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
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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.
South Korea
South Korea
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Yes, dismissal for business reasons (ie, redundancy) is one of the three basic types of dismissal recognised under Korean law: one is dismissal for business reasons; another is disciplinary dismissal due to the employee’s misconduct; and the last is so-called “ordinary dismissal” due to other circumstances, such as the employee reaching the employer’s retirement age, or the complete closure of the business.
However, the applicable legal standard for dismissal due to redundancy is extremely strict. Article 24 of the Korean Labour Standards Act (LSA) requires an “urgent business necessity” to dismiss employees for redundancy, among other requirements. An “urgent business necessity” is not defined precisely, but generally is understood to mean significant financial losses that are likely to persist without restructuring, or other objective circumstances that threaten the survival of the business and require restructuring for the company to survive.
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
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- 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).
South Korea
South Korea
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Subject to very limited exceptions, dismissing an employee requires “just cause”. For dismissals due to redundancy, Article 24 of the LSA specifies the requirements that must be satisfied to have just cause:
- there must be an urgent business necessity to dismiss employees;
- the employer must make every effort to avoid terminating the subject employees;
- the employer must use fair selection criteria for identifying the employees to be dismissed; and
- 50 days in advance of any dismissals, the employer must notify a labour union representing a majority of employees or, absent such a union, another representative of the majority of employees (collectively, the Employee Representative), and consult in good faith with the Employee Representative.
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
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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.
South Korea
South Korea
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No, the requirements of LSA Article 24 apply to any dismissal due to the employer’s business reasons, regardless of the number of employees dismissed. The basic legal requirements are the same whether one is dismissing 100 employees due to redundancy, or dismissing only one – although there may be reporting requirements depending on the number of redundant employees (see our explanation below). However, the practical approach to redundancies may differ even if the legal requirements for layoffs remain the same regardless of employee number. For example, terminating a single employee due to redundancy would usually be accomplished through individual negotiation to avoid the risk of unlawful termination, while a larger set of redundancies may involve a broader mutual separation package offer to the workforce, and potentially Article 24 layoffs for any holdouts who decline the offer, provided there is a reasonable chance of satisfying the legal standard.
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
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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.
South Korea
South Korea
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Yes, before laying off employees for redundancies, an employer must provide 50 days’ notice (50 days before the expected termination date) and consult in good faith with an Employee Representative. This consultation must include discussions of the efforts made to avoid dismissal, and the selection criteria for redundant employees.
No agreement with the Employee Representative is required by law. However, if a collective bargaining agreement (CBA) or the employer’s employment rules and policies (Rules of Employment) require consent from a union or other representative body, then such requirement is generally binding and must be satisfied.
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
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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).
South Korea
South Korea
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If the CBA or Rules of Employment require union or other workforce consent for layoffs, the requirement must be followed. Violating such a consent right is likely to invalidate the layoffs, unless the union is grossly abusing the situation by unreasonably delaying or refusing to reach an agreement. It can also result in criminal liability if the consent right is contained in a CBA. If consent is required but cannot be obtained, it could significantly delay or prevent the restructuring. In the absence of any consent requirement in a CBA or Rules of Employment, however, the law itself does not impose any.
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
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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.
South Korea
South Korea
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The collective consultation process with an Employee Representative required under LSA Article 24 should take place in the 50-day notice window described above. The consultation should include discussions of the efforts to avoid dismissal, and the selection criteria for redundant employees.
Failure to properly notify and consult with an Employee Representative can undermine the legality of layoffs. However, there is legal precedent to the effect that the mere failure to provide adequate notice does not necessarily invalidate the layoffs, and that the totality of the circumstances should be examined.
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
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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.
South Korea
South Korea
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Employers are not specifically legally obliged to present the economic business rationale to the Employee Representative during the required consultation process prior to conducting layoffs. However, it is practically helpful and common to present the business rationale to the Employee Representative and the workforce, because it is important to actually convince employees to accept mutual separation – which is de facto required to satisfy the requirement to “make every effort to avoid termination” before layoffs – and it is helpful to show that the company might have an “urgent business necessity” required for layoffs (if involuntary layoffs are contemplated).
The business rationale for layoffs is primarily challenged through unjust dismissal litigation, in which the employer’s possession or lack of an urgent business necessity will be one of the most significant areas of dispute.
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
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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.
South Korea
South Korea
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There is no legal requirement to individually consult with employees prior to dismissing them due to redundancy. However, redundancies generally must be accomplished primarily through mutual separation, because the legal standard for layoffs is so hard to satisfy and because that standard requires that the employer make every effort to avoid dismissing employees. For that reason, it may be practically necessary or helpful to conduct individual meetings with employees as part of the employer’s efforts to persuade employees to accept mutual separation and avoid dismissal – and such individual meetings are frequently used.
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
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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).
South Korea
South Korea
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Yes, LSA Article 24 layoffs require that the selection criteria be fair and reasonable as a whole.
Additionally, even if the employer’s “urgent business necessity” only requires eliminating positions in a certain group, the selection criteria may need to be applied more broadly to include reasonably interchangeable employees as well. This is because laid-off employees can argue that they could have taken other employees’ jobs that involve reasonably similar work or skills, if only those employees had been asked to leave the employer instead.
Another important aspect to remember is that the selection criteria cannot solely focus on the needs of the employer (eg, work performance, employment records, expertise, and capabilities of employees). Instead, under Korean court precedent, an employer must also take into account affected employees’ needs as well. For example, employees’ number of dependents and years of service may be considered as factors in selecting those subject to termination. Reaching an agreement with an Employee Representative on the selection criteria and efforts to avoid dismissal can significantly strengthen their defensibility, and greater efforts at sincere consultation can also buttress the employer’s legal position.
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
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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.
South Korea
South Korea
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Yes. Most notably:
- employees who are on maternity leave or within 30 days thereafter;
- employees on childcare leave; and
- employees on leave for the treatment of or recovery from a workplace accident or illness, or within 30 days thereafter.
The above cannot be dismissed for any reason other than the complete closure of the business or (in the case of workplace accident and/or illness victims) when statutory lump-sum compensation is provided to the victim who has not recovered within a certain time period. If such employees were (otherwise lawfully) selected for dismissal due to redundancy, the dismissal would have to be delayed at least until after the protected period.
Terminating employees during the above periods is subject to criminal sanctions. Mutual separation with such employees is permitted during their protected leave, though any such discussions should be approached with caution and sensitivity.
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
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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.
South Korea
South Korea
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As mentioned above, employees on certain kinds of protected leave cannot be dismissed even if the employer otherwise satisfies the legal standard. There may also be additional protections provided in a CBA or Rules of Employment.
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
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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.
South Korea
South Korea
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Under Korean law, there are no special payments that must be made to employees in connection with redundancies. But there are some significant mandatory termination payments generally.
If an employee is dismissed for any reason (including redundancy), the employee has a right to 30 days’ advance notice of dismissal or payment of 30 days’ “ordinary wage”[1] in lieu of such notice. There are exceptions to this requirement; one of the more significant of these exceptions is for employees who have been employed for less than three months. This statutory 30 days’ advance notice period can run concurrently with the 50 days’ advance notice for layoffs described above, though often more than 50 days is practically required or beneficial to prepare for layoffs.
Employees who have been employed for one year or more are also entitled to statutory severance benefits, described in more detail below.
Employees are generally entitled to compensation for unused annual leave.
And employees are usually offered an ex gratia separation payment to induce their agreement to mutually separate. This ex gratia separation payment is on top of other mandatory payments such as statutory severance benefits. The amount of these ex gratia separation payments varies considerably from case to case, based on the circumstances, the industry, past precedent at the company, and other factors – and it is often partially based on length of service. However, at the higher end, ex gratia separation payments can reach several years’ pay, particularly for long-serving employees. These payments may be individually negotiated (particularly in smaller-scale redundancies) or offered more broadly as a voluntary separation programme that employees can apply for (particularly for larger-scale redundancies). If the CBA or Rules of Employment provide for a longer notice period or more favourable payments or benefits than required by law, then any such provisions will supersede the statutory minimum requirements.
[1] “Ordinary wage” is the base rate for overtime pay and certain other employee entitlements.
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
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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.
South Korea
South Korea
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Employees whose employment terminates for any reason are entitled to mandatory severance benefits if they have been employed by their employer for at least one year. This is the case whether the employee resigns voluntarily, agrees to mutual separation, or is dismissed for serious misconduct.
These statutory severance benefits can take the form of a qualified severance pension plan, which can be defined contribution or defined benefit, with minimum contribution or benefit levels respectively. Absent such a pension, statutory severance pay of 30 days’ “average wage”[1] –calculated according to a statutory formula – per prorated year of service must be paid in lump sum.
Because involuntary layoffs due to redundancy are often extremely difficult and uncertain, or outright impossible, redundant employees also often receive a substantial ex gratia redundancy payment in return for resigning, as explained above.
[1] The daily “average wage” is the total wages payable in the prior three months divided by the total number of days in that period, with adjustments for certain other non-monthly payments, such as some types of annual bonuses, and unpaid leave compensation.
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
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- 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.
South Korea
South Korea
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Layoffs above a certain size threshold, which varies based on company size, must be reported to the Ministry of Employment and Labour (MOEL). The reporting threshold is 10% or more of the number of people ordinarily employed by the employer, with a minimum threshold of ten employees and a maximum threshold of 100 employees. The reporting obligation, however, does not affect the validity of layoffs, and there is no legal penalty for the mere failure to file this report itself. However, the penalty per the Framework Act on Employment Policy described below can still be applicable, and there could be practical consequences, such as a closer inspection by the labour office in the future.
There is another related reporting obligation; if the workforce is to be reduced by the greater of 10% or 30 or more employees, even through mutual separation, another kind of report must be filed with MOEL per the Framework Act on Employment Policy. This reporting obligation is exempted when the report required for certain LSA layoffs, described above, is filed.
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
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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.
South Korea
South Korea
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There is no strict requirement to offer suitable alternative roles. However, offering alternative roles to employees can be one of the efforts to avoid dismissals that are required by LSA Article 24.
So, although employees have no specific right to be offered alternative roles, employers should still consider what other roles redundant employees could occupy.
Under Supreme Court precedent, actions that may contribute to the employer’s efforts include:
- offering a mutual separation package or similar programme or package;
- reducing labour costs by lowering (or freezing) wages or limiting overtime work;
- avoiding new hiring;
- using temporary leaves of absence to reduce labour costs;
- terminating employment agreements with temporary or part-time employees;
- restructuring of the workforce; and
- reducing other costs and expenses.
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
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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.
South Korea
South Korea
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Employees can bring unjust dismissal claims before the Labour Relations Commission – an administrative body under MOEL that acts as a labour tribunal to hear certain kinds of cases, including unjust dismissal claims – and/or civil court. The remedy for unjust dismissal is reinstatement with back pay. An Employee Representative generally cannot bring claims on behalf of an employee. However, a union may have related causes of action – for example, it may claim “unfair labour practices” if redundancies target the union.
However, only employees who were dismissed can bring successful unjust dismissal claims. Employees who freely accept mutual separation technically resign and cannot challenge their dismissal unless their resignation was invalid, for example, due to coercion.
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
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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.
South Korea
South Korea
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Yes, and it is virtually required to try to exit most redundant employees by mutual separation. Please see question 13.
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
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- 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.
South Korea
South Korea
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The time can vary considerably depending on the circumstances and whether or not involuntary layoffs are utilised, or only voluntary exits (ie, mutual separation).
Based on our experience, where the procedure for layoffs is utilised, the process from the collective notice to the actual layoffs can often take significantly longer than the statutory 50-day notice period. Even three to six months is not uncommon, particularly given the need to make every effort to avoid dismissals.
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.
South Korea
South Korea
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Yes. If employees are dismissed pursuant to LSA Article 24 layoffs, there is a requirement to preferentially rehire the laid-off employees when hiring for substantially the same jobs during the three years after their dismissal.
There are no specific penalties, but employees who are subject to the rehiring preference could bring a civil claim seeking a court order to hire them, on the basis that substantially the same jobs were filled without being offered to them first.
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
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- 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).
South Korea
South Korea
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If an employer has 30 or more employees, it must establish a “labour-management council” comprising representatives of the employees and management, which must meet quarterly. Technically, the council may have a right to be notified of or consulted about an M&A transaction at the regular quarterly meeting. But there is no penalty for failure to do so, and those notification or consultation requirements are not generally regarded by employers as strict or necessary.
Other than the above, there is no legal requirement to consult employees with respect to major M&A transactions unless otherwise provided in a CBA or the Rules of Employment.
However, if the employer wants to change employment terms and conditions in the Rules of Employment, in connection with such a transaction (such as to harmonise terms and conditions post-transaction), that may require a consultation – see question 25.
Further, if the transaction involves transferring employees from one legal employer to another, the individual employees will have the right to accept or decline, and cannot generally be forced to transfer or dismissed for refusing to transfer.
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.
South Korea
South Korea
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If consultation or consent is required under a CBA, a union may be able to oppose, and delay or prevent a transaction.
Employees who oppose a transaction can also engage in other forms of opposition – for example, they can easily and quickly unionise (if not already unionised) and demand bargaining, and organise industrial action and protests. It is not uncommon for Korean businesses to offer “consolation” money to employees of a business that is to be sold, to avoid such opposition.
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).
South Korea
South Korea
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Where assets and employees that comprise a discrete “business” are transferred from one entity to another, it is referred to as a “business transfer”. In a business transfer, employees of the business are deemed to automatically transfer with their terms and conditions unchanged, unless they object within a reasonable period of time. They may object even after the transaction has closed, unless they affirmatively agree to transfer. All employees of the transferred business have a right but no obligation to transfer. If the entire business of the entity is transferred, all employees will have a right to transfer if they want to. If the entity carries on multiple business and only part of the entity’s business is transferred, there could be disputes over who belongs to which business; and although the company would generally have a limited right to reassign employees to different roles (eg, to move them from one business line to another before the transfer), that right is also subject to potential legal challenge.
Although an employer can rely on the automatic transfer process, it is common to seek affirmative agreement to the transfer from the relevant employees (through triparty employment transfer agreements) to have greater certainty as to who is transferring and resolve other legal issues.
Similar rules apply to a corporate split-off with the same form of automatic transfer. In that case, however, there is precedent stating that the employees do not have an absolute right to object to their transfer if there is a sufficient consultation.
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.
South Korea
South Korea
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There is no specific statutory procedure for a transfer of employment, whether by “business transfer” or individual transfers among affiliates. Transferred employees can be asked to sign documentation agreeing to the transfer and any new set of terms and conditions, and handling other things such as how to handle accrued severance. In the case of a business transfer, it is also possible to rely on mere notice and lack of objection by employees of the transferred business; however, as explained above, this may not always be recommendable.
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.
South Korea
South Korea
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In most kinds of M&A transactions, affected employees have a right to keep their existing terms and conditions. In mergers or share-purchase transactions, terms and conditions remain unchanged. In a business transfer, employees of the transferred business have a right to keep their existing terms and conditions unchanged.
If an employer wants to change individual contractual terms and conditions, the individual employee’s agreement is generally required. If an employer wants to change collective employment terms and conditions such as those in the Rules of Employment – for example, to harmonise terms and conditions post-transaction – individual agreement is insufficient. Instead, such changes require a consultation with a union representing a majority of the employees or, absent such a union, the employees generally – and any adverse changes require consent from the majority union or, absent such a union, a majority of the workforce. Any adverse changes made without the requisite workforce consent will be invalid as to existing employees, and can only be applied to new hires after the date of the change.
There is a very limited judge-made exception to the workforce consent requirement for adverse changes, where the consent right is unreasonably abused despite the employer’s good faith consultation. But this exception is very unlikely to apply in most cases.
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.
South Korea
South Korea
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In general, unilateral changes to terms and conditions are not possible. However, limited changes to an employee’s role can be defensible (though subject to challenge) where they do not conflict with other agreements or employer policies. Reducing an employee’s contractual working hours can also be possible temporarily where there is a business need, but employees generally remain entitled to be paid at least 70% of their “average wage” for the cut hours – a permanent cut in hours will generally require an employee’s agreement and may require undergoing the procedure for changing Rules of Employment. Unilateral reduction of pay is generally impermissible, though it might be defensible in special circumstances.
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.
South Korea
South Korea
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To a limited degree only. For example, it is common to include language in an employment contract reserving the right to change the employee’s duties. However, even with such language, the employer’s discretion is quite limited and any change of duties would have to be reasonable when weighing the business need and the adverse effect on the employee. Changing compensation and other benefits will require consent from the affected employee in most cases, despite any discretionary language in the contract.
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.
South Korea
South Korea
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While it may be possible from a theoretical standpoint, it will be practically difficult to defend any change to an employment term by implied conduct.
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.
South Korea
South Korea
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Employers have very limited options to impose changes to terms and conditions on existing employees. An employer must generally consult and bargain in search of sufficient agreement to make any changes. Or, as noted above, there is a very limited exception allowing unilateral changes to Rules of Employment where the majority union or workforce consent required to adversely change Rules of Employment is unreasonably abused.
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.
South Korea
South Korea
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If the employer unilaterally varies Rules of Employment without the required consultation or consent process, the adverse changes to the Rules of Employment can be invalidated and a fine of up to 5 million won can be imposed for the violation.
There is no similar penalty for varying contractual employment terms, although there can be a penalty if no written notice or statement of the change is provided. However, if the variation is invalid, it may result in other violations such as underpayment of wages.
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.
South Korea
South Korea
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Not applicable.