Guide to Restructuring a Cross-Border Workforce

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.

Employees may be lawfully dismissed for economic reasons, eg, shortage of work. In determining which employees are to be dismissed, an employer may not discriminate on the basis of legally protected classifications or by retaliating against an employee for engaging in protected conduct.

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).

For employees without an employment contract (an individual contract or a union contract) establishing termination procedures, employees may be dismissed “at will” – ie, at any time. Employees with an employment contract  should be dismissed in accordance with the contract.

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.

There are some disclosure and timing requirements for group reductions under a federal law called the Older Workers Benefit Protection Act (OWBPA). Employees aged 40 and over who are part of “group exit programmes” are covered. Typically, an involuntary “group exit” programme is a standardised formula or package of benefits that is available to two or more employees in exchange for a release, while an exit incentive programme typically is a standardised formula or package of benefits designed to induce employees to sever their employment voluntarily. In both cases, the terms of the programmes generally are not subject to negotiation between the parties.

Employees who are 40 and over must have 45 days to consider accepting the waiver and must receive (or have the ability to inspect) a disclosure listing job titles and ages of employees in the decisional unit who were selected and not selected for the group exit. The concept behind the disclosure is to allow employees to determine if older workers were disproportionately selected for termination (age discrimination) before deciding to waive rights.

Under the federal Worker Adjustment and Retraining Notification Act (WARN) and the California Worker Adjustment and Retraining Act (Cal/WARN), certain collective redundancies (termination of operations, mass layoffs, and relocations) meeting numeric and timing thresholds require at least 60 days’ advance notice to affected employees, relevant unions, and designated government officials. Failure to provide the required notice results in significant financial penalties.

Employers in California must comply with both federal WARN and Cal/WARN, which have somewhat different coverage and thresholds. Legislation is currently pending in California to increase the advance notice from 60 days to 75 days. The threshold for a “mass layoff” is 50 or more employees laid off during any 30-day period. “Relocation” means removal of a covered establishment to a new location 100 miles or more away. “Termination” means the cessation or substantial cessation of industrial or commercial operations at a covered establishment. A covered establishment means any commercial or industrial facility or part thereof that has employed 75 or more persons within the preceding 12 months. A list of employers undertaking mass layoff, termination of operations, and relocations is posted online by the California Employment Development Department on receipt of the required notice.

Call centres

Effective 1 January 2023, advance notice provisions were added for relocation of call centres (facilities or operations where the employees’ primary function is to receive telephone calls and other electronic communications for customer service). The threshold for “covered establishment” is the same as Cal/WARN (75 persons employed in the preceding 12 months). “Relocation” means either moving the call centre to a foreign country, or moving all or part of call centre operations equaling at least 30% of total call volume when measured against the average call volume for the previous 12 months. Employers who do not give the advance notice are subject to the same remedies as Cal/WARN and become ineligible for state financial grants, tax credits, and guaranteed loans. A list of relocating call centres is posted online.

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.

Typically, in union-represented workplaces, the redundancy process is established by a collective bargaining agreement. When a union contract does not define the process, an employer is required to bargain with the relevant union to either reach an agreement or a lawful bargaining impasse, after which it generally can implement the dismissals.

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).

Assuming the restructure is not prohibited by the terms of a collective bargaining agreement, and that mid-term bargaining is not foreclosed by the labour agreement, the restructure may go forward once a lawful bargaining impasse is reached.

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.

Reasonable notice to the union (if the workplace is union-represented) and an opportunity to bargain over the restructuring decision or effects “at a meaningful time and in a meaningful manner”. There is no legally required time frame, but commencing consultation at least six weeks prior to the desired implementation date is recommended. If the workplace is not union-represented, no consultation process is required.

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.

Although not legally required, most employers generally provide some information to the union regarding the rationale. The union has the right to request and obtain certain relevant, non-privileged information from the employer concerning the basis for its decision.

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.

It is not required, but typically an employer will provide at least basic information regarding the general rationale for the restructuring to employees. Very basic information about the business rationale and selection process should appear in the preamble to the OWBPA disclosure given to workers aged 40 or older who are asked to release claims.

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).

Selections must not be made for reasons that discriminate against employees in legally protected classifications intentionally or unintentionally. Unintentional discrimination occurs when employees in protected classifications are selected for dismissal at a disproportionately higher rate.  

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.

Not categorically, but dismissals of employees in legally protected classifications may be subject to enhanced scrutiny by affected employees, and potentially government agencies.

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.

The enhanced protection is not necessarily absolute, but employees in protected classifications have an easier avenue to raise concerns about their selection. Federal law protects employees from adverse employment actions based on:

• race;
• colour;
• religion;
• national origin;
• sex (includes pregnancy and sexual orientation);
• age (40 and over);
• disability; and
• genetics.

In addition, California (primarily the California Fair Employment and Housing Act) protects individuals from adverse employment actions based on:

• ancestry;
• citizenship or immigration status;
• gender;
• sex;
• sex stereotyping;
• age;
• creed;
• physical disability;
• mental disability;
• medical condition (cancer-related);
• genetic information;
• pregnancy;
• childbirth;
• breastfeeding or related medical conditions;
• sexual and reproductive health decisions (including but not limited to a decision to use or access a particular drug, device, or medical service);
• status as a victim of domestic violence;
• marital or familial status;
• natural hairstyles;
• protected military or veteran status;
• sexual orientation;
• gender identity;
• gender expression; or
• the status of being transgender.

Employees on federal or California family and medical leave (including for serious health conditions, family care, pregnancy disability, and “bonding” for parents) have very strong rights to medical insurance continuation during the leave, and reinstatement when leave ends or is exhausted. Both federal and California family and medical leave laws allow employees on leave to be impacted in a workforce reduction if the employer can prove they would have been selected for termination if actively at work. As a practical matter, employees who are terminated in workforce reductions while on protected leave often pursue legal claims. It can be difficult for an employer to defend the selection of employees on protected leaves.

Protected absences should not count against an employee. An employee selected for layoff due to poor attendance would have a claim if protected absences were included. A few examples of protected absences in California are those related to:

• pregnancy;
• disability;
• parental bonding;
• domestic violence victims;
• jury duty;
• state-mandated paid sick time and “kin care” (paid sick leave used for caring for family);
• military service; and
• emergency public service leaves.

California has Labor Code 132a, which forbids employers to discriminate against injured workers and gives very strong reinstatement rights. If missed work due to work-related injury causes an employee to lose seniority and leads to selection for reduction, the employee may bring a claim under Labor Code 132a for enhanced workers’ compensation benefits, reinstatement, and backpay.

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.

No severance payments are required by law. Unless such payments are required by an employer’s severance pay benefit plan, an individual employment contract, or a collective bargaining agreement, severance pay or pay in lieu of notice is not required. However, if the dismissals are part of an event covered by either the federal WARN or Cal/WARN, and required notice is not given, affected employees may be entitled to up to 60 days of pay, benefits, and out-of-pocket medical expenses. Employers who do not want to give 60 days’ advance notice sometimes pay 60 days’ pay with an amount for benefits added as pay in lieu of notice. For example, an employer may give selected employees a combination of garden leave (benefits stay intact) and pay in lieu of notice in any combination adding up to 60 days’ pay and benefits. A release cannot be required for the pay in lieu of notice owed under WARN. In union settings, if an employer that participates in an underfunded multi-employer pension plan ceases making fund contributions, it could be assessed that it has to pay its share of withdrawal liability.

In California, the law requires payment of all earned wages immediately on termination. Earned wages can include overtime, incentive compensation that is capable of calculation, and accrued, unused vacation or paid time off. The final pay requirements extend to short layoffs and “furloughs”. California’s Division of Labor Standards Enforcement (DLSE) has issued opinions that if a furlough extends beyond the employee’s normal pay period in which the furlough begins, the employer is required to pay final wages immediately. In another opinion letter, the DLSE stated that a furlough with a definite return-to-work date that does not exceed 10 days does not result in a termination. A furlough that does not have a definite return-to-work date within 10 days or less, or within the employee’s normal pay period, should be treated as a termination for final pay purposes.  

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.

An employer may voluntarily establish a severance programme and establish eligibility requirements and severance formulas. Many employers design severance pay to be based on length of service subject to a maximum or minimum. Similarly situated employees should receive the same severance benefits to avoid claims of discrimination.

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.

Not unless the redundancies are large enough to trigger the federal WARN or Cal/WARN (eg, 50 separations in 30 days at a covered establishment). In California, 60 days’ advance notice must be provided to the California Employment Development Department (EDD), the local workforce investment board, and the chief elected official of each city and county where the separations are occurring. Once notice is given to the EDD, it is published online. The content of the notice is the same as for federal WARN.

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.

There is no legal obligation to do so; however, some collective bargaining agreements contain such requirements. Most employers do consider a variety of alternatives and document a “business case” of the alternatives considered, and the reasons alternatives were insufficient or unworkable.

There are no specific notification obligations after making the redundancies. Only general notification obligations, which are the same for all employment terminations, apply.

These general notifications must be made within eight days, using the relevant forms, to: (i) the employee’s health insurance company; and (ii) the District Social Security Administration (including the pension insurance record sheet).

If wage deductions were made to satisfy the employee’s debt to a third party, the employer must notify the relevant court (or tax authority case of tax debt), including an account of the deductions.

No. An employer may receive inquiries from some government agencies (which they should respond to), and employers must respond to unemployment benefit claims (which cannot be released). For employees on work visas, appropriate updates regarding status may be required.

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.

Employees can file charges with the federal Equal Employment Opportunity Commission (EEOC) or the California Civil Rights Department (CRD). An employee also may file a charge with the National Labor Relations Board (NLRB). A union-represented employee and their union may file a grievance under the collective bargaining agreement. Administrative agency charges may lead to litigation in state or federal court. In some instances, litigation may be initiated directly in court or in arbitration. Individual arbitration agreements are common in California. Unions have standing to bring claims under the federal WARN and Cal/WARN on behalf of represented employees.

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.

It is common to offer separation pay and benefits in exchange for a release of legal claims. Payments in exchange for a release must be over and above earned wages, accrued vacation, and payments owed under federal WARN or Cal/WARN.

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.

Careful planning of thoughtful collective redundancies often takes at least several weeks, eg, to develop a business case, make and review selections, potentially conduct a disparate impact analysis, draft severance agreements and releases, and draft employee and third-party communications. In situations where 60-day federal WARN or Cal/WARN notice is required, the process can take longer (although it can be shortened if the employer is willing to pay WARN liability in lieu of notice).

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.

Most collective bargaining agreements contain recall or rehire obligations for various periods of time, eg, one year. In non-union settings, generally there are no legal recall requirements (although California has adopted some; see below). Hiring into the same positions that were the subject of redundancy could raise inferences of discriminatory pretext. Employers advertising open positions after reductions may find employees who accepted severance applying for those openings.

Several California cities passed right to recall laws during the pandemic, giving priority in hiring to former employees. In 2021, California passed a state-wide recall rights law with limited coverage (hotels, private clubs, event centres, airport hospitality operations, airport service providers, and entities that provide building services – ie, janitorial, maintenance, or security services). To qualify, ex-employees must meet length of service and hours thresholds. This obligation to rehire workers can survive business ownership changes and restructuring if the successor business conducts the same or similar operations using substantially the same assets.

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).

Not in non-union settings. In union-represented workplaces, some collective bargaining agreements contain consultation or consent requirements. However, it is more common for these agreements to permit such transactions but either require bargaining over their effects on represented employees, or contain severance benefits.

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.

Where consultation duties are required and not complied with, a union can file an unfair labour practice charge with the NLRB or a grievance under the collective bargaining agreement. In certain circumstances, the union may seek an injunction in federal court to block the action pending, eg, an expedited arbitration under the collective bargaining agreement.

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).

Generally, with some specific exceptions in California, the main protection is WARN and Cal/WARN advance notice if enough employees are displaced. Apart from that, the usual legal prohibitions against discrimination in hiring and termination apply. In stock transactions, because the purchaser buys the stock of a continuing business, the employees would continue employment with the seller unless dismissed. In an asset sale, the seller’s employees are terminated and then hired by the buyer. Unlike federal WARN, Cal/WARN has no exception for the sale of a business in the statute itself. However, one case has held that where employees transitioned seamlessly to a new business entity taking over a municipal contract, there were no separations “from a position for lack of funds or lack of work” to trigger Cal/WARN. Employees kept the same terms and conditions of employment, even driving their same routes, with no interruption when the new employer took over.

Specific California exceptions: grocery workers, janitors, and city contracts

Under 2016 legislation, a “successor grocery employer” must retain current grocery workers for 90 days after the “change in control” of a grocery store. At the end of the 90 days, the new employer must prepare a written performance review for each worker and “consider offering” continued employment if the worker has performed satisfactorily. Notably, this state-wide law does not pre-empt any city or county ordinance that provides greater protection to eligible grocery workers. Some California cities, including Los Angeles, Santa Monica, San Francisco, and Gardena, have “worker retention” ordinances that require purchasers of major supermarkets to retain certain members of the pre-existing workforce for at least 90 days, subject only to the employer’s right to dismiss a worker for cause.

City contracts

Other city or county ordinances of this kind similarly protect service workers in the event that one city contractor replaces another.

Employment of displaced janitors

Successor service contractors must hire janitor-employees who worked for the former service contractor for at least four months and retain them for 60 days absent substantiated cause (based on performance or conduct). Contractors must state this requirement in all initial bid packages and must make written job offers in the worker’s primary language or other language in which the worker is literate. The same wages and benefits are not required. The offer shall state the time it will remain open (not less than ten days). If fewer employees are needed, then seniority within job classification must be the basis for layoffs. Contractors must also identify employees not retained and the reason, and place the workers on a preferential hiring list. Contractors must give each retained employee a written performance evaluation at the end of 60 days. If the evaluation is satisfactory, then the contractors must offer continued employment, which may be at will.

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.

Any requirements under a collective bargaining agreement or an individual employment contract would need to be followed. “Change of control” provisions are common in executive contracts. Transfer offers “within a reasonable commuting distance” and on reasonably comparable terms within the same employing entity are not considered “employment losses” under federal WARN and would likely not be “separation from a position for lack of funds or lack of work” in California. Even when the transfer is within group companies with shared benefit plans, there are certain formalities. As some examples:

• the employer’s name will change on the itemised pay statement;
• new wage theft notices will need to be issued where required;
• compliance with work visa rules for changing employment;
• certain payroll taxes with annual maximums start over at zero (but there is a refund process); and
• benefit plan issues such as crediting of prior service.

Where the assets of the business are sold and the seller’s employees are terminated from the seller and then hired by the buyer, California termination formalities must be followed. Wages earned from the seller must be paid immediately on the date of separation. Accrued unused vacation must be paid on the date of separation (includes paid time off where paid vacation and sick leave are combined).

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.

In general, not unless there is an applicable contractual requirement or prohibition, eg, under a collective bargaining agreement or individual employment contract. However, similarly situated employees cannot be discriminated against on the basis of legally protected classifications. California has a strong pay equity law that requires equal pay for substantially similar jobs.

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.

Typically, yes, unless there is a restriction in an applicable collective bargaining agreement or individual employment contract. Reductions must not discriminate against employees in legally protected classifications. In California, reductions in pay must be prospective. If an employee is informed of the reduction or change and continues to work, the change is accepted. However, significant pay reductions could result in constructive discharge, and could be considered employment losses under federal or Cal/WARN.

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.

Yes. However, there could be a dispute about the employer’s interpretation of such a provision. It is very common for offer letters, employee handbooks, and some types of benefit plans to contain language giving the employer the right to make changes to terms and conditions of employment prospectively.

Yes, the employee and the employer may agree on certain changes and variations implicitly. However, it is recommended to avoid such situations.

While it is possible, it would be atypical. In the unusual circumstances in which it might occur, a practice would have to be consistent and sustained for a sufficiently lengthy period of time to arguably constitute a contract term that employees rely upon. Employers generally insert protections against verbal or implied contracts by stating that changes must be made in writing. An example would be that the at-will relationship can be changed only in writing, signed by a limited number of company officers (titles specified).

If agreement is required to vary an employment term or condition, then the only option to vary it is an agreement.

If the employer is prohibited from acting by a contractual restriction, it might need to incentivise a modification. In California, where employment is at will, offer letters, employee handbooks, compensation plans, and the like typically reserve the right for the employer to make prospective changes in terms and conditions.

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.

If the employer has violated a restriction in a collective bargaining agreement, it may be subject to a contractual grievance, an unfair labour practice charge before the NLRB, or other litigation. In a non-union setting, if the employer violates the terms of an individual employment contract, it could be sued for breach of contract or under other applicable legal theories.

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.

Watch for expansion of recall rights for non-union workers to cover additional types of businesses.  Legislation vetoed by the Governor recently would have required “chain employers” (companies with many locations) to: (1) provide covered workers a displacement notice at least 60 days before the expected date of closure of a covered establishment. (2) to provide all covered workers the opportunity to transfer to a location of the chain within 25 miles as positions become available for which they’re qualified within 5 days of a position becoming available for one year after the closure; (3) maintain a preferential transfer list of covered workers and make offers of transfer in order of greatest length of service based on the worker’s date of hire at the chain. Although not the law for now, vetoed legislation often resurfaces with more traction. Likewise, amendments to Cal/WARN that would have increased the notice period from 60 to 75 days were vetoed by the Governor in 2023 but may succeed in becoming law in the future. The vetoed legislation contained new provisions for remote employees and labour contractor or client employer relationships (eg, professional employer organisations and temporary employment agencies) clarifying that employees of the labour contractor are also employees of the client employer for liability.