consultation must take place, and the employer must try to reach an agreement and inform the Labour Office of the result.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Certain obligations to consult may arise for consultation and the provision of information to appropriate representatives under a collective agreement (if any applies). These obligations can include consultation with appropriate representatives in a collective redundancy context and the provision of information to appropriate representatives on a business closure or transfer.
A labour union can require an employer to hold a collective bargaining session on any issue, provided that the issue relates to the union itself or the economic status of the workers who are union members. The employer cannot refuse to bargain without a proper reason and must negotiate in good faith with the union. When the employer continuously acts in good faith, refusal to compromise or a failure to reach an agreement are not breaches of the duty to bargain in good faith.
05. If agreement is not reached, can the restructure be delayed or prevented? If so, by whom?
05. If agreement is not reached, can the restructure be delayed or prevented? If so, by whom?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
It is the employer’s right to make an organisational change and its factual validity cannot be challenged. However, the individual dismissals may be challenged by employees. If successful (ie, the employer doesn’t prove redundancy), the restructure in the individual case may be prevented.
In the case of collective dismissals, it may be delayed by the unions prolonging the consultation. However, even then the unions and the Labour Office can’t prevent the dismissal, and the only way to prevent individual dismissal is a successful individual challenge by the dismissed employee.
If the unions believe that the collective agreement was violated by the redundancy or in the process of its implementation, they may dispute this violation. The dispute may be resolved by a mediator or escalated to an arbitrator. However, this doesn’t prevent the employer from executing the dismissals or restructure (only if violation is later found, it may have certain implications based on the individual collective agreement and nature of its violation).
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
See question 4. For a consultation, no agreement has to be reached in principle, but compromising is often necessary and negotiations with labour unions can still be protracted and the restructuring delayed.
06. What does any required consultation process involve (i.e. when should it commence, how long should it last, what needs to be covered)? If an employer fails to comply with its consultation obligations, what remedies are available?
06. What does any required consultation process involve (i.e. when should it commence, how long should it last, what needs to be covered)? If an employer fails to comply with its consultation obligations, what remedies are available?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
In case of individual dismissal, the consultation process is, rather, a notification (with the exception of employees with enhanced protection; see question 11) including:
- the identity of the employee;
- termination grounds (redundancy); and
- basic details of the redundancy (why and when).
It should take place prior to the dismissal (no specific deadline is given).
In case of collective dismissal, the consultation process includes:
- measures preventing or limiting the collective dismissal;
- mitigation measures (eg, employing the redundant employee at other workplaces of the employer);
- reasons;
- number and professions of redundant employees;
- number and professions of all the employees;
- the period during which the collective dismissal takes place;
- selection method of redundant employees; and
- severance pay and other rights of the redundant employees.
The consultation process must take place no later than 30 days prior to the collective dismissal. The local Labour Office must be notified as well (see question 3).
The administrative fine for violation of the consultation process with unions is up to 200,000 koruna. Employees who suffer damage as a result may claim compensation.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
The labour union would typically send a request for collective bargaining to the employer, setting the place, date, time and agenda (demands or the subject of bargaining) with specific hours for bargaining. Once these points have been agreed upon, the employer and union representatives meet to negotiate. The employer must listen to the union and respond with good-faith counter proposals. For labour disputes, there are dispute resolution procedures either established by unions and employers in collective agreements or prescribed by law. Typical procedures involve conciliation, mediation, fact-finding and recommendations, and arbitration. However, refusal to bargain collectively without a proper reason (including the refusal to bargain in good faith) is an unfair labour practice under the Labour Union Act. In such cases, specific remedial procedures are handled by administrative bodies called local Labour Relations Commissions and an administrative review of their decisions can be petitioned to the Central Labour Relations Commission. In turn, an appeal may be filed with the courts under the Administrative Litigation Act to cancel orders issued by the Commissions.
07. Do employers need to present an economic business rationale as part of the consultation with unions/employee representatives? If so, can this be challenged and how would such a challenge normally be made?
07. Do employers need to present an economic business rationale as part of the consultation with unions/employee representatives? If so, can this be challenged and how would such a challenge normally be made?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, an economic business rationale should be the reason for organisational change, and therefore the redundancy, and as such should be part of the consultation.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Employers must indicate the basis of their arguments and submit the necessary supporting data. In a redundancy context, that would mean showing the efforts made to avoid redundancies (through transfers, farming out, solicitation of voluntary retirement, non-renewal of fixed-term contracts and temp staff, etc), submitting financial statements and providing some economic analysis, etc. Counterarguments can be put forward by the labour unions (who can engage accountants or other experts) to which the employer can respond, and so forth.
08. Is there a requirement or is it best practice to consult employees individually (whether or not the employer is also legally required to collectively consult employees)?
08. Is there a requirement or is it best practice to consult employees individually (whether or not the employer is also legally required to collectively consult employees)?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
In case of collective dismissals, if there are no unions or employee representatives, the employer must inform and directly consult the affected employees to the same extent.
In case of individual dismissal, it is not a requirement, nor best practice, and highly depends on the strategy in the individual case.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Yes, this is best practice and part of the due process condition, although collective (town hall) meetings can take place depending on numbers.
09. Are there rules on the selection of individual employees for redundancy?
09. Are there rules on the selection of individual employees for redundancy?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The only rule is that the employee’s position or work must be genuinely redundant (see question 1). If more than one employee fulfils this condition, it is up to the employer which employee to select. However, this choice must not indicate that there are in fact different motives for the redundancy of the selected employee (eg, disputes with the employer, unsatisfactory performance, or gender or other discriminatory motives).
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
As part of the Tokyo High Court conditions, the selection must be proper and the employer must establish objectively reasonable standards that should be applied fairly. Criteria can include job performance, discipline, history of absences and tardiness, and a lower economic impact on younger employees.
10. Are there any specific categories of employees who an employer is prohibited from making redundant?
10. Are there any specific categories of employees who an employer is prohibited from making redundant?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, a termination notice due to redundancy is not allowed during the period for which an employee is:
- declared temporarily medically unfit for work or in institutional treatment (unless the employee has intentionally caused this unfitness, or it is a direct consequence of the employee’s alcohol intoxication or substance abuse);
- deployed in military exercises or military service;
- on long-term full leave to act in public office;
- pregnant, or on maternity leave, paternity leave, or parental leave;
- declared temporarily unfit for night work if they perform night work; or
- on leave caring for a child under 10 years of age, treating a child under 10 years of age or other natural persons, or providing long-term care, all as specified in the Czech Sickness Insurance Act.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
An employee cannot be dismissed while unable to work because they are receiving treatment for a work-related injury or illness and cannot be dismissed within 30 days of the date that treatment ceases. Special protection applies to dismissals connected with pregnancy and maternity, parental and family care leave, labour union membership or activities, and whistleblowing.
11. Are there categories of employees with enhanced protection (e.g., union officials, employees on sick leave or maternity/parental leave, etc)?
11. Are there categories of employees with enhanced protection (e.g., union officials, employees on sick leave or maternity/parental leave, etc)?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, members of a trade union body during their term of office and for a period of one year after the end of their term of office. The employer must have prior consent of the unions for termination of their employment relationship by a notice. Consent is deemed to be given if the unions don’t respond within 15 days. Consent is valid for two months. Termination notice without such consent is invalid unless the court decides in the validity case that the employer could not have been justifiably required to keep the employee.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
See question 10.
12. What payments are employees entitled to when made redundant? Do these payments need to be made within a specified period? Are there any other requirements, such as giving contractual notice, payments into a central fund, etc.
12. What payments are employees entitled to when made redundant? Do these payments need to be made within a specified period? Are there any other requirements, such as giving contractual notice, payments into a central fund, etc.
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
A redundant employee is entitled to a statutory severance payment, regardless of whether the employment termination is made by notice or agreement and if the redundancy is explicitly stated as the reason for the termination.
The severance payment is due on the next scheduled pay date following the termination of employment. A later due date can be agreed.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
If the Tokyo High Court conditions are met, there is no legal obligation to pay severance pay, but a voluntary payment according to a separation agreement is customary. Employers must provide the affected employees with a minimum of 30 days' notice (or payment in lieu).
13. If employees are entitled to redundancy/severance payments, are there eligibility criteria and how is the payment calculated?
13. If employees are entitled to redundancy/severance payments, are there eligibility criteria and how is the payment calculated?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The severance payment amount differs based on the length of the employment as follows:
- one gross average monthly salary of the employee if the employment lasted less than one year;
- two gross average monthly salaries of the employee if the employment lasted at least one year but less than two years; and
- three gross average monthly salaries of the employee if the employment lasted at least two years.
If the working hours account applies (specific working hours distribution scheme under the Czech Labour Code) the statutory severance is the relevant amount above plus three gross average monthly salaries of the employee.
The severance payment may also be higher if stated so by:
- agreement between the parties;
- the employer’s internal regulations; or
- a collective bargaining agreement.
A gross average monthly salary of the employee must be calculated for each employee separately using the specific rules of the Labour Code.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Not applicable.
14. Do employers need to notify local/regional/national government and/or regulators before making redundancies? If so, by when and what information needs to be provided?
14. Do employers need to notify local/regional/national government and/or regulators before making redundancies? If so, by when and what information needs to be provided?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Not in cases of individual dismissals.
In cases of collective dismissals, the employer must notify the relevant branch of the Labour Office:
- of the intention to carry out collective dismissal;
- that the consultation process has been initiated with the unions or the employees; and
- of the specific aspects of the collective dismissal, to the same extent as the unions (see question 6).
Following the consultation, the employer must deliver a written report to the Labour Office stating:
- that the employer has decided on collective redundancies;
- the outcome of the consultation process;
- the number and occupational composition of all employees; and
- the number and occupational composition of the employees to be made redundant.
A copy of the report must be delivered to the unions, which then have the right to comment on it.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
See question 3.
15. Is there any obligation on employers to consider alternatives to redundancy, including suitable alternative employment?
15. Is there any obligation on employers to consider alternatives to redundancy, including suitable alternative employment?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
No, generally there is no such obligation. If the conditions for dismissal due to redundancy are met, the employer is not obliged to offer the employee an alternative solution.
However, in some specific individual cases, the courts have concluded that if the employer still needs the work on part-time basis, the employer should first offer the employee this part-time job.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Yes, reassignment within the employer’s organisation, farming out, or transferring to related companies to avoid redundancies are measures to be considered to meet the Tokyo High Court conditions.
16. Do employers need to notify local/regional/national government and/or regulators after making redundancies, e.g. immigration department, labour department, pension authority, inland revenue, social security department? If so, by when and what information needs to be provided?
17. If an employee is not satisfied with the decision to make them redundant, do they have any potential claims against the employer? If so, what are they and in what forum should they be brought, e.g. tribunal, arbitration, court? Could a union or employee representative bring a claim on behalf of an employee/employees and if so, what claim/s and where should they be brought?
17. If an employee is not satisfied with the decision to make them redundant, do they have any potential claims against the employer? If so, what are they and in what forum should they be brought, e.g. tribunal, arbitration, court? Could a union or employee representative bring a claim on behalf of an employee/employees and if so, what claim/s and where should they be brought?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
An employee may challenge the validity of a dismissal for redundancy if they consider that the statutory conditions were not met. First, the employee who wishes to remain employed must inform the employer without undue delay after the termination notice that they insist on continuing their employment. Second, the employee must file a lawsuit at the district court of the employer’s seat (residence or registered address). The lawsuit must be made within two months from the date on which the employment should have ended. After the two months, the right to file the lawsuit expires.
If the dismissal for redundancy is found invalid, the employee who wishes to remain employed remains to be employed at the original position under the original conditions and is entitled to a full compensation of salary for the whole time from the invalid termination until work is assigned again, or until the employment is validly terminated (ie, including the time of the court proceedings). The court may reduce the amount of such compensation if, for example, the employee has found another job in the interim, or could have found one.
There’s no statutory authorisation for unions to raise any claims at the court on behalf of employees except for insolvency proceedings (see question 21). However, only attorneys at law can represent employees fully and without limits in any proceedings. Another natural person can be granted a power of attorney in a specific case (not repeatedly). Theoretically, this could be a member or employee of the unions, but this is not a market standard.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
The employee will generally seek to invalidate the dismissal and claim compensation or reinstatement. Judicial procedures including initiating proceedings before the courts or a labour tribunal are last resort options in cases involving wrongful termination. Some form of negotiation would typically be attempted before legal proceedings are commenced. Employees can consult an attorney or a labour and social security specialist to seek legal advice, and they can alternatively contact and join a labour union independent of the employer's organisation (if the employer does not have a labour union). The union can then force the employer to hold discussions through collective bargaining on the subject of the dispute.
18. Is it common to use settlement agreements when making employees redundant?
18. Is it common to use settlement agreements when making employees redundant?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, it is very common and highly recommended to terminate the employment by mutual agreement when making employees redundant. The termination agreement does not have to state any reasons for termination. However, should the reason be redundancy of the employee, the employee is entitled to statutory severance payment regardless. To motivate the employees to conclude the termination agreement, it is a market standard to offer a higher severance package than the statutory severance payment.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Yes, this is often recommended to minimise legal risks and it is best practice. See question 2.
19. In your experience, how long does it normally take to complete an individual or collective redundancy process?
19. In your experience, how long does it normally take to complete an individual or collective redundancy process?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Individual redundancies generally take around two to three months. The organisational change must be prepared, and the termination agreement negotiated or the termination notice given. In case of the notice, the statutory notice period is two months. There’s no statutory notice period requirement in case of agreement, therefore it can be faster. It can also take longer (eg, more complicated cases, restructuring, C-level or other higher managers).
For collective redundancies, the process takes several months (at least three) due to higher demands on preparation, more complicated structuring, the consultation process, and the notification obligation to the Labour Office.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Where the conditions are met, the individual redundancy process can be completed quickly, in a matter of days or weeks. The employer may often try to convince the employee to resign (at the employer’s request) first. In the case of collective redundancies, the process can be protracted, especially if the employer offers a pre-retirement plan as a first stage.
20. Are there any limitations on operating a business for a period following a redundancy, like a prohibition on hiring or priority for re-hire being given to previous employees?
20. Are there any limitations on operating a business for a period following a redundancy, like a prohibition on hiring or priority for re-hire being given to previous employees?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The statutory law does not expressly prohibit certain conduct. However, a redundancy means that the employee’s work is no longer needed and therefore any hiring (internal or external) for the same (or largely the same) position should be avoided (or at least thoroughly considered), especially for the two-month period during which the employee can challenge the validity of the dismissal.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
There is no express prohibition or priority, but if the employer starts re-hiring, paying dividends or increasing wages immediately or quickly after the redundancies, the economic rationale behind the redundancies would be undermined. Even if a settlement agreement were signed, the employee could argue that they have been deceived and seek to invalidate the agreement and be reinstated.
21. Is employee consultation or consent required for major transactions (such as business transfer, mergers, acquisitions, disposals or joint ventures)?
21. Is employee consultation or consent required for major transactions (such as business transfer, mergers, acquisitions, disposals or joint ventures)?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The term “restructuring” in Czech law means one of the ways of resolving a company’s bankruptcy in insolvency proceedings. During this process, organisational changes including redundancies may occur. This kind of restructuring does not require unions’ consent; however, consultation may be required. Further, unions may represent the employees in insolvency proceedings.
In Czech law, “restructuring” within the meaning of a business transaction or corporate transformation or changes (i.e. not a type of insolvency proceeding) can also lead to transfer of rights and obligations from the employment relationship to another employer (transfer of undertakings), ie, the employee and their employment will be transferred to a new employer as a result of such transaction. In this case, the employer must inform the unions or other representatives (and if there are none, then the individual employees) and consult at least 30 days in advance:
- the effective date of the transfer;
- reasons for the transfer;
- legal, economic, and social consequences of the transfer for the employees; and
- measures to be taken in relation to the employees.
In case of cross-border mergers or spin-offs, the employer also must: (i) inform the employees or unions of their right to get acquainted with the written merger or spin-off project and give written comments on it; and (ii) generally reach agreement with unions regarding the extent and manner of the right of influence of the employees of the successor corporation (for example, in certain cases by electing a certain number of members of supervisory board in a joint stock company) if the seat of the newly formed entity is supposed to be in the Czechia. Further corporate obligations depend on the form of such restructuring.
However, the described labour law obligations don’t apply in the case of mere ownership change of the employer’s company where this has no direct legal implications for the employees (ie, it isn’t a transfer of undertaking or a termination reason).
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Consultation on a share deal is unusual. If there is a business transfer where there is no collective agreement providing for information or consultation with employee representatives, the employer has no obligation to inform the employees of the proposed transfer (except to the extent that employee transfers – where individual consent must be secured – or redundancies are contemplated). Even if an employer has consultation obligations under a collective agreement, there is generally no obligation to reach an agreement. Ministry of Health, Labour and Welfare guidelines provide guidance on sharing information on working conditions and economic prospects to employees.
In the case of a corporate division (kaisha bunkatsu) (ie, the carve-out of a business or part of a business), the employer must consult with the employees engaged (primarily or not) in the spun-off business individually, and with the labour union that represents the majority of employees, or a representative of the majority of employees (Law on the Succession of Employment Contracts in a Corporate Division and related guidelines). The company to be split must try to secure the understanding and cooperation of its employees.
22. What are the remedies that are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?
22. What are the remedies that are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
In general, employees have limited ability to influence the process of business transactions. The consultation process (see question 21) doesn’t have to result in an agreement with or of the unions. The administrative fine for violation of the consultation process is up to 200,000 Czech Koruna. If there are no unions and the employer breaches its information obligation towards the individual employees (see question 21), the law provides no administrative penalty. In each case, the employee could claim compensation for damage if any damage occurred.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
If there is a labour union and an employer does not hold collective bargaining negotiations in good faith with the union, the union can complain to the competent Labour Relations Commission about the employer's breach of its duty to negotiate and the Commission can direct the employer to resume negotiations. The labour union can also apply for a provisional injunction or start formal litigation before the courts. Likewise, the court can order the employer to negotiate.
If the employer fails to consult with the employees before a corporate division, the employees can claim that the transfer of their employment contract is invalid.
23. Is there any statutory protection of employees on a business transfer? Are employees automatically transferred with the business? Are employees protected against dismissal (before or after the transfer of employment)?
23. Is there any statutory protection of employees on a business transfer? Are employees automatically transferred with the business? Are employees protected against dismissal (before or after the transfer of employment)?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
If the statutory conditions for transfer are met, the transfer occurs automatically, ie, neither the original employer, the new employer, the employees, nor the unions can avoid the transfer. An employee may prevent their own transfer only by serving termination notice to the employer before the transfer’s effective date, in which case the employment terminates on the day immediately preceding the transfer’s effective date at the latest. If the employer didn’t inform employee at least 30 days in advance (see question 21), the employee may serve their termination notice within two months after the transfer’s effective date – in which case, only a 15-day notice period applies.
Individual rights and obligations are transferred in full to the new employer. The rights and obligations under the original employer’s collective agreement are also transferred to the new employer, but only for the duration of the collective agreement, and for no longer than to the end of the following calendar year.
Transfer itself is not a statutory reason for terminating the employment. However, a restructuring (organisation change) leading to redundancy may happen before, during, or following the transfer. In such a case, the employee has the same rights as in the case of other redundancies.
If the employee terminates the employment by a notice or by an agreement within two months of the effective date of the transfer, they may raise a claim at court that the reason for termination was a substantial deterioration in working conditions caused by the transfer. If the court confirms it, the employee will be entitled to statutory severance (see question 13).
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
There is no TUPE-style statutory protection of employees in a business transfer and they are not automatically transferred with the business, except – at least for the primarily engaged workers – in the case of a corporate division (see questions 21 and 24).
24. What is the procedure for a transfer of employment (upon a business transfer or within group companies)?
24. What is the procedure for a transfer of employment (upon a business transfer or within group companies)?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Since the transfer of rights and obligations under employment law occurs automatically, it is generally sufficient to follow the legally prescribed procedure for a given business transfer. In addition, it is necessary to comply with the information and consultation obligation (see question 21). Further, general reporting and notification obligations to the state authorities apply.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
For an ordinary business transfer, the employees resign and are newly hired by the transferee of the business (who can do some cherry-picking). By contrast, in the case of a corporate division, the dedicated employees (those primarily engaged in the business to be spun off) are automatically transferred while some analysis and negotiation may be needed for non-primarily engaged workers.
25. Are there any statutory rules on harmonising the transferring employees’ terms of employment with the existing employees’ terms of employment?
25. Are there any statutory rules on harmonising the transferring employees’ terms of employment with the existing employees’ terms of employment?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The working conditions of the transferred employees cannot substantially worsen. If this were to happen and the employee gave termination notice within two months of the transfer, the employee could claim statutory severance (see question 23).
In addition, the employer must comply with the general principle of equal treatment and ensure equal treatment of both the original and new employees in terms of their working conditions, remuneration, and other benefits, training, and the possibility of promotion.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Only in a corporate division context; in an ordinary business transfer, new terms can be offered. Since the successor company assumes the employment contracts of the split company under the Companies Act based on universal succession, the working conditions should be maintained as they are. Any change requires a labour-management agreement under the Labour Union Act and the Employment Contract Act. Any change to working conditions before or after the effective date of the corporate division requires a labour-management agreement (an agreement under the Labour Union Act (collective agreement), unless such change results from a reasonable change to the work rules (see question 26), which satisfies certain statutory requirements.
26. Can an employer reduce the hours, pay and/or benefits of an employee?
26. Can an employer reduce the hours, pay and/or benefits of an employee?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
If the hours, pay, or benefits are agreed in the employment or other contract, then no unilateral change can be made.
Working hours – either statutory weekly working hours apply (40 hours per week) or shorter working hours are agreed. In either case, the employer determines the distribution unilaterally (subject to complying with statutory rules and limits) unless agreed differently.
Salary – if it isn’t agreed in the employment or other contract, the employer unilaterally determines the salary by an internal regulation or by a salary statement.
Benefits – if they aren’t agreed in the employment or other contract, the employer unilaterally determines the benefits by an internal regulation or by a salary statement.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Contracts can be supported by work rules, which are specific rules for the workplace. They set out working conditions, including wages, working hours, holidays and the rules with which employees must comply. Employers with 10 or more employees at a given workplace must adopt work rules. The main points to consider if an employer wants to unilaterally change the terms and conditions of employment depend on the nature of the changes and the structure of the employment terms (for example, whether they are contained in a contract or the work rules). Employers and employees can agree to make changes. An agreement between a labour union and an employer can affect individual agreements without the employee's consent, but this is rather unusual. In principle, salaries (and benefits other than variable or discretionary ones) cannot be reduced unilaterally.
If an employer has established work rules, individual employment contracts do not need to include all the employee's working conditions (ie, wages, working hours and breaks, holidays and disciplinary procedures). However, altering the rules is not a simple process. Unless agreed with the employee, an employer cannot make detrimental changes to the working conditions set out in the employment contract by changing the work rules. Changes can be made to an employee's working conditions if certain conditions, including reasonableness, are satisfied. This does not apply to individual contracts, and provisions that the employer and employee have agreed on cannot be amended by revising the rules. In cases of demotion or a disciplinary sanction, a reduction in salary or benefits can be considered under the work rules, but that should be carefully implemented by the employer and ideally with the employee's consent.
Under certain circumstances (eg, the covid-19 pandemic), an employer can place its employees on furlough. The employer is required to pay a furloughed employee compensation of at least 60% of their wage during the leave of absence, if the employer reduces its business activities due to reasons attributable to the employer.
27. Can an employer rely on an express contractual provision to vary an employment term?
27. Can an employer rely on an express contractual provision to vary an employment term?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
As for employment terms and conditions in general, if these have been agreed in the employment or other contract, they can be changed only by agreement. Validity of express contractual provision to vary the conditions depends on its structure and which conditions it concerns, and therefore there’s no generally applicable answer to the question.
The Labour Code further allows, in certain cases, a change in type of work, workplace, or employer by a temporary transfer of an employee to a different work position, workplace, or employer. Generally, consent is required; however, in certain cases, the employer can (and in very specific cases, has to) make a temporary transfer unilaterally (for example, if the employee is medically unfit to perform the agreed type of work, or to avert imminent danger). The employer must adhere to strict statutory conditions.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Not always, it depends on the term to be amended. Some clauses are nice to have in a contract or work rules, although not always enforceable (for instance a clause authorising the employer to unilaterally reduce an employee's salary in case of reassignment).
28. Can an employment term be varied by implied conduct?
28. Can an employment term be varied by implied conduct?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
Yes, the employee and the employer may agree on certain changes and variations implicitly. However, it is recommended to avoid such situations.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
Where an employee is treated in the same manner repeatedly and continuously for a long period, that treatment can be regarded as an implied term of employment.
29. If agreement is required to vary an employment term, what are the company’s options if employees refuse to agree to the proposed change?
29. If agreement is required to vary an employment term, what are the company’s options if employees refuse to agree to the proposed change?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
If agreement is required to vary an employment term or condition, then the only option to vary it is an agreement.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
The employer has the right to establish and maintain enterprise order concerning staff, organisation and facilities. Employers generally have a right to make changes to job descriptions and positions and reassign employees. If an employee does not agree where an agreement is required, the employee could be reassigned to a different position or the employer could ultimately ask the employee to resign at the employer's request in exchange for a package.
30. What are the potential legal consequences if an employer varies an employment term unilaterally?
30. What are the potential legal consequences if an employer varies an employment term unilaterally?
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
If varied unilaterally in a case where agreement was required, the employee may challenge the variation (depending on the situation, by demanding the employer to: refrain from such conduct, restore the original terms, or compensate the employee for the damage caused by such conduct). Depending on the situation there could also be a risk of administrative penalties.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
The employee can contact the Counselling Corner set up in Labour Bureaux or Labour Standards Inspection Offices. Public officials provide consultation services regarding issues arising from employment relations, and employees can present their grievances. If an employee using these services wants to pursue a legal claim, the Labour Bureaux or Labour Standards Inspection Office can request the employer to appear before it to discuss how to resolve the dispute. If the dispute is not resolved and if one of the parties so requests, the case can be subject to conciliation by a three-member panel set up in the bureau, usually composed of practising lawyers or law professors. If requested by either party to the dispute, the panel (or a member of the panel) mediates the dispute, ascertains the facts of the case and the allegations of the parties, confirms their main arguments, co-ordinates and prompts them to consult each other to resolve the dispute and proposes a settlement. Neither the employer nor the employee is bound to accept an amicable settlement offer suggested by the panel under the Individual Employment Disputes Resolution Promotion Law, and the employee can decide to initiate legal proceedings before the labour tribunal or the district court.
Employees can consult an attorney or a labour and social security specialist to seek legal advice, and they can alternatively contact and join a labour union independent (or not) from the employer's organisation. The union can then force the employer to hold discussions through collective bargaining on the subject matter of the dispute (terms and conditions of work and so on).
Areas to Watch
Areas to Watch
Czechia
Czechia
- at Legalité
- at Legalité
- at Legalité
The Czech parliament is currently debating several changes in the area of labour law. However, none of the currently debated changes should affect the answers above.
Japan
Japan
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
- at Iwata Godo
There are many legislative developments in the field of labour law but they would not affect the answers above.