What you need to know before hiring in the Czech Republic: A guide to terminations

When making your first Czech hire, termination policies might be far from your mind. But if you don't know the basics about terminations in the Czech Republic (Czechia), you'll be sailing into a storm when you eventually part ways with a Czech employee.

Employees in the Czech Republic have strong protections against hasty or unwarranted dismissals. These regulations apply to citizens and to those with a work permit for the territory of the Czech Republic. If you don’t adhere to minimum notice or remuneration requirements, all while failing to prove a just cause for involuntary termination, you could be subject to wrongful dismissal claims from Czech courts.

Read on to learn everything you need to know before hiring Czech employees—and how hiring through an Employer of Record (EOR) can spare you from bungling any local dismissal requirements.

5 essential things to know before hiring in the Czech Republic

Termination rules in the Czech Republic: What are acceptable grounds for firing an employee?

Czech employees can leave their job voluntarily for any reason, so long as they give the employer advance notice (usually two months). Here are the reasons an employee can be terminated involuntarily in the Czech Republic:

The Czech Republic's termination requirements might differ from those in other countries where you hire, and it’s crucial to keep your global hiring compliant with local laws.

Only an employee is able to give notice of termination without cause. At-will employment does not exist in the Czech Republic (more on that below).

What are the mandatory notice periods and termination pay for Czech employees?

The Czech Labour Code sets dismissal requirements. These legal regulations state that the notice period is a minimum of two months and that the notice period begins on the first day of the month following the termination. A longer period can be negotiated.

Severance pay is based on length of employment or if the termination is because of health reasons. Payment ranges from one to 12 times average monthly earnings.

Pay in lieu of notice is not allowed in the Czech Republic, however "garden leave" may be used instead. This means that during the notice period, employers grant employees a release from their obligation to work.

Frequently asked questions about terminating employees in the Czech Republic

Do you need a reason to terminate an employee in the Czech Republic?

You can involuntarily dismiss an employee in the Czech Republic, but the cause must be one of those listed in the Czech Labour Code (see below).

What is considered just cause for terminating an employee in the Czech Republic?

In the Czech Republic, reasons for termination with just cause are specified in the Czech Labour Code as follows (notice is required):

There are two scenarios where an employee can be terminated immediately:

Poor performance or incompetence can be just cause for termination, but Czech laws and norms encourage employers to consider other disciplinary proceedings first. Most workplaces try to correct less severe misconduct with verbal and written warnings before firing an employee outright.

In general, just cause can be hard to prove in the Czech Republic. Employers should ensure they have strong evidence of any serious breach of conduct before terminating an employee.

What qualifies as wrongful dismissal in the Czech Republic?

In the Czech Republic, wrongful dismissal is when an employee is terminated without one of the proper causes as listed in Czech labour law. This includes a dismissal based on discrimination (gender, ethnic background, sexual orientation, age, religion or union membership).

The employee has the option to file a claim with the court within two months of the alleged termination of employment. If the court finds that the termination was improper, it may declare it invalid and reinstate the employment relationship.

What is always required when an employer terminates an employee in the Czech Republic?

Failure to do so could invite legal sanctions from the courts and labour office.

What is the law for dismissing a contractor in the Czech Republic?

The termination process for independent contractors in the Czech Republic can vary depending on the terms of the employment contract.

Typically, either party may terminate by providing notice as specified in the contract. If the contract does not specify a notice period, the reasonable notice period will depend on the length of the contract and the type of work performed. However, contractors are not entitled to severance pay or notice.

If an independent contractor is found to be misclassified, they may be entitled to employment standards legislation protections and notice or termination pay.

What are layoffs in the Czech Republic?

In the Czech Republic, layoffs and company reorganization due to a poor business climate or other issues are accepted reasons for termination. The same labor regulations covering just cause apply. In most cases, the employee is entitled to compensatory wage or average monthly salary.

Mass layoffs and those involving trade union members are much more complex. These involve the union and compliance with additional Labour Code regulations.

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